The PEO phenomenon: Co-employment at work

Would it not be fantastic if a busy, growing company could take all of its human resources administration responsibilities, including insurance and benefits, and transfer them to an outside service provider, cutting costs, eliminating red tape, and improving employee benefits? Not long ago that concept gave birth to an innovative business model called the Professional Employer Organization, or "PEO" for short. The PEO arrangement is predicated upon a tripartite contractual relationship between the PEO, its client, and the client's employees. That unique relationship has perplexed government agencies and the courts in regard to the proper allocation of responsibility and liability for labor and employment compliance. This article analyzes the current state of the law concerning the individual and joint obligations of PEOs and their clients, highlighting the primary areas of interest for both parties in the PEO arrangement.