| Entrepreneurs, HR professionals, and finance | | | | two. The worksite employer continues to direct |
| departments will be hearing the buzz more and more | | | | employees' day-to-day duties and activities: hiring, |
| in 2010. Terms like employee leasing, HR outsourcing, | | | | training, managing, firing, etc. The employer of record is |
| and PEO are being tossed around by all sorts of | | | | responsible for the back-office administrative duties |
| people, and most of us have a hard time | | | | such as processing payroll, administering & paying |
| understanding what it all means. | | | | federal and state taxes on-time, managing employee |
| This article is the first of many aimed to educate the | | | | benefits, handling workers comp and unemployment |
| business community on the Professional Employer | | | | claims, etc. |
| Organization (PEO) industry, the most comprehensive | | | | But here is the best part.... |
| form of HR Outsourcing services for small companies. | | | | Through coemploying with all of its clients, the PEO |
| Simply put, a Professional Employer Organization is a | | | | essentially forms one large conglomerate, comprised |
| multi-service-providing vendor that allows companies to | | | | of the sum of all of their clients' employees. This allows |
| outsource payroll and tax administration, employee | | | | them to take advantage of economies of scale and |
| benefit packages, workers' comp insurance, and | | | | the law of large numbers. This yields decreased risk |
| human resources all under one roof. | | | | across the entire group; thereby stabilizing, and in many |
| PEOs were once referred to as employee leasing | | | | cases decreasing, health and workers comp insurance |
| companies, and this term still does makes sense as it | | | | premiums as well as state unemployment tax rates. |
| loosely describes what a PEO does to deliver its | | | | Professional Employer Organizations provide discounts |
| service, however over the last 20 years PEOs have | | | | on many other cooperative purchases such as EPLI |
| developed their offering into much more than simply | | | | insurance, HRIS systems, employee discount programs, |
| leasing employees. | | | | and much more. |
| The backbone of the PEO value proposition, and what | | | | The ideal situation for a salesperson attempting to sell |
| makes it unique from any other service in the HR | | | | you PEO services is to save the company so much |
| Outsourcing industry is the concept of coemployment. | | | | on cooperative purchases such as health insurance |
| What is Coemployment? | | | | and workers comp insurance that it offsets all of their |
| Coemployment means the worksite employer (your | | | | administration fees. Although this does not always |
| business) and the employer of record (the PEO) both | | | | happen, a business owner should shop around |
| employ your employees, and the responsibilities of | | | | thoroughly as all PEOs are not created equally. |
| employing the workforce are shared between the | | | | |