Hiring talent within the U.S. can be complicated, especially when H-1B employees are involved. Many companies evaluating global or distributed hiring models find two popular options: PEO (Professional Employer Organization) and EOR (Employer of Record) services. 

But when it involves H-1B workers, the two models work very differently. 

The blog answers the core question-What’s the difference between PEOs and EORs for H1B hiring? -along with related sub-questions that founders and HR teams commonly ask. 

What is a PEO, and how does it work? 

A PEO, or Professional Employer Organization, is an organization that co-employs with your business in a form of partnership. This means: 

• You remain the official employer 

• The PEO handles HR, payroll, benefits, and compliance assistance 

• Certain employment responsibilities are shared by both you and the PEO 

Therefore, a PEO is ideal for organizations that already have a legal entity in the U.S. and want to outsource administrative HR tasks. However, it cannot serve as a legal employer for visa purposes. The U.S. government must see, for immigration purposes, your company as the real employer.

How does an EOR differ from a PEO? 

The EOR becomes the worker’s employer of record in a paper sense. This means that the EOR handles: 

• Employment contracts 

• Payroll and tax compliance 

• Compulsory insurance 

• Local labor-law compliance 

• Risk & liability 

You still manage the employee’s day-to-day work, but in the eyes of the law, the EOR becomes the employer. 

EORs are commonly used when: 

• You don’t have a U.S. entity 

• You want to hire quickly without setting up a company 
• You require assistance in navigating through intricate local laws. 

Can a PEO sponsor or manage H-1B visas? 

No, PEOs cannot sponsor or file H-1B visas. Because a PEO is not the employer of record, it cannot petition for or hold immigration sponsorship in its name. For any H-1B employee hired through a PEO: 

• Your company must file the H-1B petition 

• Your company must meet the USCIS employer requirements. 

• The PEO cannot be listed as the petitioner 

As stated by USCIS, an H-1B employer has to prove the element of having control over the employee with regard to work, pay, and supervision. 

Can an EOR sponsor or manage H-1B visas? 

Generally, no EORs cannot sponsor H-1B visas either. This is because the U.S. immigration system requires that the sponsoring employer: 

• Directly control the employee 

• Provide specialty occupation work 

• Meet wage-level requirements 

• Show the employer–employee relationship 

Since the EOR is not the actual worksite manager or skill-based supervisor, USCIS usually denies EOR-based H-1B petitions. However, EORs can compliantly hire: 

• Green card holders 

• U.S. citizens 

• Permanent residents 
• Work-authorized visa employees (EAD, OPT, etc.) 

Why do companies confuse PEOs and EORs for H-1B hiring? 

Because both PEOs and EORs: 

• Handle payroll 

• Provide compliance support 

• Offer HR outsourcing 

But only EORs become the legal employer, while PEOs do not. 

This confusion grows because, outside the U.S., global EORs can serve as visa sponsors in certain countries. 

However, both the PEO and EOR models have immigration limitations for U.S. H-1B hiring. 
A 2024 industry analysis by the National Association of Professional Employer Organizations found that PEO services are designed primarily to reduce HR costs and ensure compliance, not to provide immigration sponsorship.