PEO stands for Professional Employer Organization. A PEO allows business owners to outsource many of the administrative functions associated with human resources (HR), such as payroll, compliance and employee benefits administration.
There are various ways to structure an administrative or HR outsourcing arrangement, and most full-service PEOs can structure their offering to match the client's needs. One outsourcing structure unique to PEOs is co-employment.
What is co-employment?
In a co-employment relationship, the PEO becomes the employer of record for the client's workers, assuming much of the responsibilities (and sharing the risks) of the company’s complex employment matters. The client company remains responsible for its core business functions, like product development and production, business operations, marketing, sales and service, and still retains all the authority to direct employees’ day-to-day activities. In the past co-employment was often synonymous with the term "employee leasing," but as the PEO industry has evolved co-employment has become the preferred term.
The PEO and the client company share some responsibilities for complying with employment statutes. A full service PEO can assume much of the administrative responsibilities and liabilities associated with being an employer.
How many Americans do PEOs employ?
An estimated 2 and 3 million Americans are currently co-employed in a PEO arrangement. There are about 700 PEOs operating in the U.S. today. PEOs retain 86 percent of their clients because the majority of client companies are very satisfied with these arrangements.
G&A Partners currently co-employs some 25,000+ employees across the country.
The average PEO has grown at a rate of more than 20 percent per annum for each of the past six years. Why? Because the service helps their clients grow.
How do PEOs help clients control costs and have more time to grow their businesses?
A PEO’s economy of scale allow client companies to reduce employment costs and increase their bottom line. The PEO saves the client company time by handling routine HR and administrative tasks. The PEO can also provide assistance with key compliance issues, mitigating the client’s vulnerability to many liabilities.
What kinds of companies use PEOs?
PEOs can help a wide range of businesses–from contractors and manufacturing companies to high-technology companies and service organizations.
Learn why a PEO might be right for your organization or contact us for questions about getting started with G&A as your professional employer program.