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A Professional Employer Organization or PEO is an organization that gives coverage to organizations against any claims from the employees of the company. This protects the face of the company alongside defamation that could happen due to these claim suits.
An organization that enters into a joint-employment relationship with an employer, leases its employees to the employer. This is what a PEO mainly deals in. By doing so, the PEO is able to share and manage any employee-related responsibilities and liabilities. Due to a PEO a company is able to drastically save a lot on their Workers’ Compensation Insurance. This is due to the close proximity that the PEO works with the employees as well as the employers.
A PEO has four main responsibilities, namely, managing employee benefits, improving retention, assisting with payroll duties, and minimizing risks. PEOs are basically an organization’s Co-employers. A PEO contracts with client businesses to allocate and keep in check employer rights and responsibilities. As the Co-employer of a company, the PEO pays wages and taxes. This also includes responsibilities for providing benefits as well as maintaining workers’ compensation coverage.
A Professional Employer Organization (PEO) can provide additional ways to reduce workers' compensation costs, among many other cost-saving initiatives. Changing employee class codes can be a quick way to reduce costs, for example, but it can also be confusing and ripe for mistakes. If you enter an incorrect code, you risk fines and penalties. Partnering with an experienced PEO can help you develop plans and policies to reduce your workers' comp costs legitimately.
Comprehensive case management ranging from monitoring treatment to carrier contact ensures that injured workers receive proper care. Return-to-Work programs enable workers to benefit from a restoration of normalcy through either a modified job to accommodate the worker's injury or a job at a different worksite employer. Effective, aggressive management of injured worker needs and claims benefits the injured worker, client companies, and the PEO.
Many small to mid-sized business owners have to wear a lot of different hats. Off-loading some of those day to day tasks such as payroll, work comp admin work, etc. may open up some time to allow you to work more on the business rather than in it. Brent, of Insperity, mentioned that there has been a significant increase in HR related claims in recent years, stating that Insperity saw 900 claims made out of over 10,000 employees. Utilizing a PEO with either the standard set up or the ASO set up could help off load potential liability and ensure you’re compliant in today’s lawsuit happy society. Last but not least, joining a PEO is essentially pooling your employee group in with other small to mid-sized businesses, so you’re likely opening yourself up to better group rates, particularly on the benefit side.
With all that a PEO does for a company, it is not always clear or easy to fathom just how much a PEO benefits the business.It starts with offering a lower workers comp premium than standard markets for companies that have higher claims, experience mods and higher premiums. This also includes helping its client companies manage employees’ payrolls, compliance as well as the HR responsibilities of the organization. Thus, making the trasition from standard carrier markets to PEO, seamless.
A PEO’s main focus is to lower the workers comp premium for their partner companies, you caan say that by partnering up with a PEO would ensure that spend less for your premiums. The PEO addresses to all the worker complaints. They also retain the right to hire the right employees for their client companies. They also have to maintain a safe working environment for all the workers, working in the firm. This involves not only taking care that there are no racism, no sexual harassments, no catcalling, etc. This sometimes also involves drug tests, loss control and safety procedures, settling of claims management of injuries, safety training, employment assistance plans implementation, back-to-work programs and regular invigilation of the rules being followed in the firm. The roles of a PEO doesn’t end there.
Taking proper care of injured workers and stablishing proper return to work programs also form a part of the responsibilities of a PEO. This is possible when the implementation of their right to the worker’s compensation is available. Whenever a worker in the company needs such facilities, it is the job of the PEO to grant them easy access to such programs, including a back-to-work program.
When employees suffer injuries on the job, they may be entitled to workers' comp benefits. The sooner they get back to work, the lower the amount of benefits they receive. This can mean lower premium increases.
Safety programs, especially in high-risk industries like construction companies, are essential. When you hire a new employee, they must go through your safety program. The same is true of employees who have been on the job for some time.
Most employees are honest and trustworthy. But some bad apples exist. While uncommon, some workers have been known to fake an injury to collect benefits and get some time off. Your PEO will investigate every workers' comp claim to ensure there is no fraud taking place.
If your business operates in a high-risk industry, your experience modifier rate may be high. But when you join a PEO, you can join their existing workers' compensation plan, which may have a lower experience modifier rate than what you could get on your own.
A Professional Employer Organization (PEO) arrangement is defined as a co-employment relationship between a licensed Professional Employer Organization and a business (client). In a PEO relationship, the PEO becomes the employer of record for purposes of assuming and managing employer related responsibilities such as payroll and tax compliance, human resources, workers' compensation and employee benefits among others. The advantages of partnering with a PEO not only include obvious benefits such as transferring employer related liabilities and responsibilities but also provides an essential benefit by freeing up time for the business and key staff members to focus on core activities of the business versus employment related, non-revenue generating administrative activities.
So why would you choose the PEO option? There are many factors to consider when choosing an outsourcing solution for your business and the PEO option provides so many benefits that it would be impossible for me to highlight all of them in a here. Let's however highlight some of the key advantages of the PEO arrangement.
The ASO acronym has actually been defined using a few different terms, i.e. Administrative Services Only, Administrative Services Outsourcing or Administrative Services Organization. All of which provide an essential benefit to businesses (clients) by offering a suite of services similar to the PEO arrangement such as payroll and tax compliance, human resources and insurance administrative services including assistance with finding, implementing and managing workers' compensation and employee benefits. The significant difference between the PEO and the ASO is the co-employment relationship. Unlike the PEO arrangement, the employer retains the employer of record status with the ASO and all payroll taxes are reported and filed using the client's FEIN.
So why would you choose the ASO option? Similar to the PEO, the ASO option provides a bundled suite of services intended to help you manage your business more effectively. Although the ASO arrangement is not a co-employment arrangement it is designed to minimize your risks and liabilities through outsourcing of key employment related.
Human Resource Outsourcing (HRO) is similar to the ASO and PEO in that it typically provides a suite of services tailored to helping employers manage risks and responsibilities related to employees. The HRO model is commonly referred to as the à la carte option since it is typically focused on specific HR related tasks based on the HRO providers experience and specialty. It is more common for larger companies to consider the HRO option versus the PEO or ASO option when they have already developed internal staff and technology to manage a majority of these tasks and responsibilities but may have a need outside of their internal expertise which could be handled more effectively by an HRO provider.
So why would you choose the HRO option? Regardless of how many employees you have, there are a myriad of employee related laws and regulations that you face as an employer everyday. Managing these employee related laws and regulations on a day-to-day basis is a complicated task—one that requires a substantial amount of energy, time, and expertise. Here are three reasons why you should consider HR outsourcing for your business:
The PEO, ASO, and HRO models are very different and has the potential to bring unique value to a company whose goal is to lower the workers comp premium as compared to standard carriers. Besides weighing the pros and cons of each model, you should also understand the fees, access to benefits, and flexibility and control associated with PEOs, ASOs, and HROs. This information will help you come up with a sound decision.
The Workers Comp King will provide cost-effective coverage for your employees while fulfilling the payroll, insurance and HR duties for your organization.
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