The definition of a PEO is:  A Professional Employer Organization (PEO) is defined as 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 responsibilities and risk, through the establishment and maintenance of a co-employer relationship with the clients employees.

 A PEO establishes a contractual relationship with its clients whereby the PEO:

• 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 co-employment relationship with its employees which is intended to be long term and not temporary
• Assumes responsibility as an employer for specified purposes of the workers assigned to the client locations
• Shares the responsibility of co-employees wages and safety with the client. 

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.

A PEO provides integrated services which more cost effectively manage critical human resource responsibilities and employer risks for clients. PEOs deliver these services by establishing and maintaining an employer relationship with the workers assigned to its client and by contractually assuming substantial employer rights, responsibilities, and risk.

That was a little marketing-ish.  There are many advantages as an employer to using a PEO.  Do we recommend a PEO for every employer?  We do not as each employer has to be analyzed individually to see if the company is a good fit for a PEO.   Most employers are - some are not a good fit. 

There has been a substantial amount of negative press about PEOs.  However, most of it involved the principals of the PEOs, not the companies themselves.