What is the difference between a PEO and an EOR?

A PEO and your company become co-employers of the same US worker, so the PEO shares payroll tax, workers compensation, and benefit duties. An EOR is the legal employer of record on the paperwork for a worker in a country where you have no entity. Justworks PEO Basic costs 79 dollars per employee per month, while Oyster's employer of record service costs 699 dollars per employee per month.

Is a PEO cheaper than hiring an in-house HR manager?

For a small team, usually yes. Justworks PEO Basic at 79 dollars per employee per month covers payroll, compliance help, a 401(k) plan, and 24/7 support with no base fee. A full-time human resources manager had a median pay of 149,280 dollars in May 2025 according to the Bureau of Labor Statistics, before benefits and payroll taxes. Fractional HR sits between the two, often at 10,000 to 25,000 dollars a month.

Does a PEO make my company the legal employer?

No. Your company stays an employer, and the PEO becomes a co-employer of the same people. That means you still control the work and can still be liable for your own conduct, while the PEO carries shared responsibility for payroll taxes, workers compensation, and benefit obligations. With an EOR the vendor is the employer of record, which is why it is the usual choice for a first hire abroad.

When do I risk a W2 misclassification problem?

The risk appears when a real employee is paid as an independent contractor. The IRS Worker Classification 101 page splits the test into behavioral control, financial control, and the relationship of the parties, and no single factor decides the outcome. The Department of Labor says misclassified employees may miss minimum wage and overtime pay. Moving a real employee onto a W2 through a PEO or EOR removes the exposure.

HR Outsourcing Cost Per Employee in 2026 Compared

Q: How much does HR outsourcing cost per employee per month?

Published 2026 prices run from 79 dollars per employee per month for Justworks PEO Basic to 699 dollars for Oyster employer of record. Justworks PEO Plus is 124 dollars, the Justworks employer of record service is 599 dollars, and Multiplier EOR Core is 459 dollars billed annually or 499 dollars billed monthly. Fractional HR retainers run 10,000 to 25,000 dollars a month for a senior leader.

Asking hr outsourcing is usually the first step for a founder who cannot keep up with payroll filings. The label covers three very different services, and the number that changes every answer is your headcount plus where your people sit. Published 2026 vendor prices run from about 79 dollars per employee per month for a basic professional employer organization. At the top of the range, an employer of record costs nearly 700 dollars per employee per month. By the end of this guide you can match your company to a model and know what to ask a vendor in writing.

Three models do the heavy lifting. A professional employer organization, or PEO, shares employer duties with your company for US staff. An employer of record, or EOR, becomes the legal employer for a worker in a country where you have no entity. A fractional HR team puts senior people leaders on your calendar for a set number of hours each week. The prices differ because the risks each model carries look different.

What is the difference between a PEO an EOR and fractional HR

A PEO and your company become co-employers of the same person. The PEO takes payroll tax filings, workers compensation filings, and most benefit administration, while you keep control of the daily work. A PEO is built for US employees. Our roundup of the best PEO services in 2026 compares Justworks, TriNet, and ADP on price and coverage.

An EOR is different because the EOR is the legal employer on the paperwork. You direct the work and approve the contract, but the EOR signs the employment agreement and runs payroll in that country. This is the normal choice for a first hire somewhere you have no registered entity.

A fractional HR team is people instead of software. You hire an experienced HR leader for a set number of hours each week, usually on a three month minimum. Go Fractional reports an average fractional hourly rate of 153 dollars as of June 2026. Retainers for a senior leader typically land between 10,000 and 25,000 dollars a month.

Model	Who is the legal employer	Best fit	Published 2026 price
PEO	Your company and the PEO together	US staff who need benefits	79 to 124 dollars per employee per month
EOR	The EOR	First hires in a country with no entity	459 dollars annually to 699 dollars per month
Fractional HR	Your company	Senior HR help a few days a month	10,000 to 25,000 dollars a month
Payroll only	Your company	Very small US teams	8 dollars per employee plus a 50 dollar base fee

What each model includes and what it costs

What a PEO includes

Justworks PEO Basic lists payroll for all employees, compliance help, 24/7 support, a 401(k) plan, and an applicant tracking system. PEO Plus adds medical, dental, and vision administration plus HSA and FSA accounts. Health premiums, payroll taxes, and workers compensation sit on top of the admin fee either way.

What an EOR includes

Oyster's employer of record fee covers compliant local contracts, payroll in more than 120 countries, benefits administration, and onboarding and offboarding support. Oyster also lists a US PEO product at 114 dollars per employee per month for teams that want co-employment at home. Our Oyster HR pricing guide shows what each product leaves out.

