The benefits of a PEO.
Over the years, PEOs (Professional Employer Organizations) have grown tremendously in popularity. PEOs offer numerous valuable services to clients. In most, if not all, agreements between the PEO and the client(s), the PEO agrees to carry out the employer’s specific responsibilities for leased workers. They include some or all of the following:
• Payment and accounting of workers’ wages
• Ensure WC (Worker’s Compensation) insurance for employees
• Complete payroll-related tax withholding and/or reporting
Businesses, regardless of size and shape, can use PEOs as a co-employer for a company’s employees. As much as PEOs solve countless problems for businesses (such as providing employee benefits, filing taxes, reducing the administrative burden of running/managing payroll, outsourcing the HR function, etc.), most Staff essentially turn to PEOs for one main reason; this is a workers’ compensation solution that may not be available to them within the standard market. Without a doubt, most employment agencies typically have a hard time finding affordable workers’ compensation coverage from insurance companies. The following three reasons may report such a situation:
• Little experience in handling or managing claims
• The agency could be a start-up
• An agency places temporary workers in hazardous jobs such as energy, heavy industry, trucking, construction, etc.
Why Every Business Should Enter into a PEO Agreement
Before entering into a Professional Employer Organization agreement, a business must be able to understand and appreciate the main benefits of PEOs. Here are some of the reasons why you should enter into a PEO agreement:
1. Some PEOs allow companies or staffing agencies to place temporary workers in risky occupations more dangerous than is normally the appetite of a standard insurance market/field
2. PEOs may be more than willing to cover all of your worker’s compensation exposure if you are a small business or agency
3. Small to medium deductible options are often available. The average deductible for PEO is much lower at $500.00 to $1000.00 on average; standard policy usually starts around $3000.
4. For companies in high-growth mode, PEOs can be an alternative to payroll financing or factoring.
For employees, PEO does the following:
• Deliver accurate and timely payroll
• Process claims responsively and efficiently
• Provides the latest information on regulatory compliance
• Provides professional assistance when dealing with employment-related issues
• Offers easy access to comprehensive benefits often unavailable
• Comes with practices, procedures, policies and manuals that are easy to read and understand.
• Offers enhanced access to payroll information, vacations, personnel data, sick time accrual, as well as specialized reports
How does PEO work?
A PEO typically serves as an outsourced HR department offering comprehensive employment services such as assistance with employer compliance, HR management, benefits and payroll administration, etc. A PEO typically serves as your strategic HR partner who can assist you in:
• Effectively minimizes liability and risk exposure
• Create efficiency
• Contain rising human resource costs
• Attract and retain talent
Due diligence when considering a professional employer organization
Just like when making any other business decision, choosing the betting PEO is a crucial decision. The following are some tips to help you settle for the best service provider:
• Verify professional and client references
• Effectively understand how employee benefits are secured and funded
• Ask if the potential PEO is accredited by ESAC (Employee Services Assurance Corporation) and is a member of NAPEO
• Make sure the PEO meets all regulatory requirements in your state
• Confirm that participating employees can easily receive coverage on the first day of benefits
• Verify that the employee’s risk pool perfectly matches the employer’s profile
The PEO effect in everyday business
When it comes to co-employment, the PEO usually becomes a registered employer for tax purposes. A PEO fills out the paperwork with their own identification numbers. So, what is your position as a company in this relationship? As a client company, you will continue to dictate or direct the daily activities of the employees. The PEO then assumes responsibility for most of the human resources as well as the payroll functions of the company. This gives you the freedom to spend or invest your time on the things that matter most: building your business. PEOs can impact your company’s day-to-day operations in one way: by focusing solely on safety programs, workplace risk management, and excellent HR practices.
For many businesses, whether small or large, joining a PEO makes a lot of sense. In addition to helping save a substantial amount of time and money, PEO can also help mitigate liability. Joining a PEO membership will certainly make hiring the next employees a much better experience.