Professional Employer Organizations (PEO)

Professional Employer Organization (PEO)

 

Professional Employer Organizations provide outsourced services primarily to small and medium-sized businesses. A PEO is designed to replace or supplement a company’s internal human resources (HR) department. When a business uses a PEO, the PEO serves as the employer of record (EOR). In most cases, co-employment exists in a PEO arrangement, with workers employed by both the client and the PEO. 

 

PEO service offerings can include:

 

• Human resource consulting

• Workforce management technology

• Recruitment and hiring

• Training and development

• Employee compensation

• Payroll processing and taxes

• Performance management

• Health benefits

• Retirement vehicles 401(k)

• Safety and risk mitigation services

• Information and documentation storage

• Employer payroll tax filing

• Workers’ compensation insurance

• Employers’ practice and liability insurance (EPLI)

• Regulatory compliance assistance

 

Examples: 

• Many startups lack funding for HR staff, so a PEO is ideal for filling that need. In some cases, a startup may have the budget for an HR department, but they lack experience managing HR services. In this scenario, working with a PEO temporarily or permanently meets the company’s needs. 

• Seasonal employers can also benefit from the PEO model because their HR management needs change throughout the year, and hiring HR staff to manage their processes is impractical. 

• Large corporations may use a PEO if it isn’t feasible to manage HR services nationally or internationally. With a PEO, businesses can ensure that they are compliant with regional laws and regulations.