The simplest answer to this question would be an “administrative employer” or a “co employer”.

A PEO is not an employment agency, nor is it a payroll company. PEOs offer a total solution to employee management by replacing the majority of Human Resources by a team of specialists. Services can include:

  • IRS Payroll Taxes & Reporting
  • Crafting Benefits Program
  • Legal Counseling
  • Employee Policies & Management
  • Government Regulatory Compliance
  • Arbitration and Employee Dispute Resolution
  • Safety and OSHA compliance
  • Managing Unemployment & Work Comp claims and payments
  • Workers Compensation & Occupational Accident Coverage at reduced premiums
  • Being a resource of Work Comp for those difficult to place industries which a regular Work Comp carrier may not be willing to write.

Without overwhelming detail, it means a Professional Employer Organization, also known as a Staff Leasing Company, or Employee Leasing Company, is a company who contracts with a client to manage the administrative side of employment. Typically that includes Payroll Services,¬†Health Insurance, Employee Benefits, HR, Workers’ Compensation and Risk Management.

Employees become a part of a larger pool of employees which allows the PEO to purchase Workers’ Compensation and Employee Benefits at a greatly reduced premium due to their large pool of employees.

PEOs allow companies to stay in compliance with State and Federal regulatory laws, IRS Payroll Tax issues, COBRA, HIPPA, ERISA by the co-employment agreement.

A common misconception is that the company will lose control over their employees if they contract with a PEO.

This is never the case. The company never relinquishes control over their employees, nor do they have to consult with the PEO in the day to day management of their employees. The PEO serves as an advisory board, and brings their expertise to implementing policies and procedures, HR benefits, and shares employer liabilities with the company.

The last category, i.e. Employment Practices Liabilities, is one of the most overlooked liabilities from an employer’s viewpoint. Most employers believe there will never be a discrimination lawsuit.¬† But, the majority of claims brought about in a discrimination lawsuit or employment practices lawsuit do make it to court, and damages are awarded. Such court battles and damages are usually crippling for a company. This is where a PEO’s experience in HR management comes into play.

To learn more about how a PEO can help your business, call 832-434-1406 or email info@peotexas.com