What is a Professional Employer Organization (PEO)?

A Professional Employer Organization (PEO) provides outsourcing of payroll, workers' compensation, human resources and employee benefits administration.

How does a PEO work?

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

How are PEOs compensated?

PEOs charge a service fee for managing the human resource and payroll functions of the client company. This fee is in addition to the normal employee overhead costs, such as the employer's share of Medicare and unemployment insurance withholding.
 

Are there other ways a PEO can save its clients money?

Yes. PEOs benefit from aggregation of employee headcount: by combining the employees from multiple clients, they qualify for lower premiums on health insurance plans, voluntary benefit programs, insurance and HR infrastructure.

What is a PEO?
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Fast Fact

PEO was the fastest growing service in the United States during the 1990's.