I am a payroll administrator with a general question. Are O2 visa holders exempt from Social Security taxes.

No, O2 visa holders are not exempt from FICA taxes. This is work visa and the days in the U.S. are not exempt from residency.
Read Your U.S. Tax Return: The U.S. Visas (http://taxipay.blogspot.com/2008/08/us-visas.html)