What is a PEO

The initials PEO stand for Professional Employer Organization. A PEO is not a staffing agency or a payroll service. A PEO serves as an outsourced Human Resources department for businesses.

The forerunner to PEOs was Employee Leasing. Originally developed in the 1970's, Employee Leasing was utilized by companies looking for a way to decrease certain business risks such as costs associated with high turnover and worker-related injuries. By the 1980's a new business evolved as an outgrowth of Employee Leasing; the new business of HR Outsourcing became known as Professional Employer Organization's (PEOs). As a testament to the need and desire for these services, during the 1990's, PEOs became recognized as the fastest growing business service by the Harvard Business Review. PEOs have become a viable solution for companies who wish to outsource their Human Resources back office functions, while maintaining or increasing the quality of benefits and services for their staff.

PEOs provide services to a client company after entering into a co-employment relationship. This co-employment relationship allows the PEO to contractually assume certain employer rights, responsibilities and risks.

A relationship with a PEO allows you to focus on your business rather than be burdened with the administrative tasks related to employment.