Professional Employer Organizations (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.