Florida Association of Professional Employer Organizations

A Professional Employer Organization (PEO) is an organization that provides an integrated and cost-effective approach to the management and administration of the human resources and employer risk of its clients, by contractually assuming substantial employer rights, responsibilities, and risks and by establishing and maintaining an employer relationship with the workers assigned to its clients.

Businesses today need help managing increasingly complex employee-related matters such as personnel management, health benefits, workers’ compensation claims, payroll, payroll tax compliance, and unemployment insurance claims. Businesses contract with a PEO to assume these responsibilities, which then allows the client to concentrate on the revenue-producing side of its operations.

The PEO—

• Assigns workers to client locations, and thereby assumes responsibility as an employer for specified purposes of the workers assigned to the client locations;
• Reserves a right of direction and control of the employees and may share such responsibility with the client, consistent with the client’s responsibility for its product or service;
• Pays wages and employment taxes of the employee out of its own accounts;
• Reports, collects, and deposits employment taxes with state and federal authorities;
• Establishes and maintains an employment relationship with its employees that is intended to be long term and not temporary; and
• Retains a right to hire, reassign, and fire the employees.

The Florida Association of Professional Employer Organizations (FAPEO) commissioned a survey in 2003 to determine the size of the PEO industry. PEOs employ close to 700,000 employees, serve over 50,000 companies, and pay $17 billion in payroll, making the PEO industry one of the largest employers in the state of Florida.

PEOs develop lasting relationships with their clients. Due to strong client satisfaction, PEOs enjoy a nearly 86 percent client retention rate, and the average NAPEO member has grown more than 20 percent for each of the last six years.

PEO Industry Statistics

Work-site Employees	Businesses Served	Total $ of Payroll
696,453	50,907	$17,108,209,439

(Source: The Center for Human Resource Management, College of Business, Florida State University)

How Do PEOs Benefit Employers, Employees & Government?

Benefits to Employers

• Controls costs
• Saves time and paperwork hassles
• Provides professional compliance (e.g., payroll, IRCA, EEOC)
• Reduces turnover and attracts better employees
• Provides claims management (e.g., workers’ compensation, unemployment insurance)
• Provides better benefits packages
• Provides professional human resource services (e.g., employee handbooks, forms, policies and procedures)
• Reduces accounting costs

Benefits to Employees

• Comprehensive benefits previously unavailable
• Better employer/employee communications
• Payroll on-time and accurate
• Professional assistance with employment-related problems
• Professional orientation and employee handbook
• Extends statutory protection to more employees
• Up-to-date information on labor regulations and workers’ rights, worksite safety
• Efficient and responsive claims processing
• Portable benefits (employees can move from one PEO client to another without loss of eligibility for benefits)

Benefits to Government

• Consolidates several small companies’ employment tax filings into one
• More professional preparation and reporting
• Accelerated collection of taxes
• Extends medical benefits to more workers
• Expands the communication of government requirements and changes to small businesses
• Resolves many problems before they reach court
• Allows government agencies to reach business through a single-employer entity