Employee leasing introduction

Managing employees can be a costly and time-consuming job. More importantly, if you operate a business without an experienced HR professional on staff, you could put the company at risk. A Professional Employer Organization (PEO) can provide employee leasing services to relieve your company of its administrative and legal burdens and becoming a co-employer of your personnel.

As a co-employer, a PEO vendor becomes the legal "employer of record" for all of your employees. Under this arrangement, the PEO vendor technically hires your employees and leases them back to you - hence the term "employee leasing". They use their own tax ID to submit payroll records and file taxes, offer benefits, and secure workers' compensation insurance. They also assume liability for your company's employment practices, HR employee handbooks, and compliance with all federal and state labor regulations.

In addition to taking on legal risks and responsibilities, employee leasing services can help you save money and streamline your human resources operations - whether you have overworked HR staff in-house or no HR at all. In turn, you can spend more time focusing on managing your business.

How does PEO differ from HRO?

Human Resources Outsourcing (HRO) providers are similar to PEO services in that both help relieve the administrative and financial burden of managing your company's payroll, benefits, and employee manuals. However, HRO providers do so as third-party consultants and are not co-employers of your staff. For more information, read our HR Outsourcing Buyer's Guide.

This BuyerZone Employee Leasing Buyer's Guide will explain the full range of services a PEO provides, how the co-employer agreement works, the benefits and disadvantages, and how to choose the right PEO vendor.