What Is a PEO?

PEOs are co-employers. The PEO relationship involves a contractual allocation and sharing of employer responsibilities between the PEO and the client. This shared employment relationship is called co-employment. As co-employers, PEOs contractually assume substantial employer rights, responsibilities and risk through their employer relationships with their clients' workers. For workers' compensation purposes, PEOs assume the responsibility of reporting payroll, claims and paying premium for the client work force (shared employees) and are recognized as the employer of record.

The client retains ownership of the company and control over its operations. The client will continue to have responsibility for worksite safety and compliance. It is still the responsibility of the client to hire, direct and guide employees on a daily basis. First Source will concentrate on employment-related issues and the client will be responsible for the actual business operations.