Professional Employer Organization -PEO®
Many organizations need help meeting HR and employee benefits challenges. Especially organizations that are focused on increasing profits and meeting goals. A Professional Employer Organization (PEO) may be able to help.
How it works – a different organization structure to meet HR challenges
Employees become employees of the PEO, and the company delegates many of its HR responsibilities to the PEO. Though the company still officially hires its employees, the PEO handles payroll, benefits administration, workers’ compensation, medical insurance, and retirement accounts. Then, the company pays the PEO for its services (often a percentage of total salaries), along with an amount to cover the payroll for the employees.
What services will a PEO provide?
To help you meet your human resource challenges, a typical PEO provides four main services: HR assistance, benefits administration, payroll administration, and risk management.
Human Resources Assistance
The PEO functions as your off-site HR department. The bottom line: more compliance for your organization while keeping your expert staff focused on meeting targets.
- The human resource professionals at the PEO offer consulting in sexual harassment, discrimination, Family Medical Leave Act (FMLA), and hiring and firing practices
- Conducts background checks and pre-employment testing on potential employees
- Recruits employees through advertising, resume screening, and interviewing
- Provides customizable employee handbooks and position descriptions
- Conducts performance reviews
- Provides employee training for new positions
Overcome Employee Benefits Challenges
Your PEO will seek out cost-effective benefits plans for your organization. By pooling employees from many different organizations into one group, the PEO is able to spread medical claims over a larger premium base. The bottom line: lower rates, smaller annual rate increases compared to smaller businesses.
- PEOs typically offer the following benefit plans:
- Health care
- Long- and short-term disability
- Life insurance
- Section 125
- COBRA compliance
The PEO will take responsibility for the range of payroll functions. The bottom line: your staff gets great human resources services while management can pay attention to growing your business.
- Employee taxes
- Quarterly reports
- Workers’ compensation insurance
- Premium audits
- Claims management
- Benefits procurement
Handling Risk Management
PEOs manage any workers’ compensation or unemployment claims that arise, typically at a lower claim cost (as compared to what a company could achieve on its own). The bottom line: spreading the risk pool and expert care for any claims saves you money and reduces your exposure.