What is a Professional Employer Organization (PEO)?
If you are not familiar with the term “PEO” the first question that usually comes to mind is, “What is a PEO?” A PEO company, or Professional Employer Organization, is defined as a business entity that provides human resources outsourcing services to client companies through the use of a co-employment relationship. The Oasis Outsourcing PEO relationship involves a contractual allocation and sharing of employer responsibilities between Oasis and the client. This shared employment relationship is often referred to as “co-employment.”
How Does the PEO Relationship Work?
The PEO company acts as the Administrative employer and the client functions as the Worksite employer. This relationship is based on a true partnership. Because of the PEO structure, a PEO company can help small- and medium-sized businesses achieve economies of scale that they may not be able to achieve on their own. Partnering with a comprehensive PEO company can help your business succeed with improved efficiency and reduced liability. For more information, view our infographic, “What Value Can a PEO Provide.”
In a PEO Relationship, What are the Roles of Each Employer?
The following scenarios describe the roles of each employer in a PEO relationship:
- The PEO becomes responsible for the payment of wages in the co-employment relationship, as well as the management of workers’ compensation claims and various other administrative functions related to the assigned employees.
- The PEO assists with regulatory paperwork and compliance issues.
- The PEO can give managers advice on proper termination procedures, proper disciplinary procedures and more.
- The PEO provides the client and/or its worksite employees with workers’ compensation insurance, unemployment insurance, Employment Practices Liability Insurance (EPLI), a 401(k) Plan, health insurance, a Section 125 Plan, voluntary insurance products and a broad range of other employee benefits programs.
- The client remains responsible for directing and controlling the daily activities of the employees assigned to its worksite.
- The client remains responsible for ensuring a safe work environment.
- The client remains responsible for keeping track of actual hours worked and reporting those hours to the PEO for processing.
- The client is responsible for making sure payroll funds are paid to the PEO.
For more PEO information, visit The Value of a PEO page.