What is a Professional Employer Organization (PEO)?
A Professional Employer Organization, or PEO, is a firm that handles payroll, benefits administration, and HR compliance for client companies under a co-employment model, where the PEO becomes the employer of record for tax and insurance purposes.
Why does a Professional Employer Organization (PEO) matter?
Small and mid-sized businesses use a PEO to access enterprise-level benefits and offload compliance risk without building an internal HR and payroll department from scratch.
How does a Professional Employer Organization (PEO) work?
The client company and PEO enter a co-employment agreement; the PEO handles payroll processing, benefits enrollment, workers’ compensation, and regulatory compliance, while the client retains control over hiring, firing, and day-to-day work direction.
Frequently asked questions
Is working with a PEO the same as outsourcing HR?
It’s closely related; a PEO takes on employer-of-record responsibilities specifically, which goes further than a typical HR outsourcing arrangement that doesn’t involve co-employment.
Who is the employer when using a PEO?
Both the client and the PEO share employer responsibilities under co-employment, with the PEO typically handling payroll tax and benefits administration and the client directing daily work.
How BrightMove helps
BrightMove works alongside PEO partners, keeping candidate and employee records in your ATS in sync with the PEO handling payroll and benefits. Explore BrightMove for staffing agencies.