Finally, an important first step for attorneys who counsel businesses that are PEO clients is to determine whether the PEO with whom your client works is an IRS-certified PEO (CPEO). Using the right-to-control test, the typical PEO client clearly would qualify as the common-law employer of the client company's employees because the PEO client maintains control over their day-to-day work. In the United States today, there are 487 professional employer organizations (PEOs) that provide human resources, payroll, and employment tax services to approximately 173,000 small and mid-sized businesses employing nearly four million worksite employees.[1] PEOs are attractive to small and mid-sized businesses, in part, because a PEO-client relationship allows each party to focus on its area of expertise: business owners focus on running their businesses, while PEOs handle the administrative side of things.[2] In addition to the time gained by outsourcing the administrative burdens of payroll processing, human resources administration, and employment tax compliance, PEOs tout cost savings on benefits, workers' compensation, and unemployment insurance as an additional benefit of PEO use. [Extracted from the article]
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