5 Misconceptions of Professional Employer Organizations

Nov 21

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Over the last decade, we have just about heard every question known to man about Professional Employer Organizations. So we thought we would put together the top 5 that we hear the most often. Here they are.

1. We can't join a PEO because it's not the beginning or end of the year.

You can join a PEO whenever you like. Certified PEOs do not have to restart your State and Federal Taxes. Your employees would get an additional W-2 at year-end. But that pales in comparison to the benefits of being in a PEO.

2. If we have paid our deductibles and leave the carrier, our deductibles will start all over again.

That's not accurate. We have gotten deductible credits for every client we have ever placed in a PEO. Even if you are switching health insurance carriers.

3. We are using a PEO and already renewed with them and can't leave for a year.

This is also incorrect. Virtually every PEO Client Service Agreement requires only a 30-day notice to leave the PEO relationship. You should inquire about what the termination is.

4. If we join a PEO, the PEO will tell us how to run the company, and control who we can hire and fire.

Entirely false. You continue to run your company just like you do now, the PEO shares your employer responsibility.

5. What if we join a PEO and they have a really high renewal, it will hurt our company.

PEOs do have large renewals, but it's rare. That's mainly for two reasons. The first is because of the buying power of the Professional Employer Organization. The second reason is that the PEO would lose it's client base if it had high renewals.

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There are numerous misconceptions about joining a Professional Employer Organization. And while there is plenty of misinformation on the internet, it's best to get the facts from experts, not your friend who knows a guy for everything.

Joining a Professional Employer Organization can give you the freedom to grow your business, limit your employer liability, and allow you to focus on running your business, not the business running you.

What to do if you are New to PEO?

First, you should know what a Professional Employer Organization is, how one works, and what to expect in one. Here's a 45-second video we made about what a PEO does. Next, you need to find PEOs to get quotes from or a PEO broker to help you navigate the over 700 PEOs.

People choose to join a PEO for typically one or two reasons, those are usually centered around either health insurance or workers' compensation insurance costs. This is because you can save quite a bit of money on one or both, and get access to better plans, networks, and affordable premiums.

What if I'm already using a PEO?

You already know the benefits of being a Professional Employer Organization client. What you might not know is whether you are getting the best deal on your PEO. Chances are you are not - and that's because no one knows exactly what they should be paying.

We help PEO clients all the time unbundle their administration fees, and negotiate lower costs in all areas of their PEO. And many times we will find a better PEO solution altogether. Either way, you save money, time, and get the best deal.

Ok, so what next?

Whether you are new to PEO or a veteran PEO user, we can help you. We can either help you find out if a PEO is right for you and your company. If you are currently in a PEO we can compare your costs to other PEOs and even negotiate with your current PEO.

If you are interested in learning how we can help you, let's chat.

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Rodney Steele

As Dinsmore Steele’s CEO and Founder, Rodney is responsible for the leadership and vision of Dinsmore Steele, as well as leading the company’s solution development and strategy. He founded Dinsmore Steele because he witnessed first hand the inefficiencies and difficulty companies had when pricing, shopping and purchasing their human capital solutions, and so he created single source platform that comparatively shops the entire marketplace. Prior to Dinsmore Steele, Rodney had an illustrious career in Capital Markets and Banking for some of the largest financial institutions in the world. Committed to changing the way companies shop for their human capital needs, Rodney and the entire Dinsmore Steele team is at the forefront of human capital. Rodney holds a bachelor’s degree in finance from the University of North Carolina, Chapel Hill. He is an active member of his community and resides on the North Shore of Long Island with his Siberian Husky Jefe.