PEO (Professional Employer Organization)

A PEO becomes the employer of record for payroll and benefits purposes, while the client business keeps control over day-to-day management and hiring decisions. Because a PEO pools employees from many client businesses together, it can often offer access to large-group health insurance rates and plan designs that a single small or mid-sized business couldn’t get on its own.

Why smaller employers use one: a PEO relationship can dramatically reduce HR overhead — payroll, benefits administration, workers’ comp, and compliance all move to the PEO — while also unlocking better group buying power on health coverage.

What to watch for: PEO benefits packages are typically pre-set (you’re joining their master plan, not designing your own), and switching PEOs or bringing benefits back in-house later can be a significant transition. A broker who works with PEO arrangements can help evaluate whether the bundled benefits, not just the payroll convenience, are actually a good fit for your workforce.