PEO
Business & Finance abbreviation · Human Resources
| Stands for | Professional employer organization |
|---|---|
| Categories | Business & Finance |
PEO stands for Professional employer organization, a human resources abbreviation.
Company that enters a co-employment relationship with small and midsize businesses, taking over payroll, tax filing, benefits and workers' compensation while the client directs daily work. Pooling many clients' employees lets small firms offer large-group health plans.
Example: We joined a PEO, and our 14 employees now have the same benefits as a big company.
Usage notes
Since 2017 the IRS has run a certification program for PEOs (CPEOs), created by 2014 legislation, which clarifies responsibility for payroll taxes. Leaving a PEO can be disruptive because benefits plans belong to the PEO, not the client. A PEO differs from an employer of record, which becomes the sole legal employer.