The Professional Employer

  To run a business, you need a grasp of current employment practices, a detailed employee handbook, and to comply with all federal and state labor regulations. A Professional Employment Organization (PEO) can manage these administrative responsibilities and free up your in-house resources to concentrate on growing the business.

Hiring PEO services involves more than simply passing your HR responsibilities over to them: the PEO actually become a co-employer of your personnel. As the legal “employer of record” for your entire staff, the PEO hires your employees and leases them back to you. They then use their own tax ID to submit payroll records and file taxes, offer benefits, and secure workers’ compensation insurance.

So what does a PEO offer?
A PEO vendor brings the four core competencies of business to your organization:

Safety and risk management: If you’re looking for the key selling point of PEO services, this is it. PEOs assume liability if somebody gets injured on the job or accuses a co-worker of harassment. They also ensure compliance with all employment laws and OSHA regulations, and assure there’s no discrimination of age, sex, or race in the hiring and policies.

Payroll processing and taxes: PEO services take responsibility for your payroll taxes and responsibilities. This includes distributing paychecks, processing direct deposits, deducting taxes and retirement account funds, and sending out year-end tax statements.

Benefits administration: Saving money is a top concern for every business, and PEO vendors help tighten purse strings with discounted rates for health and dental insurance, disability plans, life insurance, employee retirement plans, and COBRA.

HR management: PEO vendors ensure compliance with ever-changing federal and state labor regulations. They help create employee handbooks and training documentation and place updated labor law posters where staff can see them. They also help recruit new talent by advertising for open jobs, prescreening candidates, and conducting background checks and drug screenings.
What’s the Cost?
The costs of PEO services can vary greatly based on industry and the package of services rendered. In addition to an initial setup fee - usually $1,000 to $5,000 - PEO vendors charge 3% to 6% of each employee’s gross salary per pay period. They may also charge additional fees for some payroll services, recruitment methods, and training, or bundle all services into a single package.