Frequently Asked Questions
The PEO and client company share and allocate responsibilities and liabilities. The PEO assumes much of the responsibility and liability for the business of employment, such as risk management, human resource management, and payroll and employee tax compliance.
The client company retains responsibility for and manages product development and production, business operations, marketing, sales, and service. The PEO and the client will share certain responsibilities for employment law compliance. As a co-employer, the PEO will often provide a complete human resource and benefit package for worksite employees.
The professionals at the PEO can provide critical assistance with employer compliance, which helps protect the client against liability. In addition, the PEO provides time savings by handling routine and redundant tasks for its clients. This enables the business owner to focus on the company’s core competency and grow its bottom line.
As the employer for employment taxes and employment benefits, PEOs assume responsibility and liability for payment of state unemployment taxes. Most states recognize the PEO as the employer for UI purposes. Many states also recognize the PEO as the employer of worksite employees for purposes of providing workers’ compensation coverage.
Additionally, PEOs provide worksite employees with coverage under the entire spectrum of employment laws and regulations, including federal, state, and local discrimination laws, Title VII of the 1964 Civil Rights Act, Age Discrimination in Employment Act, ADA, DMLA, HIPPA, Equal Pay Act, and CORBA. In some cases, these laws would not apply to workers at small business without the PEO relationship, since many statutes have exemptions based upon the number of workers in a work force. Once included in the PEO’s workforce, the workers are protected by these laws.
See http://www.napeo.org/findapeo/faqs.cfm for full text.