What is a PEO?
The term "PEO" stands for Professional Employer Organization. PEO's provide small to medium size companies with outsourced human resource services. PEO's enable their clients to cost-effectively outsource the management of human resources, employee benefits, payroll, workers compensation, and unemployment insurance while still maintaining control over their workforce. PEO's are not staffing companies.
In a PEO arrangement, there exists a co-employment relationship in which both the PEO and the client company have an employment relationship with the employee. The PEO and the client company contractually allocate and share a tax ID number as well as traditional employer responsibilities and liabilities.
While the employee still works for the employer, this arrangement enables a company to transfer many of its employer responsibilities to the PEO, including most aspects of employer-related risk and compliance. The PEO assumes responsibility for the "business of being an employer." The client company directs and controls the worksite employees in the normal course of the client's business including production, manufacturing, distribution, and delivery of its products and services.
In this relationship, the PEO is responsible for human resources, employee benefits, payroll, employment law compliance, risk management, employer taxes and more. The PEO also provides a complete human resource and benefit package to the worksite employee. PEO's may be responsible for most or all of the following:
Human Resources Administration
- Dedicated On-site HR Representative
- Personnel Record Keeping
- Employee Handbook
- Employee Dispute Resolution
- Disciplinary Action Procedures
- Employee Benefits Orientation
- Government Compliance, ie, FMLA, ADA, FLSA, ERISA, COBRA, EEOC, HIPPA, OSHA
- Wage and Tax Compiance
- Web-based Payroll and HR
- Pre-employment Testing
- Job Descriptions
- Performance Appraisals
- Recruiting and Selection
Payroll and Tax Services
- Dedicated Payroll Consultant
- Payroll Processing
- Payroll Record Maintenance and Management
- Direct Deposit
- Payroll Tax Preparation and Filing
- Detailed Payroll Reporting
- Flexible Spending Accounts
- Wage and Tax Representation
- W-2 Processing
- W-3 Reconciliation
- Garnishments
- Paid Time Off Accruals
- QuickBooks General Ledger Import
- Affordable Access to 401(k) Plans
Benefits Administration
- Medical, Dental, Life, Vision, Short-term Disability, and Long-term Disability Plans
- Competitive Rate Comparisons
- Plan Design and Modification
- Open Enrollment Presentations
- COBRA Administration
- Eligibility and Participation Verification
- Employee Contributions
- Employer Contributions
- Bill Reconciliation
Workers' Compensation Management
- First Report of Injury Reporting
- Claims Management
- OSHA 300 Log Reporting
- Dispute Resolution
- Risk Management Evaluation
- MIOSHA Compliance
- Client Representation
- Safety Evaluation and Reporting
- Safety Training
401(k) Administration
- Plan Design and Plan Documents
- Participant Enrollment
- 5500 Reporting
- Loan and Hardship Processing
- Top Heavy Testing
- Employer Match and/or Profit Sharing Administration
- Rollovers
Unemployment Administration
- Claims Processing
- Employer Representation
- Unemployment Hearings
- Return-to-Work Verification
Additionally, the PEO provides employees with coverage under the full spectrum of employment laws and regulations, including federal, state, and local discrimination laws such as:
- Title VII of the Civil Rights Act of 1964
- Age Discrimination in Employment Act
- Americans with Disabilities Act (ADA)
- COBRA
- ERISA
- FLSA
- HIPPA
- Equal Pay Act
So there is a significant expertise that the PEO brings to the table as well as a substantial lifting of the administrative burden from the back of the employer.
Most business owners have no interest in becoming a Human Resources Manager. Furthermore, the typical small business cannot justify the expense of hiring a full-time HR person. But HR is not an option when you have employees - it's a necessity. Same with complying with a myriad of government regulations and processing payroll perfectly every time. The penalties for making mistakes in these area can literally put a small company out of business. A PEO arrangement can be just the right solution for owners and managers that want to focus on growing and running their operations while letting someone else handle the administrative tasks of being an employer.
For more information on the benefits to both employers and employees of a PEO arrangement, please see:
Why Would a Business Use a PEO?
How Do Employees Benefit From a PEO?
Who is a Candidate For a PEO?
or contact Select Management. Simply call 1-800-390-4620 ext.106 to speak with a representative today. You can also contact us here.