Professional employer organization

Service provider of outsourced human resource management / From Wikipedia, the free encyclopedia

A professional employer organisation (PEO) is an outsourcing firm that provides services to small and medium-sized businesses (SMBs). Typically, the PEO offering may include human resource consulting, safety and risk mitigation services, payroll processing, employer payroll tax filing, workers' compensation insurance, health benefits, employers' practice and liability insurance (EPLI), retirement vehicles (401(k)), regulatory compliance assistance, workforce management technology, and training and development. The PEO enters into a contractual co-employment agreement with its clientele. Through co-employment, the PEO becomes the employer of record (EoR) for tax purposes through filing payroll taxes under its own tax identification numbers. As the legal employer, the PEO is responsible for withholding proper taxes, paying unemployment insurance taxes and providing workers’ compensation coverage.

As of 2017, industry gross revenues in the United States were estimated to be over US$174 billion annually.[1] In 2017, there were 907 PEOs operating in the United States alone, servicing 3.7 million worksite employees (WSEs), which were spread over approximately 175,000 PEO clients.[2]