Do you hate dealing with employee paperwork? Is your payroll a pain? Is attracting good employees a struggle?
HR challenges can really hinder your growth. It’s easy to overlook your core business when you’re distracted by your HR issues. The good news – there’s help, it’s called a professional employer organization.
These organizations work with your company to provide payroll, benefits, and HR services through a b2b relationship called co-employment.
Through a co-employment relationship, a PEO takes on many of your employee-employer responsibilities, while allowing you to continue managing and running your business. Here’s what that means for your business.
Your company remains the primary employer. You still maintain control over managing your employee’s day to day tasks, and functions, as well as maintaining your company.
What does the PEO do?
As the co-employer, the PEO takes on specific employer obligations as set forth in the service agreement. This lets the PEO handle things like payroll, benefits, tax, and government filings. Because it acts as an employer for these specific purposes, it lets the PEO assume greater responsibility than a payroll company is allowed/capable of doing.
The PEO is a one stop shop
Typically, the PEO can manage many HR jobs that you’d have to outsource to multiple vendors, like payroll processing, benefit plan management, recruiting, training, and more. With a PEO, you can spend less time managing vendor relationships, and more on your business.
The PEO becomes your one stop shop
Employee Benefits: With a PEO sponsored plan, your employees will have access to a variety of benefits. More benefits than your company could get on its own. This includes medical, dental, vision, retirement plans, life insurance, personal accident insurance, disability insurance, and more.
Payroll Processing: The PEO handles payroll for your employees, including managing compensation of your employees, along with things like payroll record management, payroll compliance, W-2’s, paystubs, and more.
HR Administration: You can support your internal HR team with a PEO – because the PEO Helps you manage your employer liabilities, provide employee handbooks, handles onboarding new hires, termination of employees, employee relation, drug testing, and more.
Workers Compensation Coverage and administration is handled by the PEO
Joining a PEO also provides you with workers comp insurance coverage. The PEO manages, and resolves, all injured employee claims in the event of an injury. In order to prevent injuries, the PEO also offers workplace loss prevention reviews. Loss prevention specialists are capable of working with your company in order to design loss prevention programs.
Performance Management Support
PEO can help you design, and conduct, employe performance appraisals on a recurring basis. In addition, PEO provides you with compensation resources and tools, supervisor coaching, and more.
Training and Development
Many PEOs also offer you training and leadership services for your employees, like online LMS system which contain courses and books.
PEO’s can also help you design an ideal recruitment process which fits your business needs. It can also work with you to develop wage and salary surveys, improve your managers interviews and candidate selection process.
Strategic HR Support
The PEO can help you develop an HR plan which lets you make HR management decisions.
Reduce your employer liability
Through a co-employment relationship with a PEO, your company can mitigate a portion of the risk and responsibility associated with employees. This means reducing your risk for things like:
- Reporting, collecting, depositing taxes
- I-9 requirements
- EEO reporting / claims
- Management of employee related claims
Many PEOs have specialists trained for monitoring employer related state and federal laws. They are constantly abreast of changing laws that impact the services the PEO is supposed to provide.
What doesn’t a PEO do?
PEO does not control your business. They are providing with HR professionals whose guidance you can rely on and solicit. They help you manage employee related issues and risks. More importantly, they do not replace your internal HR staff. The PEO aligns itself with your company’s existing HR department/staff to provide support and expertise. A good PEO will have seasoned HR staff who are certified HR professionals. The PEO’s expertise is at your disposal. More importantly, there is minimal disruption to employees when you work with a PEO. They will see the PEO’s name on their paycheck, and other documents and benefit from greater benefits and services offered by the PEO.
PEO vs. CPEO
The IRS established a new classification for PEOS – certified professional employer organizations. This is the result of a new federal law which established guidelines and a framework. Unlike PEO’s which aren’t IRS certified, a CPEO assumes the responsibility for federal employment taxes for wages it pays to employees.