Industry model for professional employer organizations-New NY law outlines responsibilities for PEOs and their clients

Staffing companies generally recruit and provide short-term workers to businesses, often in information-service or technology-related areas. In contrast, professional employer organizations (PEO), formerly known as employee leasing companies, play a different role by providing so-called leased employees to client businesses in all sectors. The distinguishing feature of a PEO, as opposed to a staffing company, is that the PEO transitions the client company's existing workforce onto the PEO's payroll and handles a broad range of HR and personnel services, including benefits and payroll administration, health and workers' compensation insurance programs, personnel records management, employer liability management, employee recruiting and selection, performance management and training, and development services. Use of a PEO relieves business owners and key executives of many employer-related administrative and regulatory burdens and enables them to focus on the core competencies of their businesses. At the same time, the unique status of the client company workforce - formerly employees of the client, and going forward, employees of the PEO continuing to perform work for the client at the client's worksite - raises a number of important legal and practical issues.