What payroll only includes

Payroll software is the cheapest option and the most dangerous one to copy without help. Justworks sells payroll alone at 8 dollars per employee per month plus a 50 dollar monthly base fee. When you run payroll yourself, you stay the employer of record and you own every filing. Our guide to payroll software for small business compares the cheaper tools.

How much does HR outsourcing cost per employee per month in 2026

The published rates make the gap easy to see. Justworks lists PEO Basic at 79 dollars per employee per month with no base fee, and PEO Plus at 124 dollars. Its employer of record service is 599 dollars per employee per month. Oyster charges 699 dollars per employee per month for its employer of record service and 29 dollars per contractor per month.

Multiplier sits lower on the employer of record side of the market. Its Core plan is 459 dollars per employee per month on an annual contract, or 499 dollars billed monthly. The Growth plan is 519 dollars annually or 559 dollars monthly. Multiplier also states that about 11 percent of the countries it supports carry adjusted pricing because of local wage levels. Our Multiplier pricing for 2026 breaks down the country differences.

One vendor publishes no price at all. Rippling says its platform plans start at 8 dollars per employee per month plus a monthly base fee, and its PEO service is quote only. Our Rippling PEO pricing guide for 2026 shows what that quote usually contains.

Vendor and plan	Price per employee per month	What the vendor states
Justworks PEO Basic	79 dollars	No base fee, includes a 401(k) plan
Justworks PEO Plus	124 dollars	Adds medical, dental, and vision administration
Justworks payroll only	8 dollars plus a 50 dollar base fee	No co-employment, you stay the employer
Justworks employer of record	599 dollars	For hires outside the United States
Oyster employer of record	699 dollars	29 dollars per contractor per month
Multiplier EOR Core	459 dollars annual or 499 dollars monthly	About 11 percent of countries cost more
Multiplier EOR Growth	519 dollars annual or 559 dollars monthly	Volume pricing available by quote
Rippling platform	From 8 dollars plus a monthly base fee	The PEO service is quote only

Who is liable when something goes wrong with a PEO or EOR

Liability is where hr outsourcing buyers most often get surprised. With a PEO, the PEO is a co-employer, so it shares responsibility for payroll taxes, workers compensation, and benefit obligations. With an EOR, the EOR is the employer of record, so it carries the legal employment duties in that country. Your company still controls the work and can still be liable for your own conduct.

Two tax details matter here. IRS Publication 15 for 2026 sets the employer Social Security tax at 6.2 percent of taxable wages. It also sets the Medicare tax at 1.45 percent and the Social Security wage base at 184,500 dollars. A PEO certified by the IRS can pay the shared responsibility tax so you do not pay it twice if you leave midyear. The IRS publishes that list of certified PEOs on its CPEO public listings page.

When does W2 misclassification risk appear

Misclassification appears when a company pays a real employee as an independent contractor. The Department of Labor says misclassified employees may miss minimum wage and overtime pay. Its final rule from January 2024 sets out the test in 29 CFR Part 795. A W2 worker who should have been a 1099 contractor can file Form 8919 to recover the employee share of Social Security and Medicare tax.

The IRS Worker Classification 101 page groups the test into three areas. Behavioral control asks whether you control what the worker does and how. Financial control asks about payment, expenses, and who supplies the tools. The relationship of the parties asks whether you offer benefits or an employee contract. No single factor decides the outcome, and the IRS says you should document the factors you used.

Outsourcing helps only when you use it the right way. A genuine contractor paid through an EOR platform stays a contractor, so the exposure stays. Moving a real employee onto a W2 through a PEO or an EOR removes it. The IRS says a business that misclassified a worker can be held liable for employment taxes for that worker.

How do you choose the right outsourcing model

Start with where your people sit. US staff who need benefits point to a PEO. A first hire in another country points to an EOR. A company that needs a senior HR leader for a few days a week points to a fractional team. A good hr outsourcing decision starts with naming the job, not the vendor.

Then ask every bidder for the same three things in writing. Get the full monthly fee per employee, the notice period, and the exit terms for your data and your benefits. Compare each quote against the published list prices. A quoted PEO fee of 79 dollars and a quoted EOR fee of 699 dollars carry very different contents.

Last, check the headcount rules. Justworks counts every active employee, including hires who have not started yet, and it bills unpaid owners as employees. A per employee model will cost more in a growth quarter than a flat retainer will. Write down which model matches your hiring plan for the next twelve months.

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