Liability Shield (via PEO)
Definition
Risk protection provided through a PEO partnership against certain employment-related liabilities.
What is a Liability Shield?
A PEO acts as a co-employer and assumes liability for key HR functions, including payroll taxes, workers’ compensation, unemployment claims, and benefits compliance. This protects the client company from direct legal exposure.
Why is a Liability Shield Important for Employers?
- Reduces employer risk for wrongful termination, discrimination, and wage claims
- Shifts tax and insurance liability to the PEO
- Essential for small businesses without or with limited internal HR/legal support
FAQs
What does a liability shield do for employers?
It helps protect businesses from certain legal and financial risks by transferring or limiting responsibility, often through insurance or a PEO partnership.
How does working with a PEO like ExtensisHR offer a liability shield?
The PEO becomes the employer of record for tax and compliance purposes, assuming shared liability for payroll, HR, and benefits-related compliance.
Is a liability shield foolproof?
No. While it reduces exposure, employers still need to maintain sound HR practices and comply with contractual and legal responsibilities.
How ExtensisHR Can Help
We offer liability protection by:
- Managing tax filings under our EIN
- Providing workers’ comp coverage and claims support
- Sharing compliance responsibility through our co-employment model
- Offering EPLI coverage