The right model depends on your headcount, how much HR you want to outsource, and whether co-employment is acceptable for your industry. Below is a direct comparison, followed by who each model fits best.
PEO vs ASO vs broker-direct: comparison
| Dimension | PEO | ASO | Broker-Direct |
|---|---|---|---|
| Employer of record | Co-employment (shared) | You remain sole employer | You remain sole employer |
| Workers' comp | Under PEO's master policy | Your own policy, they administer | Your own standalone policy |
| Payroll & taxes | Handled under PEO's FEIN | Administered under your FEIN | Your responsibility |
| Benefits access | PEO's large-group plans | Your plans, they administer | You source your own |
| Best for | 5–100 employees wanting to outsource HR | Employers wanting help but not co-employment | Employers with in-house HR or a strong mod |
| Trade-off | Less control, bundled cost | You keep liability & sourcing | Most control, most in-house work |
When a PEO makes sense
A PEO fits growing businesses, often 5 to 100 employees, that want to hand off payroll, benefits administration, and workers' comp in one relationship. Because the PEO pools many clients under a master workers' comp policy, a business with a high experience mod or a tough class code can sometimes get coverage it would struggle to place on its own. The trade-off is co-employment and less direct control over rates at renewal.
When an ASO makes sense
An ASO gives you the administrative support of a PEO — payroll processing, HR guidance, benefits administration — but you remain the sole employer of record. This suits employers who want to offload paperwork without entering co-employment, and who have a healthy enough claims history to hold their own workers' comp policy.
When broker-direct makes sense
Broker-direct means keeping your business as the sole employer and buying a standalone workers' comp policy through a licensed broker. It offers the most control and, for employers with a low experience mod and in-house HR, often the lowest total cost. A good broker also brings audit defense and mod management — the pieces a bundled provider may not prioritize on your behalf.
Sixth Man places coverage across all three models. The point is not to sell one structure — it is to match the model to your headcount, your mod, and how much you want to run in-house.