In the last 20 years, PEO services have experienced double-digit growth annually, and industry experts expect 2022 to be their biggest yet. So, why are so many businesses choosing to outsource with a PEO and how could your company benefit?

For starters, a Professional Employer Organization (PEO) provides human resource services for their clients: 

  • Paying wages
  • Taxes
  • Assisting with compliance from a myriad of state and Federal rules and regulations

In addition, many PEO companies provide employees with access to:

  • 401(k) plans
  • Health insurance
  • Dental insurance
  • Life insurance
  • Dependent care
  • Other benefits not typically provided by small- to mid-sized businesses

Outsource your HR Difficulties With PEO Services

A Professional Employer Organization enables their clients to outsource the management of HR, employee benefits, payroll, and workers' compensation insurance for less than in-house costs. Most importantly, in removing these burdensome tasks, a PEO allows their clients to gain more time to focus on their core competencies and grow their bottom line.

So let’s look at how these services align with current employment issues and how they provide a great return on investment.

Improve Your Employee Benefit Offerings

Retaining good employees has never been more important. Accessing a PEO with the right employee benefits for your group can be the solution to keeping and attracting the employees you need to grow. A PEO's master healthcare plan can provide great options at lower costs than today’s community rated group policies.

Plus, employees can access dental, vision, supplemental- even savings plans without employer contributions. Even better, benefits are deducted pre-tax from payroll with complete administration of governmental filings by the PEO.

Get Professional HR Help

In today’s new employment world of Covid mandates, legalization of marijuana, discrimination lawsuits, employment market compensation, and more – even small businesses must acknowledge these issues. The right PEO company will give you the answers, with certified human resource professionals to help you navigate through these compliance requirements.

A PEO's human resource department can help you build or update employee handbooks that detail:

  • Company policies
  • Job descriptions
  • Benefits eligibility
  • Holiday and paid time off allowances

Removing Your Business Liabilities

Partnering with the right PEO allows you to remove a number of employment- related liabilities. The PEO is responsible for making accurate and timely tax payments on your behalf, along with administering any wage garnishments. Drug testing, e-verify, and background checks can all be included as a part of a PEO's a la carte services for their clients.

Even the time-consuming communication and resolution of unemployment claims is managed by the PEO, saving you time and keeping costs down.

Workers’ Compensation Insurance

PEOs are known for saving their clients on their workers’ compensation insurance rates, but how do they do this?

Just like any other business, a PEO has a workers’ comp policy through a carrier. As they grow their business and add client employees to their policy, their premium increases- allowing opportunity for quicker reductions in rates through good risk management. This is similar to any other growing business, what many know as lowering your experience rating, or x-mod.

A PEO with a .50 experience rating has the ability to offer a prospective client with a 1. experience rating a 20% discount by offering them the equivalent of a .80 experience rating.

More workers’ compensation benefits through a PEO include little to no money down through their pay-as-you-go payroll process, eliminating large down payments and policy fees. And the paygo process means premium is deducted as payroll is reported, so you’ll never deal with the headaches of time consuming audits. As part of the PEO service, you’ll also get help with creating a safety manual, or reviewing and updating your current policies.

Save Valuable Time & Associated Salary for Business Management

As mentioned earlier in this article, a PEO allows their clients to gain more time to focus on their core competencies and grow their bottom line. Payroll administration, tax reporting, benefits, and risk management- along with so many employment obligations- take time and don't produce a dime of revenue.

The PEO model has proven success in taking these burdens and liabilities away for their clients. In fact, based on an independent study from analytics experts McBassi & Company, businesses in a PEO arrangement grow 7-9 percent faster, have 10-14 percent lower turnover, and are 50 percent less likely to go out of business.

So as the business of employment continues to change, creating more complex laws, compliance issues and the requirement for more work on a company to stay afloat – why not consider the value of a PEO service in 2022?

ELQ is one of the nation's largest and oldest PEO brokerages. Give us a call to see how the right PEO could impact your business. You’ll get unbiased answers to your questions, and no cost proposals from carefully vetted providers that work with clients of your industry and employment size.

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About the Author: Mike Burgelin

With two decades of experience in the PEO Employee Leasing industry, Mike Burgelin is an expert in helping business owners maximize their growth potential through the outsourcing of human resources and payroll tasks. He is also a fully licensed insurance agent, whose skills and knowledge in workers’ compensation insurance help his clients save over $40 million in premiums each year.