| It's the $51 billion industry you've likely never heard of: | | | | larger companies' HR departments.When is your |
| PEOs. Private Employment Organizations, or PEO's as | | | | business ready to outsource to a PEO? Industry |
| they're known, were deemed the fastest growing | | | | experts advise careful preparation when deciding if |
| business service during the 1990s by the Harvard | | | | your business should contract with a PEO. Do your |
| Business Review. Currently over 700 PEO's operate in | | | | homework. Here are some questions to consider |
| all 50 states and provide service to approximately | | | | (courtesy of StaffMarket.com):Are you spending too |
| 100,000 small to mid-sized businesses. So what exactly | | | | much for workers' compensation insurance?Are your |
| is a PEO, and how can your business benefit by using | | | | employees asking for benefits you can't offer?Are |
| one? Following is an introduction to the basics of | | | | you paying too much for health insurance?Is your |
| PEOs.What is a PEO? A PEO is not a temp or | | | | company compliant with state and federal |
| staffing agency and it is not a payroll service. As | | | | regulations?Is your turnover rate adversely affecting |
| defined by the National Association of Professional | | | | your company's performance?Is your HR department |
| Employer Organizations (NAPEO), a PEO is an | | | | as effective or as efficient as you believe it could |
| "organization that provides an integrated and cost | | | | be?If the answers to these questions lead you to |
| effective approach to the management and | | | | believe that a PEO is in your future, appoint a team to |
| administration of the human resources and employer | | | | the task of conducting thorough market research, |
| risk of its clients, by contractually assuming substantial | | | | attend conferences, and read case studies about HR |
| employer responsibilities and risk, through the | | | | outsourcing. Utilize their findings in your PEO |
| establishment and maintenance of a co-employer | | | | search.How do you choose a PEO? First, make sure |
| relationship with the client's employees."In other words, | | | | the PEOs you consider are accredited by the |
| a PEO legally hires a company's employees, which | | | | Employer Services Assurance Corporation (ESAC), a |
| makes the PEO the "employer of record" for tax and | | | | nonprofit organization which protects the interests of |
| insurance purposes. The employees are leased back | | | | businesses contracted with PEOs. Accreditation |
| to the original employer under a co-employment | | | | means a PEO meets ESAC's ethical, financial, and |
| contract. The PEO is then responsible for | | | | operational standards.In addition, Make sure your PEO |
| administration of payroll, workers compensation, | | | | meets state licensing and registration requirements. |
| employee benefits, and workers compensation. | | | | The following states have licensing laws: Arkansas, |
| Numerous duties such as 401 (k) administration, risk | | | | Florida, Illinois, Montana, New Hampshire, New Mexico, |
| management, employee counseling, and training and | | | | Oregon, South Carolina, Tennessee, Texas, Utah, and |
| development can fall under these categories | | | | Vermont. The following states have registration laws: |
| depending on the terms of your contract.Why use a | | | | Kentucky, Louisiana, Maine, Minnesota, Nevada, New |
| PEO?Being an employer can be a headache: there | | | | Jersey, New York, North Carolina, Ohio, Oklahoma, |
| are over 60 different employment-related | | | | Rhode Island, and Virginia.Here are some more |
| governmental regulations with which a business must | | | | guidelines provided by the NAPEO:1. Assess your |
| comply. The U.S. Small Business Administration reports | | | | workplace to determine your human resource and risk |
| that owners of small or mid-sized businesses now | | | | management needs.2. Make sure the PEO is capable |
| spend up to a quarter of their time on | | | | of meeting your goals. Meet the people who will be |
| employment-related paperwork. By outsourcing to a | | | | serving you.3. Ask for client and professional |
| PEO, employers can focus on operating and building | | | | references.4. Check the firm's financial background, |
| their business. Employees gain improved, | | | | and ask for banking and credit references. Ask the |
| comprehensive benefits. Some other benefits to | | | | PEO to demonstrate that payroll taxes and insurance |
| consider:- Improved human resource practices can | | | | premiums have been paid.5. Check to see if the |
| increase your profitability. PEOs handle basics like | | | | company is a member of NAPEO, the national trade |
| employee handbooks or more delicate HR tasks such | | | | association of the PEO industry.6. Investigate the |
| as sexual harassment training.- Comprehensive | | | | company's administrative and risk management |
| employee benefits makes your business a more | | | | service competence. What experience and depth |
| attractive place to work- State of the art HRIS | | | | does their internal staff have? Do any of the senior |
| systems better serve you and your employees with | | | | staff have professional training or designations? Check |
| on-line access to payroll and employee information- | | | | to see if the PEO's risk management services have |
| Coverage under a PEOs master workers comp policy | | | | been certified by the Certification Institute at |
| means insurance is more affordable. PEOs yearly | | | | Understand how the employee benefits are funded. Is |
| shop for the best insurance rates, and since they have | | | | the PEO fully insured or partially self-funded? Who is |
| an interest in keeping claims low, they conduct risk | | | | the third-party administrator (TPA) or carrier? Is their |
| management training.- Progressive PEOs offer | | | | TPA or carrier authorized to do business in your |
| benefits such as college tuition reimbursement | | | | state?8. Understand how the employee benefits are |
| programs and travel servicesWho can benefit from a | | | | tailored. Determine if they fit the needs of your |
| PEO's services? Businesses from numerous | | | | employees.9. Review the service agreement carefully. |
| industries-medicine, automotive, construction, retail, | | | | Are the respective parties' responsibilities and liabilities |
| manufacturing, hi-tech- outsource to PEOs. According | | | | clearly laid out? What guarantees are provided? What |
| to the NAPEO, their member PEOs average client is a | | | | provisions permit you or the PEO to cancel the terms |
| small business with 17 employees. PEO clients are | | | | of the contract?Eric Morgan has been assisting |
| small enough that they do not have the need or ability | | | | companies with internet marketing for over 7 years. |
| to staff a human resource department. Even large | | | | He currently works for MWI web design in Salt Lake |
| companies with a dedicated HR department can | | | | City, Utah. For more information on this topic please |
| benefit: they get access to supplemental HR expertise, | | | | visit Workforce Solutions - a Human Resources PEO |
| competitive health insurance, and state of the art HR | | | | Firm. |
| information systems. PEOs work in cooperation with | | | | |