What is a professional employer organization (PEO)?

If you are not familiar with the term “PEO,” the first question that usually comes to mind is, “What is a PEO?” A PEO company, or professional employer organization, is defined as a business entity that provides human resources outsourcing services to client companies through the use of a co-employment relationship. The HROi PEO relationship involves a contractual allocation and sharing of employer responsibilities between HROi and the client. This shared employment relationship is often referred to as “co-employment.”

What is co-employment?

Co-employment is a relationship wherein the PEO company acts as the administrative employer and the client acts as the worksite employer. This relationship is based on a true partnership. Because of the co-employment relationship, a PEO company can help small- and medium-sized businesses achieve economies of scale that they may not be able to achieve on their own. Partnering with a comprehensive PEO company can help your business succeed.

In a co-employment relationship, what are the roles of each employer?

The following scenarios describe the roles of each employer in a PEO relationship:
  • The PEO becomes responsible for the payment of wages in the co-employment relationship, as well as the management of workers’ compensation claims and various other administrative functions related to the assigned employees.
  • The PEO handles the regulatory paperwork and compliance issues.
  • The PEO can give managers advice on proper termination procedures, proper disciplinary procedures, and more.
  • The PEO provides the client and/or its worksite employees with workers’compensation insurance and handles all unemployment claims and administration.
  • The PEO provides and administers a comprehensive benefits package including a 401(k) plan, health insurance, a Section 125 plan, voluntary insurance products, and a broad range of other employee benefits programs.
  • The client remains responsible for directing and controlling the daily activities of the employees assigned to its worksite.
  • The client remains responsible for ensuring a safe work environment.
  • The client remains responsible for keeping track of actual hours worked and reporting those hours to the PEO for processing.
  • The client is responsible for making sure payroll funds are paid to the PEO.

Can my business benefit from partnering with a PEO company?

When you partner with HROi, your business can benefit in a number of ways. You become better positioned to:
  • Focus on your core business—by removing non-revenue-producing tasks, you can spend much more time on what counts: managing and growing your business.
  • Lower expenses and increase profits—by outsourcing your human resources,benefits, and payroll administrative tasks to HROi, you can take advantage of our economies of scale and broad expertise.
  • Become an employer of choice—by providing world-class employee benefits programs for employees, you are better able to attract and retain great employees.
  • Maintain peace of mind—by protecting your business with guidance on legal compliance and improved risk management, safety support, training, and claims processing services, you gain peace of mind.