Professional Employer Organizations I Advantages I Benefits

Core Benefits

Large-company benefits for small business

One key advantage of the PEO relationship is that you become part of a larger group for employee benefits purposes. This enables you to take advantage of the economies of scale achieved through the large number of client employees on the benefit plans of the PEO.

Health Insurance

The most important employee benefit is usually health insurance, and a good plan with good rates can be critical in attracting and retaining top talent. The PEO is generally able to provide more plans for the employees to choose from, and with premiums lower than what you can obtain on your own in the open market.

Plan Administration

The PEO handles the administration of the plan, so you don't need to worry about adding and removing employees from the plan, paying the invoice, handling renewals, or fielding insurance questions from your employees.

Additional Benefits

The PEO also enables you to offer large-group dental, vision, supplemental (AFLAC, etc.) insurance, and a 401k plan to your employees.

401k Advantage: Offering a 401k on your own entails significant initial and ongoing expense for plan documents, annual testing and reporting, along with the fiduciary liability of sponsoring your own plan. The PEO removes all the cost and liability, while still enabling you to customize the plan in terms of matching contributions, vesting schedule, Safe Harbor options, etc.

Key Savings

Workers Compensation

If you are in a higher-risk industry, the savings possible through the PEO relationship can be significant. PEOs can often provide workers comp premium savings over your own plan for several reasons:

Large number of client employees covered
Greater involvement with your business due to the integrated payroll, giving a greater level of understanding about employees actually being covered
Other sources of revenue provided through the relationship, such as the admin fee

If your business is strictly clerical, the possible savings will be limited. But for all other groups, the workers comp advantage is reason in itself to consider a PEO.

Significant Savings

Lower premiums for higher-risk industries

Protection

Employment Law Compliance

Countless business owners have discovered employment law compliance deficiencies only when it is too late, via a Department of Labor audit, EEOC complaint, or employee lawsuit.

Even companies with only a few employees have exposure to significant liability, particularly through the Fair Labor Standards Act. Commonly known as "wage & hour," the FLSA is the greatest area of exposure for most businesses.

While minimum wage and overtime compliance seems simple on the surface, there are thousands of plaintiffs attorneys making a good living because of that assumption. Misclassifying employees as exempt from overtime is a common violation, and one that leaves employers subject to significant claims and attorneys' fees.

The exposure to employment claims increases rapidly once you exceed the 15-employee mark, when Title VII, Americans with Disabilities Act, etc. are now an issue, and additional laws apply when you reach 20 and 50 employees.

The following infographic just lists the federal laws affecting employers. Every state has its own employment laws, varying in the degree of burden that they impose. California and the northeastern states are justifiably notorious for the burden placed on employers.

PEO Counsel Solution: Fortunately, we at PEO Counsel can help you identify a PEO with the state-law knowledge you need to navigate the minefield and minimize your exposure.

PEO Federal Employment Laws by business size

Consolidated HR

All HR functions under one roof

Efficiency

Integration of HR functions and consolidation of vendors

With a PEO, you will have an integrated approach to HR, and will no longer need to worry about whether your payroll system communicates with your employee benefits vendors and workers comp carrier.

You will reduce the considerable number of vendors you need to manage as they will be consolidated under the PEO. All this results in more time for you to grow your business (or spend productively in other ways, like a much-needed vacation).

If you have any questions about PEOs, HR, employee benefits, workers compensation, or our services,

Please send us an email or give us a call. We're here to help.

PEO Advantages