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’ salaries
• Ensure WC (Worker’s Compensation) insurance for employees
• Complete payroll-related tax withholding and/or return
Businesses, regardless of size and shape, can use PEOs as a co-employer of a company’s employees. As much as PEOs solve myriad problems for businesses (such as providing employee benefits, filing taxes, reducing the administrative burden of running/managing a payroll, outsourcing the HR function, etc.), most employment agencies 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 marketplace. Without a doubt, most employment agencies typically have a hard time finding affordable workers’ compensation coverage from insurance companies. The following three reasons can 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 company 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 more dangerous risk occupations than is normally the appetite of a standard insurance field/marketplace
2. PEOs May Be More Than Willing To Cover All Worker’s Comp Exposure If You Are A Small Business Or Agency
3. Small to medium deductible options are often available. The average deductible for PEOs is much lower at $500.00 to $1000.00 on average; the 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 payslips
• Process claims in a responsive and efficient manner
• 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.
• Provides enhanced access to payroll, vacation, personnel data, sick time accrual, as well as specialized reports
How does PEO work?
A PEO typically serves as an outsourced HR department that offers 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 trading decision, choosing the betting PEO is a crucial decision. Here are some tips to help you settle with 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 your state’s regulatory requirements
• 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 day-to-day business
When it comes to co-employment, the PEO typically becomes an employer of record 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 the majority of the human resources as well as payroll functions of the business. This gives you the freedom to spend or invest your time on the things that matter most: building your business. PEOs can affect the day-to-day operations of their company 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, PEOs can also help mitigate liability. Joining a PEO membership will certainly make hiring the next few employees a much better experience.