A professional employment organisation (PEO), also known as an employee leasing company or employer of record, is a third-party organisation that provides comprehensive outsourced human resource (HR) services and other business administration responsibilities for their client companies. The relationship between the PEOs and the client companies is governed contractually, setting forth the co-employment scope as well as the specific responsibilities and functions.
While the breadth of PEO services and the nature of the co-employment relationship can vary among providers depending on the co-employment arrangement, generally the PEO becomes the employer of record for purposes of payroll, benefits administration, and related HR tasks. This means that the PEO is responsible for payroll processing, tax withholding and reporting, employee benefits administration (including health insurance, retirement plans and workers’ compensation coverage) and compliance with employment laws and regulations.
The client company, on the other hand, retains control over its core business operations, such as day-to-day supervision of employees and operational decision-making. The idea is that the PEO...
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