What is a PEO?
PEO stands for Professional Employer Organization. With a PEO, an employer can outsource employee management tasks, such as employee benefits, payroll and workers’ compensation, recruiting, risk/safety management, and training and development. When these tasks are outsourced, the employer is then free to spend more time focusing on growth strategies. This arrangement is also called “co-employment” or “employee leasing.” The PEO becomes the co-employer with the business owner and shoulders a share of the risks of managing human resources.
Why partner with a PEO?
Statistically, small business owners spend up to 25% of their time on administrative functions. When you’re with a PEO, they handle the majority of your company’s administrative functions so that you have more time to focus on doing what you do best – whether that is selling HVAC systems, building houses, or arranging flowers! More importantly, a PEO provides expertise in the areas of Risk Management, Human Resources and Compliance, so you won’t have to hire individual professionals in each of these areas, and you won’t have to worry about ending up on the wrong side of the law. Not only will you have the PEO’s expertise at your fingertips, but you’ll also free yourself of many of the risks of being a small business owner. Think of all the time and money you’ll save!
What are some of the ways a PEO can help me?
The PEO becomes the employer of record, so you are no longer responsible for any payroll related duties. Some of their services include:
- Tax withholding, filing, deposits
- State & Federal unemployment filing and deposits
- W2 Processing
- Check Printing
- Direct Deposit
- Child Support Payments
- Remittance of Social Security
- Medicare Deductions
- Sick Pay
- Benefits eligibility dates
- Probationary periods
- Anniversary dates
As your business partner, the PEO assumes workers’ compensation risk and liability. They offer competitive programs, provide timely certificates of insurance, and eliminate pre-payment and audits. They handle all of the paperwork. From the first call, they take over every detail. The PEO also provides loss prevention programs tailored to meet your needs such as:
- Custom safety programs
- Managed care programs
- Light duty – back to work program
- Risk and claims management
Human Resources / Benefits
Managing your human resources can be a risky and complex arena. In today’s heavily regulated environment, there are significant “hidden” exposures. The penalties for non-compliance can be severe:
- Wrongful Termination: Average out-of-court settlement of $40K. 10% of cases above $1mil.
- Illegal Immigrant Workers: A company found in violation can face fines up to $10,000 for each unauthorized alien.
- Fair Labor Standards Act: An employer found guilty of willful violations is subject to civil penalties.
- In the past 8 years, employer litigation costs have doubled