What is a PEO?
A Professional Employer Organization (PEO) is a company which contractually assumes and manages critical human resource and personnel responsibilities and employer risks for its small to mid-sized businesses by establishing and maintaining an employer relationship with worksite employees.
Who uses employee leasing/PEO?
The average client of a PEO is a small business with 16 worksite employees, though larger businesses also find value in a PEO arrangement. These small business customers include every single type of business from accountants to small manufacturers and every profession in between including doctors, retailers, mechanics and more.
How many Americans are employed in a co-employment PEO arrangement?
PEOs are operating in all 50 states and the average PEO continues to grow more than %20 each year. Today, it is estimated there are 700 PEOs responsible for generating more than $43 billion in gross revenues.
How does an employee leasing/PEO arrangement work?
Once a client company contracts with a PEO, the PEO will then employ the client’s worksite employees. In the relationship among a PEO, a worksite employee, and a client, there exists a co-employment relationship in which both the PEO and client have an employment relationship with the worker. The PEO and client company responsibilities and liabilities. The PEO assumes responsibility and liability for the “business of employment” such as risk management, personnel management, human resource compliance, and payroll & employee tax compliance. The client company retains responsibility for and manages product development and production, business operations, marketing, sales, and service. The PEO and the client will share certain responsibilities for employment law compliance. As a co-employer, the PEO will often provide a complete human resource and benefit package for the worksite employees.
How does employee leasing/PEO differ from a staffing company?
While the terminology is at times used interchangeably, there is actually a difference between these two services. Under the conditions of a PEO arrangement, the partnered Professional Employer Organization (PEO) takes upon itself the employer responsibilities of such facets employment as payroll, benefits administration, human resources management, and workers’ compensation. The PEO also, in many cases, provides access to such services as health insurance, retirement plans, and other such benefits. Should the PEO partnership be dissolved for any reason, the original employer retains their employees and resumes the aforementioned responsibilities.
In contrast, true employee leasing or staffing provides temporary employees who are actually employed by the leasing or staffing agent. These individuals are wholly governed and employed by the respective leasing agent and are assigned to the client for a specified period of time. When this period of time expires, or the relationship be dissolved prematurely, the employees return to the leasing agent taking with them their experience and knowledge. This circumstance generates little to no equity in the employees.
Will I lose control of my business?
No. The Professional Employer Organization (PEO) and the client become partners in the employment of the workers. The client retains ownership and management of the company.