Misconceptions about the PEO Industry

There is a great deal of misperceptions about the PEO industry, especially when it comes to who pays for workers’ compensation insurance and how any claims are handled with an employer who uses the services of a PEO. Because employers have responsibilities to take care of employee employment taxes, worker’s compensation insurance, there were concerns put forth to the California Contractor’s State Licensing Board about being able to provide proof of worker’s compensation on behalf of those who are clients of the PEO.

At the end of the hearing, the board revealed that they had misjudged the industry and said that such issues regarding worker’s compensation insurance would not be raised again.

PEO’s are becoming increasingly popular across a wide variety of industries because they provide the necessary services such as employee withholding and benefits, income tax reporting to the federal and state authorities, accounting and securing worker’s compensation for employees.

According to the California Labor Code, section 3700, if a business operating in the state of California does not carry workers’ compensation insurance coverage, it is considered a criminal offense. More than that, the business is liable for a fine of up to $100,000!

If a business is investigated by the Division of Labor Standards Enforcement (DLSE) and there is not proof of workers’ compensation insurance, an order will be issued that prevents the employer from conducting business until proof is produced that they have valid worker’s compensation insurance for even one employee who isn’t covered. Even assets that are held overseas by a corporation or trust, as well as personal property such as a home or other investments, can have liens attached to them. What is more, uncovered workers can sue you for negligence in civil court.

Don’t take any chances when dealing with a PEO. At NetPEO, we are experts and understand the law and what is required by state and federal authorities. We also know how to fill your company’s employment needs. That’s why companies choose NetPEO.

We offer a complete range of services that include payroll, management of employee benefits and liability management for employers, brokerage services, and employee leasing.

Contact us today to discuss your company’s current needs and let us answer any questions you have. Call to schedule a free assessment today. Let NetPEO help you with all of your employee needs.