From hidden fees to limited control over benefits and outdated technology, the cracks in a PEO relationship can begin to show over time. If you’re starting to feel more restricted than supported by your PEO, it might be time to make a change.
In this post, we’ll walk you through the process of leaving your PEO, and why partnering with EmphasisHR and Paylocity might just be the upgrade your business needs.
Why Leave Your PEO?
Partnering with a Professional Employer Organization (PEO) can be a great decision for small to mid-sized businesses, at least in the beginning. But over time, many business owners realize that their PEO may not be as cost-effective or transparent as they once believed.
Before we get into the step-by-step process, it’s important to understand why many companies choose to exit the PEO model.
1. Hidden Fees and Murky Invoicing
Many PEOs bundle services into one invoice, making it difficult to see what you’re actually paying for. This lack of transparency often leads to unexpected charges and inflated costs, especially when it comes to workers’ compensation, unemployment taxes, and administrative fees.
2. Lack of Flexibility in Benefits
Under a PEO, you’re often locked into a one-size-fits-all benefits package that may not be right for your workforce. Want more competitive health insurance options or greater customization? You’re out of luck or stuck with a price hike.
3. Outdated Technology
Many PEOs still use clunky, outdated systems that create more work than they save. If your HR tech isn’t intuitive, mobile-friendly, or integrated, it’s not helping your team thrive.
A Better Way: EmphasisHR + Paylocity
Leaving your PEO doesn’t mean giving up on HR support, it just means choosing a smarter solution. At EmphasisHR, we combine personalized service with modern tools like Paylocity, giving you access to:
- Clear, itemized billing (no more hidden fees)
- Significant healthcare savings through strategic broker relationships
- Next-gen HR tech that streamlines everything from payroll to performance reviews
- Dedicated HR advisors who act as an extension of your team
Now let’s dive into how to make the switch.
Step-by-Step: How to Leave Your PEO
Step 1: Review Your PEO Agreement
Before making any moves, carefully review your current PEO contract. Look for:
- Termination clauses
- Required notice periods
- Early termination fees
Many contracts auto-renew annually, so the timing of your exit is critical. Ideally, give yourself at least 60-90 days before the renewal date to prepare for a smooth transition.
Step 2: Assess Your Needs
Think about what’s driving your decision to leave:
- Are you overpaying for benefits?
- Is your HR technology lacking?
- Do you want more visibility into your data?
Clarifying these needs will help you choose the right replacement and ensure your new provider addresses the gaps your PEO left behind.
Step 3: Choose the Right Partner
This is where EmphasisHR comes in. Unlike a PEO, we don’t take control of your business. Instead, we empower you with tools, data, and support to manage HR your way. And with Paylocity, you get best-in-class software that integrates payroll, benefits, time tracking, recruiting, and employee engagement, all in one user-friendly platform.
We’ll guide you through the switch and make sure nothing slips through the cracks.
Step 4: Coordinate the Exit Plan
Once you’ve selected EmphasisHR, we’ll help coordinate the following:
- Transitioning payroll from the PEO to Paylocity
- Re-establishing your employer tax IDs (if needed)
- Moving employee benefits plans or setting up new ones
- Ensuring compliance with wage and hour laws, ACA reporting, and other requirements
Most PEOs operate under a co-employment model, which means your business’s federal and state tax IDs might not have been active during your time with them. We’ll make sure your accounts are reopened or reactivated appropriately.
Step 5: Communicate with Your Team
Your employees will have questions, make sure they’re informed. We help you manage this change through clear messaging around:
- New benefits offerings
- Paycheck differences (due to tax ID changes)
- Where to access their HR tools moving forward
We also provide training on the Paylocity platform so your staff can hit the ground running.
Step 6: Double-Check the Details
As your PEO relationship winds down, verify that:
- Final tax filings have been completed correctly
- All data has been transferred and secured
- Benefits coverage is continuous (no gaps in healthcare or retirement plans)
- COBRA is handled if required
This last stretch is crucial to avoid compliance headaches or payroll hiccups.
What Happens After You Leave the PEO?
Once the transition is complete, you’ll notice the difference almost immediately:
- Greater cost transparency: No more mystery invoices, just straightforward pricing and savings.
- Healthcare flexibility: With EmphasisHR, you gain access to multiple insurance carriers and better broker-negotiated rates.
- Modern HR tools: With Paylocity, your team gets mobile access, automated workflows, and analytics that drive smarter decisions.
And the best part? You’re not doing it alone. EmphasisHR acts as your HR partner, helping you navigate issues as they arise, without taking over your business.
Conclusion
Leaving a PEO might seem daunting, but with the right partner, it’s a strategic move that puts your business back in control. At EmphasisHR, we specialize in helping companies make this transition smoothly and confidently.
Let us help you cut hidden fees, unlock healthcare savings, and upgrade your HR technology, all while giving your business the tailored support it deserves.
Ready to break up with your PEO?
Contact EmphasisHR today and take the first step toward a smarter HR solution.
