78 LAWYER MONTHLY JULY 2023 What is a professional employment organisation, or 'PEO'? A professional employment organisation (PEO), also known as an employee leasing company or employer of record, is a thirdparty organisation that provides comprehensive outsourced human resource (HR) services and other business administration responsibilities for their client companies. The relationship between the PEOs and the client companies is governed contractually, setting forth the coemployment scope as well as the specific responsibilities and functions. While the breadth of PEO services and the nature of the co-employment relationship can vary among providers depending on the co-employment arrangement, generally the PEO becomes the employer of record for purposes of payroll, benefits administration, and related HR tasks. This means that the PEO is responsible for payroll processing, tax withholding and reporting, employee benefits administration (including health insurance, retirement plans and workers' compensation coverage) and compliance with employment laws and regulations. The client company, on the other hand, retains control over its core business operations, such as day-today supervision of employees and operational decision-making. The idea is that the PEO adds value by leveraging its expertise and resources to manage the admin functions more efficiently and effectively, leaving the client company to focus on its operations. How do these companies operate, and what distinguishes them from temporary staffing agencies? PEOs and temporary staffing agencies are often conflated, mainly because they both deal with similar segments of general labour, light industrial, warehouse and logistics matters. However, what distinguishes PEOs from temporary staffing agencies is the Working With PEOs: Thought Leader Professional employment organisations, or ‘PEOs’, offer many benefits to client companies through the utilisation of its employees’ expertise. However, a PEO’s unique structure often complicates matters when it comes to workers’ compensation. In this article, a workers’ compensation and employment law attorney, CB Everett, of CBE Law Group, offers his insight and experience into PEOs when it comes to workers’ compensation and employment liability matters. Employment Law and Workers' Compensation Challenges
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