A professional employer organisation (PEO) is an outsourcing firm that provides services to small and medium-sized businesses (SMBs).
Typically, the PEO offering may include human resource consulting, safety and risk mitigation services, payroll processing, employer payroll tax filing, workers' compensation insurance, health benefits, employers' practice and liability insurance (EPLI), retirement vehicles (401(k)), regulatory compliance assistance, workforce management technology, and training and development.
[3] This fee is in addition to the normal employee overhead costs, such as the employer's share of FICA, Medicare, and unemployment insurance withholding.
One service provided by a PEO is to secure workers' compensation insurance coverage at a lower cost than client companies can obtain on an individual basis.
A professional employer organization (PEO) is not a staffing agency or human resources outsourcing company.
Employee leasing in the United States began in the late 1960s by three businessmen, Eugene Boffa, Louis Calmare, and Joseph Martinez.
In a case in San Antonio, Texas [13] four executives were convicted of siphoning $133 million from the three PEOs they owned and operated.
In 2014, the United States Congress enacted sections 3511 and 7705 of the Internal Revenue Code, provisions that include special definitions and rules related to the Federal tax treatment of a "certified professional employer organization.
[15] In 2004, President George W. Bush signed into law the SUTA Dumping Prevention Act of 2004, which requires that all 50 states enact anti-SUTA-dumping legislation by 2007.
As part of the industry's self-regulation efforts, an independent accreditation body, the Employer Services Assurance Corporation (ESAC), was formed in 1995.
In 2012, according to National Association of Professional Employer Organizations (NAPEO), there are now approximately 700 PEOs operating in all 50 states.
NCCI, the National Council on Compensation Insurance, sees this as a "Mod Neutral" action since the median average does not change.