The National Association of Professional Employer Organizations (NAPEO) defines co-employment as a contractual allocation and sharing of certain employer responsibilities between the Professional Employer Organization and the client, as outlined in a contractual agreement. This arrangement transfers a significant portion of the risk and liabilities associated with employees to the PEO and allows the client to offer enhanced benefits. A PEO often assumes the responsibilities of payment of wages and employment tax compliance, reporting, collecting and depositing state and federal taxes, and workers’ compensation coverage and management. The PEO may engage with worksite employees regarding specific human resource matters or employment compliance issues, while the client company remains in control of the day-to-day operations and the manufacturing, production and delivery of products or services. Every contractual agreement is unique and developed based on your specific service delivery needs.