What is a PEO?
A PEO (Professional Employer Organization) is a company that provides an integrated, cost-effective solution to the management of employee administration and human resources. The PEO and the business owner enter into a contractual arrangement whereby both share certain employer responsibilities. The business owner retains full control of the company, concentrating on growing the business and managing day-to-day operations, while the PEO takes on the administrative role including payroll, human resources, benefits administration, and regulatory compliance.

Who uses a PEO?
The typical client of a PEO is a small or medium sized business; however PEO services can benefit any size company. Whether you have one employee or hundreds, a PEO can help relieve you from the burden of employee and human resource management, allowing you to concentrate on growing your business.

How does a PEO arrangement work?
In the arrangement between a PEO, a worksite employee, and a client company, there exists a joint-employment relationship in which both the PEO and the client company assume certain employer rights, responsibilities, and risks. The PEO assumes the responsibility for personnel management, human resources, and benefits and payroll administration. The client company controls the business activities and the day-to-day management and directions of its employees.

Why would a small business use a PEO?
Small business owners need to focus their time and energy on the ‘business of their business’ and not on the ‘business of employment’. According to the Small Business Administration, only 20% of start-up companies survive beyond 5 years. One reason is because many small business owners are not prepared for the onslaught of tasks entailed in employee administration, nor do they have the necessary human resources training, payroll and accounting skills, knowledge of regulatory compliance, or the backgrounds in risk management, insurance and employee benefits needed to meet the demands of being an employer. These tasks divert the business away from what made them a success in the first place—growing their business.

Does the business owner lose control of his or her business?
As joint-employers, the PEO and business owner become partners in the employment of the worksite employees. The client retains full ownership of the company and continues the daily supervision and direction of the employees. The PEO is responsible for payroll and benefits administration, risk management, regulatory compliance, and all other human resource-related functions. By shifting these responsibilities to the PEO, the client is able to focus on the revenue-generating aspects of their business.

Why would the worker of a business want a PEO as an employer?
Workers seek financial security, quality health insurance, and a safe working environment. PEOs provide Fortune 500 quality employee benefits including, health insurance, 401(k) savings plan, and workplace risk management. Job satisfaction and productivity increase when workers are provided with access to more comprehensive and affordable benefits and quality human resource services.

What is the future of the PEO industry?
PEOs are responsible for over $18 billion in employee wages and related benefits, and over 2 million Americans are currently co-employed in a PEO arrangement. The PEO industry is in demand as business owners seek solutions to the increasingly complex ‘business of employment’. According to the Wall street Journal, PEOs are among the 10 fastest growing industries in America— this clearly an idea whose time has come.