Professional Employment Organization

A PEO (which is short for “Professional Employment Organization” or “Professional Employer Organization”) is a type of entity that can save you a lot of headaches and frustration by taking over some of the major employee-related functions that you as a business owner or manager are responsible for. These are tasks that can soak up your time. Running a business is tough, and you will be well-served to position yourself so that you can concentrate on actually running your business rather than doing paperwork. By outsourcing certain paperwork-heavy functions, you are freed up to take care of the things that affect your bottom line.

A professional employment organization provides services that fall into four major categories. The following sections discuss each of those categories.

Workers’ Compensation Administration

Workers’ compensation administration includes tasks such as reviewing and administering claims; performing safety-related audits and reviews; creating and administering workers safety plans; reporting and documenting on-the-job accidents; complying with OSHA regulations; and workers compensation billing reconciliation.

PEOs have people on staff who deal with workers’ comp claims quickly and efficiently. In addition, those claims are charged against the PEO for purposes of re-evaluating insurance costs, rather than your own company. It prevents the potential disaster of having a major claim filed against your business, which could possibly be so large that it raises your workers’ comp insurance rates past the point where you can possibly pay them.

Payroll Administration

Payroll administration includes functions such as preparing payroll distributing payroll checks; making direct deposits; managing government withholdings; reporting; preparing W2s, W3s, and other employee-related documents; payroll record keeping for audits and inquiries; and tracking vacation and sick time.

Benefits Administration

Benefits administration includes tasks such as 401 k administration; management of short term and long term disability plans; life insurance administration; COBRA compliance; benefits handbook creation; flexible spending account administration; annual benefit plan review; and administration of employee assistance plans.

Providing your employees with the best benefits you can possibly afford is a good way to keep your employees happy and productivity high. It’s also difficult to do. Hiring a PEO to manage your employee benefits can save you a large amount of time and money. It saves you time by freeing you from having to research, shop, and compare benefits plans. It saves you money by offering you lower rates than you would be able to get on your own.

Human Resources Administration

Human resources administration includes such tasks as accepting employment applications; performing background checks; creating employee handbooks or communicating employment policies by other means; audit compliance; managing EPLI insurance; and legal assistance.

As you can see, hiring a professional employment organization can take many burdens off of your shoulders so you can concentrate on what’s really important, which is running your business.

So How Do You Benefit?

A PEO is able to provide services by establishing a contractual relationship with you where your current employees become employees of the PEO for most Federal and State employment compliance purposes. The PEO then is able to handle compliance issues; however you maintain local control of employees in order to provide the products and/or services for which your business was established. Simply put, the PEO provides you with the local control over your workforce while removing virtually all administrative headaches and costs associated with employees.