In a PEO relationship, the PEO and the business owner share certain employer responsibilities and liabilities. For example, the business owner remains in control of the business and continues to manage the day-to-day operations including hiring, firing, promotion and demotion of employees.

Behind the scenes, the PEO assumes responsibilities and liabilities for payment of wages and compliance with all rules and regulations that govern the reporting and payment of federal and state taxes on wages paid to employees. The PEO also shares liabilities related to labor law, Worker's Compensation claims, Unemployment claims and benefits administration.

The Internal Revenue Service recognizes the PEO as the employer of record for federal income and unemployment taxes. Also, most states recognize the PEO as the employer for State Unemployment Tax purposes and as the employer of work site employees for purposes of providing Workers Compensation coverage.

"PEOs are becoming one-stop shops for business owners eager to outsource all their HR functions and focus instead on their core business. … PEOs make the most sense for business owners who can’t afford a dedicated human resources staff and don’t have the time to handle day-to-day HR issues themselves.”
“Fed Up with HR?” Inc. Magazine, May 2006

It’s important to remember, however, that in a PEO relationship the PEO works for the business owner, not the other way around. A PEO typically won't commit the owner to long-term contracts and doesn't charge them a fee or penalty for leaving their service. The result is that the PEO relationship is simple to get into and to get out of.

To find out how a PEO can help your business or to receive competitive rates to compare with your current PEO contact EmployHR.com today. You can also take a moment to complete our simple online proposal request form.