Professional employer organization

From Free net encyclopedia

A Professional Employer Organization, or PEO, is a type of business that allows outsourcing of human resources functions, mainly for small to mid-sized business who do not have the need or resources for a dedicated department.

Typically, a PEO will lease a companies current employees. This practice is also known as employee leasing or staff leasing.

PEOs hire your current employees and lease them back to you. You continue business as usual, but the PEO takes care of your employee hassles and paperwork. You keep your current employees, hire and fire whomever you want through the PEO.

PEOs usually sign a Professional Services Agreement with clients which outlines the terms of the leasing contract and how the various employment-related liabilities and obligations are to be shared. The PEO Company assumes responsibility for all payroll obligations, health benefits, welfare and retirement benefits being optional additional services which can also be contracted, as well as all the associated administrative paperwork.

The PEO also issues checks usually drawn on the clients' bank accounts and receives an agreed professional services fee from their clients. A leased employee is a worker who is essentially rented on a long-term basis from a PEO Company that is responsible for employing the worker, paying the salary or wages and taxes and providing benefits for that employee. Under a typical agreement, an employer contracts with a PEO Company and dismisses some or all of its employees who are hired by the Professional Employer Organizatoin and then leased on a long term basis to the original employer.

Most Professional Employers also provide human resource management for leased employees. Establishments in this industry usually operate in a co-employment relationship with client businesses or organizations and are specialized in performing a wide range of human resource and personnel management duties, such as payroll accounting, payroll tax return preparation, benefits administration, recruiting and managing labor relations. Professional Employment Organizations or PEO establishments exercise varying degrees of decision making relating to their human resource or personnel management role, but do not have any management accountability for the work of their clients' operations with regard to day to day work activities, strategic planning, output or profitability.

PEO's provide four integrated services through co-employment. 1. Human Resource Compliance 2. Risk Management 3. Benefits Administration 4. Payroll.

Employees gain access to benefits such as group health, 401(k) plans, cafeteria 125 plans, life and dental insurance options. Many PEO's offer even more value adding benefits and services to help you and your employees succeed.Template:Business-stub