Is a Client Service Agreement the same as an employment contract?

No. The CSA is between the PEO and the client company and governs how they share employer duties. The employment contract is between the employer of record and the worker. In co-employment, worksite employees may also sign onboarding documents that name both the PEO and the client.

Who signs the Client Service Agreement?

The PEO and the client company sign it. Employees are not parties to the CSA, though its terms shape how they are paid, what benefits they receive and who handles their HR matters. The CSA sits above the individual employment paperwork as the master agreement for the relationship.

What should a client check in a CSA before signing?

The scope clauses, which say exactly which functions the PEO assumes, and the liability clauses, which say who carries risk if compliance fails. A client should also confirm fees, the term and exit terms, and whether the PEO is certified, since that can affect certain tax treatments.

Does an Employer of Record use a Client Service Agreement?

Not usually. The CSA is the contract for PEO co-employment. An Employer of Record arrangement uses its own service agreement, because the EOR is the sole legal employer and does not share employer status with the client the way a PEO does under a CSA.

Glossary

Client Service Agreement

A Client Service Agreement (CSA) is the master contract between a Professional Employer Organisation and its client that sets out how employer responsibilities are divided, which HR and compliance functions the PEO takes on, and how liability is allocated between the two co-employers.

Reviewed by Teamed's in-house employment-law team·Last updated 28 July 2026

What is Client Service Agreement?

A Client Service Agreement, or CSA, is the contract that governs a co-employment arrangement between a Professional Employer Organisation (PEO) and a client company. It defines which employer responsibilities each party holds, so that both know who runs payroll, who files employment taxes, who administers benefits and who directs day-to-day work.

The CSA is what legally creates the co-employment relationship. Its scope clauses determine which functions the PEO assumes and which stay with the client, and its liability clauses set out who carries the risk if something goes wrong. Because those clauses decide where responsibility sits, the detail of the CSA matters more than the label on the arrangement.

A CSA is specific to the PEO co-employment model, which is most common in the United States. It is not the same as the agreement used in an Employer of Record arrangement, where a single entity is the sole legal employer in a country and no employer responsibilities are shared with the client.

What does a Client Service Agreement cover?

A CSA sets out the division of employer duties: which party runs payroll, files employment taxes, administers benefits and handles compliance, and which party directs the workforce day to day. It also allocates liability between the PEO and client and defines the scope, fees and term of the arrangement.

Why do the CSA's scope clauses matter?

Because they decide which compliance risks the PEO takes on and which remain with the client. A function that is not clearly assigned to the PEO usually stays the client's responsibility. Reading the scope and liability clauses closely, before signing, is how a client learns what protection the arrangement actually provides.

How does a CSA differ from an EOR agreement?

A CSA governs shared employer status under co-employment, where the client keeps part of the employer role and liability. An Employer of Record agreement transfers full legal employer status to a single entity in a country, so the client shares no statutory employer responsibility there. The documents reflect two different models.

Key facts

The CSA creates co-employment: The Client Service Agreement is the document that legally establishes the co-employment relationship between a PEO and its client, and its scope clauses determine which compliance risks remain with the client.Source: ADP· verified 2026-07-28

Frequently asked questions

Is a Client Service Agreement the same as an employment contract?
No. The CSA is between the PEO and the client company and governs how they share employer duties. The employment contract is between the employer of record and the worker. In co-employment, worksite employees may also sign onboarding documents that name both the PEO and the client.
Who signs the Client Service Agreement?
The PEO and the client company sign it. Employees are not parties to the CSA, though its terms shape how they are paid, what benefits they receive and who handles their HR matters. The CSA sits above the individual employment paperwork as the master agreement for the relationship.
What should a client check in a CSA before signing?
The scope clauses, which say exactly which functions the PEO assumes, and the liability clauses, which say who carries risk if compliance fails. A client should also confirm fees, the term and exit terms, and whether the PEO is certified, since that can affect certain tax treatments.
Does an Employer of Record use a Client Service Agreement?
Not usually. The CSA is the contract for PEO co-employment. An Employer of Record arrangement uses its own service agreement, because the EOR is the sole legal employer and does not share employer status with the client the way a PEO does under a CSA.

Related terms

Note

This is general information, not legal advice. Statutory rules vary by country and change over time.

Glossary

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Last verified 2026-07-28