When you hire people to work for your company, you want the authority to make decisions about compensation, promotion, termination, and other matters that are traditionally part of the employer role. Even so, you may want to relieve yourself of certain tasks. When making these decisions, you should factor in emerging law on shared responsibilities.

PEOs

A professional employer organization (PEO) is a third party to which a company outsources workers' compensation, risk management, payroll obligations, benefits plans, and other employer tasks. The company retains the right to hire and fire, determine compensation, and handle various employer responsibilities. There are an estimated 700 PEOs operating in the United States, and they oversee as many as three million employees. This arrangement is particularly favored by companies with professional staff, such as engineering firms. PEOs and the companies that use them are called co-employers.

PEOs are treated as the employer for purposes of payroll taxes, so they file under their employer identification number (EIN). However, for purposes of counting the number of employees in a company -- essential for the employer mandate under the Affordable Care Act (ACA) -- only workers at the company, excluding those who are employed by PEO, are taken into account. However, the PEO has a contractual obligation to make sure that the company is following ACA rules.