Professional Employer
Organization (PEO)
A professional employer organization (PEO) is a firm that provides a service under which an employer can outsource employee management tasks, such as employee benefits, payroll, workers’ compensation, recruiting, risk/safety management, and training and development. The PEO does this by hiring a client company’s employees, thus becoming their employer of record for tax purposes and insurance purposes. This practice is known as joint employment or co-employment.
Through employee leasing, the PEO assumes your employee related responsibilities and risks for workers’ compensation, unemployment, payroll and payroll taxes under what is called a co-employment agreement. Under this agreement, the PEO helps with all HR needs and company benefits. They maintain all personnel files, employee records, documentation and provide you with direct access to support staff.
By outsourcing these responsibilities, you can spend more time and resources to revenue producing activities such as product development, sales, marketing and customer service.
In a co-employment relationship, the PEO will act as the administrative employer and the business acts as the worksite employer. The employer maintains control of the business and is in charge of all business decision-making including employee supervision and staffing decisions. The PEO handles the time-consuming administrative tasks associated with the employment relationship.
Your business is responsible for providing the funds to cover payroll and payroll taxes, the PEO administers payment of wages to employees and tax payments to the appropriate agencies.
One of the responsibilities of a PEO is to provide your business with guidance and education regarding employment laws and regulations. Ultimately, the responsibility for complying with most of these laws lies with the business
No. The management relationship that you have with your employees will continue.