PEO stands for professional employer organization. A PEO is a partner company that can give your employees better benefits, save money, and take HR and compliance off your plate. It’s how you offer Fortune 500 benefits no matter what size company you are.
Your PEO acts as your workers’ employer for certain legal purposes, letting you tap into some very interesting PEO solutions for your business, such as network, insurance, workers’ comp, and HR resources. Your company gets all the advantages of having a professional HR team and world-class benefits.
Key advantages of having a PEO company include:
- Offering your employees comprehensive, top-quality benefits.
- Reducing the cost of providing benefits
- Getting complete HR services without hiring staff.
- Reducing risk and ensuring Affordable Care Act (ACA) compliance
In This Article
How Does a PEO Work?
PEOs leverage a legal arrangement known as co-employment. Under co-employment, the PEO acts as the “employer” of your workers for special situations. You retain full control of your company, employees, and hiring and firing decisions. But when it comes to benefits and HR, the PEO’s experts step in and do the work for you.
This arrangement is powerful and substantially more useful than just outsourcing human resources. When you outsource, your HR team is a contractor working for your company. They cannot bring your employees under their own benefit network and have no legal power in disputes and claims. They are just one more employee of your company.
A PEO is different. Because they act as an employer, they can offer employee benefits. With hundreds of clients, they count as a very large company with access to the most competitive benefits packages at deeply discounted rates.
You get access to the kind of benefits workers would expect at Google or General Motors, whether you have hundreds of employees or less than a dozen.
How Does the Co-Employment Relationship Work?
Under co-employment, you call the shots, and your PEO company makes it happen. Both parties have a clearly defined role.
- Your role: You are the primary employer, and you have authority over the PEO. You keep full control over your employees’ day-to-day work and job descriptions, as well as management and organizational structure.
- Your PEO’s role: Your PEO will take on specific employer obligations, which you can choose. You give the PEO the power to handle crucial administrative tasks like payroll, tax withholding, and providing benefits to your workers. Your PEO can also act as your agent in employee disputes, unemployment claims, workers’ comp claims, and more.
The result is a truly full-service HR arrangement where you enjoy less liability, discounts on benefits, and better overall benefits packages to attract new hires. A good PEO will even reduce your employee turnover rate, and help your business comply with the U.S. labor laws.
What Are the Benefits of a PEO?
A PEO is your all-in-one HR and compliance provider. You no longer have to outsource to multiple vendors, insurers, and specialists. Instead, your PEO can provide everything you need, including:
- Employee benefits: A PEO can typically give you access to a wider variety of benefit plans at better rates than you would get on your own. These plans include comprehensive benefits such as medical, vision, dental, retirement savings, and more. Flex accounts, life insurance, disability benefits, and educational assistance are all available. And your PEO will provide your workers with live customer support.
- Obamacare compliance: Get the guidance on Affordable Care Act requirements, or let your PEO handle compliance. You will never have to worry about expensive, unnecessary penalties.
- Payroll: Your PEO will handle all aspects of payroll, from tracking and documentation to deductions, taxes, garnishment, and sick/vacation day accrual. Your employees get access to online pay stubs, direct deposit, and digital W-2s while you get payroll management reports and flawless record keeping.
- HR administration: A PEO can provide employee manuals, employment verification, termination support, drug testing, liability management, and even new hire onboarding. PEOs can work with your existing HR team or act as the HR department for you.
- Strategic HR planning: Does your HR plan support the path you want your company to take? Are you attracting and retaining the right people? A PEO can conduct high-level strategic planning to align your human resources policies with your company’s future.
- Workers’ compensation and claim resolution: A PEO provides you with workers’ compensation insurance and start-to-finish management of any claim. Your PEO can carry out preventative safety reviews, design safety programs, resolve injury claims, and help injured workers return to work.
- Recruiting: A PEO can streamline your hiring process, work with you to develop stronger job descriptions, and train your hiring managers to identify the best recruits. Backed by years of research, a PEO can help you adjust your salary offers.
- Training and development: PEOs can help train staff and develop leaders with online learning systems, custom seminars, and digital or on-site training.
- Performance management: Good performance should be rewarded, and the best performers should be treated as valuable assets. Your PEO can help you with employee evaluations, supervisor coaching, salary resources, and tools that help employees develop themselves.
Most importantly, your PEO can reduce your liability on all fronts—taxes, paperwork requirements, insurance, and equal opportunity employer (EEO) claims. You can be compliant with all state and federal laws.
Are There Any Differences Between PEO and a Payroll Service?
While PEO companies provide some of the same services as payroll services, such as payroll administration and staff support, a PEO can also provide additional HR resources for workers and share some important legal burdens with your company. A PEO can also help small or medium-sized companies offer huge employee benefits.
Also, with a PEO company, you keep control over every decision within your company. You can fire, promote, or hire at your best judgment.
Who Uses a PEO?
Any company that wants top-quality benefits may use a PEO. At NetPEO, our clients include:
- Small companies with five to 10 employees
- Growing companies with 100 to 200 employees or more
- Large companies
We have worked with businesses in industries including:
- Real estate
- Property management
- Health services
- Law firms
- Accounting and auditing
- Non-profit organizations
This list is not exhaustive. If you want better HR services and impressive employee benefits, NetPEO can help.
How Much Does It Cost to Hire a PEO Company?
There are many ways in which PEO companies charge for their services. They usually charge a percentage of your payroll investment, but the final cost will also depend on how many employees you have and the type of benefits you want to give to them.
These are some of the things you should look for when shopping for a PEO company:
- Cost analysis: Look for a provider that can estimate how your payments will be allocated in different areas, such as benefits, payroll, and workers’ compensation coverage.
- In-depth services: While some providers offer basic HR services, many more can offer you in-depth services that can increase your returns, such as talent management, data insights about your workforce, and benefits usually unavailable for small and medium-sized businesses.
- Managing services: Getting a PEO company can help you manage your workforce and give amazing benefits to your employees. Still, a reputable provider can offer even more services to take as many administrative burdens from your attention as possible so that you can focus on your business.
Can a PEO Interfere With My Company Culture?
PEOs are co-employers with your company, but mostly on labor and legal stances. Your company is still the only one that decides how they work and the culture they share with their workers. Said that if you want to promote a new or better work culture, many PEOs can offer you strategies and processes to achieve that.
When you partner with a PEO, you can decide how involved they are. And if you need new strategies or hiring rules, they can share their experience with you.
What Makes NetPEO PEO Services Different?
There are many PEO copmanies, but not all provide the level of service you deserve. At NetPEO, we outdo the competition in three ways:
- Experience: We have decades of PEO experience across all industries. Our founders have a combined 50 years in the PEO business.
- Value: We save you money by reducing your liability and tailoring our services to your needs.
- Service: We create solutions so that you can focus on your business.
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Our goal is to make your business run better. We make it cost-effective for you to get the HR services you need, minimize your liability, and offer your employees the most competitive benefits possible. Find out what we can do for you.
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