This is a staffing service, which is contracted to handle the risks at the workplace and responsibilities of an employer. Employees get co-employed by PEO; The Professional Employer Organization, is responsible for actions such as remittance of payroll remittance taxes and payroll checks.

How it works

More than 800 PEOs in the U.S. provide a variety of services to between 156,000 and 180,000 small and medium-sized companies employing 2.7 to 3.4 million people. As a co-employer, the PEO becomes the legal and tax-related employer for the employees of all client companies.

This allows the PEO to negotiate more expansive and less expensive benefits, workers’ comp, and unemployment insurance rates while offering state-of-the-art administrative services. The average client of a PEO, according to the National Association of Professional Employer Organizations (NAPEO), is a small business with 19 employees.

Remote based organizations are beginning to use PEO to hire in a country where they do not have an entity. The great advantage of a PEO, is the fact that employers are able to hire candidates from anywhere without any boundaries and also be compliant with the laws within the specific country.