A professional employer organization (PEO) is a company that moves right into a joint-employment partnership using a company by leasing employees to this company, thereby allowing the PEO to talk and also manage many employee-related duties and obligations. The benefits of this are that companies are able to outsource their human resource functions, including payroll, insurance, and benefits administration, workers’ compensation, and employment taxation, among others.
PEOs typically act as professional employer of their customers’ staff members. Your client-provider reviews its salary below the PEO’s national employer identification number (FEIN) and employee accountability changes to the PEO. Businesses benefit economies of scale from having additional positive aspects alternatives, sometimes at lower charges.
Depending on the PEO as well as the contract, some or all the HR functions may be outsourced. An administrative services outsourcing (ASO) contract gives choices for businesses that aren’t interested in co-employment but need some outsourcing positive aspects.
PEOs can be of help to small businesses, especially if they lack the resources and expertise needed to handle payroll, personnel and human resource functions.
In some cases, PEO’s hold benefits, especially in the case of a small employer who does not require a broad range of HR experience or systems ability to manage payroll and HRIS functions, but just needs the available resources and time focused on focusing on the transactional HR functions.
HR can be relieved of the following responsibilities by a PEO:
- Administration of benefits
- Recruitment and selection of employees
- Administration of payroll
- Administration of unemployment
- Administration of workers’ compensation
- Assistance with compliance
- Programs for drug testing
- Family and Medical Leave Act administration