Administrative fee (PEO)

The administrative fee is the number to isolate first in any PEO proposal, because the rest of the invoice (health premiums, workers compensation, employer taxes) is largely money the PEO passes through to carriers and governments. Fee models vary: a flat amount per employee per month, a percentage of gross payroll, or a blend with minimums.

A percentage-based fee rises with every raise, bonus, and commission unless the contract excludes them, so convert any percentage quote to a per-employee dollar figure using your payroll before comparing proposals. Ask how the fee treats part-time staff, owners, employees on leave, and mid-month hires and terminations because those definitions change the annual cost.