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A professional employer organization (PEO) is an employment relationship in which a single company oversees functions such as HR services, administrative services, training and development, and/or employee benefits administration for a group of small to mid-size businesses. PEO services are sometimes also known as employee leasing, as the client company remains in control of managing the actual work performed by employees while the PEO handles most administrative functions.
By pooling employees from several organizations into one group, a PEO can negotiate better rates on healthcare benefits packages, workers compensation coverage and insurance, short-term unemployment insurance, and more. Other common PEO offerings might include handling regulatory compliance, payroll services, and tax filings, including employment taxes.