Many Ohio employers stay in the same workers' compensation setup for years. Not because it's working well, but because they never knew other options existed.
If you've started looking, you've probably run into two similar-sounding acronyms: PEO and AEO. They are not the same thing. Here is how each one works, how they differ, and which situations point toward one or the other.
Ohio runs a monopolistic state fund, which means employers cannot buy workers' comp from a private carrier. Most pay premiums into the state fund through the Ohio Bureau of Workers' Compensation (BWC). Larger employers can apply for self-insurance, but BWC requires two years of experience with the state fund, strong financial stability, and the ability to administer a program directly.
That leaves many Ohio businesses in the middle: too small to self-insure, but not always satisfied with the state fund. PEOs and AEOs both aim to help, in different ways.
A Professional Employer Organization is a traditional HR outsourcing model built on co-employment. Your employees are co-employed by your business and the PEO, which typically acts as the employer of record for payroll taxes. In exchange, you usually get a bundle of payroll, HR support, benefits, and workers' comp coverage.
For a young company with no HR staff, one vendor handling everything can be a real relief. The tradeoff is that it comes as a package, and you generally take the whole thing.
An Alternative Employer Organization is an Ohio-specific, relatively new model. Senate Bill 201 was signed in December 2020 and took effect in March 2021, creating the AEO designation in Ohio Revised Code Chapter 4133. It was the first law of its kind in the country, and Ohio treats AEOs and PEOs as separate models. One company cannot operate both.
Through an AEO, employers participate in a self-insured workers' compensation program managed by an experienced partner. At HR Butler, that means helping manage claims, compliance, and reporting, coordinating the payroll-related processes tied to the program, and supporting Ohio unemployment services. You can see how it works on our AEO workers' comp page.
Both models take administrative work off your plate. The difference is what you're buying and how much support you get where it counts.
A PEO can be a great fit at the right stage. This is not about one model being bad, but some owners run into the same frustrations:
If that sounds familiar, it may be time to compare your options.
Which model is right for you?
If workers' comp is the part of your business that frustrates you most, an AEO deserves a serious look. Slow claims, unpredictable premiums, and not knowing who to call are exactly the problems this program is built to reduce.
With an AEO, you get a self-insured workers' comp program, hands-on claims support, and legal backing when a claim needs to be challenged, without buying an all-in-one HR bundle you may not need. If you already have payroll and HR covered, an AEO lets you fix the one piece that's causing the trouble.
A PEO can still make sense if you have a very small team, no internal HR help, and want one vendor running the entire employment cycle. But if your frustration is claims, cost, or service, it's worth comparing before you commit to a bundle.
Whichever way you lean, these questions are worth asking any provider:
For more than 40 years, Columbus-based HR Butler has helped Ohio employers with payroll, HR, and benefits. Our AEO program brings that same service-first approach to workers' comp: faster claims handling, real people who know your situation, and support when you need to navigate or fight a claim.
Workers' comp should protect your business, not create more stress. For many employers, the first step is simply knowing there is another option.
Not sure whether a PEO or an AEO makes sense for you? Contact the HR Butler team, and we'll walk through it together.