What is a Professional Employer Organization?

A Professional Employer Organization (PEO) helps client companies cost-effectively outsource the management of payroll, workers' compensation, human resources and employee benefits. PEOs help clients focus on their core competencies to maintain and grow their bottom line.

Businesses today need help managing increasingly complex employee related matters such as health benefits, workers' compensation claims, payroll, payroll tax compliance, and unemployment insurance claims. Engaging a PEO enables companies to share these responsibilities and provide expertise in human resources management. This allows PEO clients to focus on the operational and revenue-producing side of their business.

PEO companies provide an integrated service to effectively manage human resource responsibilities and employer risks for their clients. A PEO delivers these services by establishing and maintaining an employer relationship with the employees at the client's worksite and by contractually assuming certain employer rights, responsibilities and risk.

Richard Goldman explains the value of a Professional Employer Organization - PEO

Professional Employer Organizations have thrived because they have helped their client companies succeed by providing:

• Improved employment practices, compliance and risk management to reduce liabilities.
• Relief from the burden of employment administration.
• A wide range of personnel management solutions through a team of professionals.
• Access to a comprehensive employee benefits package, allowing clients to be competitive in the labor market.

Definition provided courtesy of the National Association of Professional Employer Organizations - NAPEO.