An Administrative Services Organization (ASO) is an organization that  serves as a resource for handling HR responsibilities for its clients while leaving employment liabilities with the same client.  Within the ASO platform, a client company retains complete control over their workforce while benefiting from professional assistance across such areas as labor law compliance, administrative routine and HR process optimalization.  This way, the ASO model is designed to enhance flexibility and efficiency by providing customizable and scalable support to essential HR and Payroll functions within the company needs and budget.

The term ASO was established by the PEO industry in the late 1990s in order to distinguish between the select administrative support of an ASO, and full-scale administrative & Management support of a Professional Employer Organization (PEO).  Also known as Administrative Services Only, an ASO offers flexible HR solutions for small to mid-sized businesses by providing on-going support for select employee-related functions such as payroll, unemployment claims control, safety & workers’ compensation and many other HR responsibilities, without taking on the role of a Co-employer.

No Co-Employer Agreement: The principle difference between an ASO and PEO is that the services provided under an ASO Agreement does not establish a Co-Employer relationship with the Client and its employees; and unfortunately, leaves all liabilities with the client. With this structure, insurance and tax compliance are done through the ASO, but normally only under the Client’s federal, state and/or local Employer Identification and Account numbers (EIN). The client employer retains the Administrative Employer-of-Record status for all purposes, including tax, and is also responsible for sponsoring its own benefit plans and adhering to their terms. For example, in the absence of a written Co-employer Agreement under a PEO, an ASO will process your payroll using payroll funds from the client’s own bank account, and depositing taxes under the client’s federal, state and local (if applicable) identification or account numbers.

In addition, unlike a PEO / Co-employer arrangement, the ASO will utilize the client’s own state unemployment insurance modifier (which is almost higher than the PEOs) and file all unemployment claims against the client’s state SUI account, (which is almost always more costly), rather than the ASO’s.

Finally, as indicted above, the ASO is not a Co-employer with the client, so, it is unlikely that the ASO assumes any liability around any HR matters (such as those above), depending, however, on the terms of the Client Services Agreement between the ASO/PEO and Client.

Unfortunately, the services of a standard ASO are not provided under a Co-Employment Agreement, so the ASO cannot legally provide the same level of administrative and management support services (including certain  shared liability) that our PEO option can.

Instead, an ASO provides HR expertise and technology to help businesses manage their own HR functions more efficiently.  With this structure, tax and insurance compliance are done through the ASO, and normally under the client’s local, state and federal identification numbers (EIN) since no other co-employer exists (as it does in a PEO).

But Wait!  With dmDickasonHR’s ASO model, certain HR-related tasks such as payroll  processing, tax filing, benefits administration assistance, handling unemployment and workers’ compensation using dmDickason’s lower modifiers/rates and codes, can be legally “carved-out” of the standard ASO model and outsourced to the ASO, similar to the PEO model.  In other words, with dmDickasonHR, our ASO model essentially allows carving-out a customized and scalable HR support program (using dmDickason’s lower/better modifiers, rates and terms) that meets the client’s needs and budget.