It’s a little-known occurrence, but there are professional employer organizations (PEOs) out there engaging in “scooping.” This occurs when the PEO charges their agreed-upon percentage of the employee’s full salary, pays the required taxes on the lower, post-deduction salary, then takes the remaining money.
It’s legal, but it is certainly unethical and unacceptable.
How Scooping Works
You are a business owner working with a PEO. You opted to pay your PEO a percentage of your overall payroll instead of a flat fee.
You have an employee making $65,000 per year. That employee contributes about 25%, or $16,000, toward their insurance coverage. This contribution is tax-deductible, so that employee pays income tax on a total of $49,000.
This leaves money left over. Instead of returning the money to your business, the PEO in this case “scoops” up the remainder for itself.
How NetPEO Can Help
If you’re working with a PEO you know or suspect is engaging in scooping and you’re ready to cut ties with this disreputable organization, call NetPEO at (678) 841-7146.
We can match you with a highly regarded, reputable, and certified PEO to meet your exact business needs. We can also help you seamlessly manage the transition as you disengage from a disreputable PEO to partner with a first-rate PEO partner operating entirely above board.
What NetPEO Does for Your Business
NetPEO is not an individual PEO. We are a nationwide network of highly qualified, renowned PEOs. We work with you to discover your exact business needs then provide you with options to choose a PEO match to fill your specific human resources, finance, administration, and benefits skills gaps.
We have a laser focus on customer service, accuracy, and reliability. In fact, NetPEO has a 95% client retention rate. The founders of NetPEO spent many years in the PEO and human resources industries. During that time, we saw everything from companies unable to fulfill their promises to those engaging in questionable business practices.
We pledged to do business differently and you’ll see the difference when you work with NetPEO.
How to Know if a PEO Partner Is Right for You
There are several important factors to keep in mind when determining if a particular PEO is the right fit for your company.
- At first glance, you can check to see if a particular PEO is accredited by the National Association of Professional Employer Organizations (NAPEO) and the Employer Services Assurance Corporation (ESAC). You can also check with the state where a PEO has its headquarters and determine if they have a license that is current and if their business is in good standing.
- When you’re interviewing prospective PEO partners, be sure to ask for references. Of course, businesses are going to refer you to the clients who are happiest with their services, so it pays to do a little digging. Ask why they chose the PEO partner, how the PEO has benefitted their business, what areas are not a PEO’s strong suit, and how long they are planning to continue to partner with the PEO.
- If a PEO is a private company, request a copy of their most recent audited financial statements.
- Ask to see a PEO’s service agreement and be sure to read the fine print.
- Ask specifically about unethical practices such as scooping and what a PEO is doing to prevent them from occurring.
Working with NetPEO means we’ve done a lot of this homework for you. We can provide you with detailed information about a particular PEO’s accreditations, financials, skill set, service agreements, reputation, and practices. If a PEO is inexperienced, poorly trained, unethical, or incompetent, they will not be part of NetPEO’s trusted network.
Call Today to Start Your Free Business Assessment
Don’t put up with improper business practices like scooping. If you’re dissatisfied with your current PEO, call NetPEO at (678) 841-7146 and we can help. We’ll be there with you through the process of leaving your current PEO through matching with an honest, credible PEO, and beyond.