WHAT IS A PROFESSIONAL EMPLOYER ORGANIZATION?
A Professional Employer Organization, or PEO, is a firm that allows small and medium-sized companies to outsource most of their HR management responsibilities.
PEOs deliver cost-effective, outsourced services for HR, payroll, benefits, and risk management. This lifts the burden of HR tasks off of a growing business. Having a PEO can come with a lot of benefits. Some of these services include: time and attendance, recruiting, employee training, and performance management.
HOW PEO WORKS:
In co-employment, the PEO becomes the employer of record for tax purposes, filing paperwork under its own tax identification numbers. The client company continues to direct the employees’ day-to-day activities. PEOs charge a service fee for taking over the human resources and payroll functions of the client company: typically, this is from 3 to 15% of total gross payroll. This fee is in addition to the normal employee overhead costs, such as the employer’s share of FICA, Medicare, and unemployment insurance withholding.
IS YOUR BUSINESS THE RIGHT FIT FOR A PEO?
-You have a minimum of three employees enrolling. Businesses generally need a high participation of enrollment for a more competitive quote.
-Small Business that needs assistance with HR.
-If workers comp is too expensive.
PEOs typically offer the following:
HR administration such as new hire and benefit enrollment, FMLA tracking, and other HR-related compliance functions
Employee benefits including medical, dental, vision, life, disability, and 401(k) plans and administration
COBRA and cafeteria plan administration
Affordable Care Act (ACA) reporting
Employment Practices Liability Insurance