PEO stands for “Professional Employer Organization,” which is an entity that contractually assumes and manages critical human resource responsibilities and employer risks for small to mid-sized businesses by establishing and maintaining a “co-employer” relationship with their worksite employees. Nothing changes operationally and the employees still remain under the direction and control of the client company. The main difference is that client-company and employees now have the PEO to process and administer all payroll and HR functions.

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