From the Wall Street Journal:
There’s an option for small companies that want to ease their human-resources headaches: have their employees work for someone else.
In this setup, sometimes known as co-employment, your staffers still do their day-to-day jobs for you. But on paper they work for another company called a professional employer organization. These outfits function as the HR department for hundreds or thousands of small businesses, doling out paychecks, managing employee-related taxes and administering benefits.