PEO Broker 101 – The Ultimate Guide to PEOs For Newbies [2022]
A Professional Employer Organization or PEO is an outsourcing firm that provides comprehensive solutions to small or mid-sized businesses in their employee-related responsibilities.
On the other hand, a PEO Broker helps small or mid-sized companies find the right PEOs for their human resource and administrative-related requirements.
PEOs provide services to 173,000 small and mid-sized businesses, employing a total of four million people. Getting a good PEO could be a challenge for a company. That is why it is advisable to get the services of a PEO Broker who can get your business an excellent employer-employee match.
If you want to know more about PEOs and PEO Brokers and how your business could benefit from them, here is information to help you navigate how they work.
This article will help you navigate around the world of PEOs and PEO Brokers with its discussions on the following topics:
PEO: A Business Entity
Four Core Services Offered by PEOs and PEO Brokers
Benefits of Working with PEOs and PEO Brokers
Costs of Employing PEOs and PEO Brokers
Financial History of the PEO and/or PEO Broker
Knowledge and Experience In Compliance and Business Practices
PEO Brokers
Professional Employer Organization: A Business Entity
More businesses are increasingly seeking PEO services, and the industry foresees a boom in 2022. Market conditions such as a shrinking economy push business owners to consider the PEO option.
It’s no wonder that it has grown to be one of the fast-moving and growing business services in the United States. The future of PEO is bright as companies aggressively look for ways to rebound by staying focused on their core business. Let’s have a look at how PEOs can help you.
Four Core Services That PEOs Offer
Payroll
Handling of the payroll of staff and management of business tax duties.
Employee Benefits
Providing health insurance, dental, vision, and ancillary insurance with complete end-to-end administration for the employees.
Workers Compensation Insurance
PEOs handle all claims, billing, and administration of Workers’ Comp.
Human Resources Support and Service
Employment, training, and retaining employees, including employee handbooks, background checks, and onboarding of new staff.
They also provide other services such as:
Risk Assessment
International Hiring
Retirement
Time and Labor Management
Direct Deposits
Applicant Tracking systems
Recruiting
PEOs serve as co-employers because they handle employer-employee issues while your business or company deals with all other tasks.
Hence, getting the services of a PEO is an excellent strategy for you to break free from many responsibilities and to give you more time to work on improving your business strategies.
Benefits of Working With PEOs and PEO Brokers
Promotes lower employee turnover. PEOs help you retain your employees. According to the National Association of Professional Employer Organizations (NAPEO), businesses that use a PEO have higher employee satisfaction and up to 14% lower employee turnover.
Offers better employee benefits. Through a PEO, your employees can gain access to large group benefits.
Provides a better employee experience. PEOs give access to comprehensive benefit providers at par with Fortune 500 companies.
Enables businesses to save money. PEOs can often negotiate better rates with insurance companies and other benefit providers.
Improved compliance. Your business gets guidance regarding rules and regulations because PEOs are constantly updated on these.
PEOs are well-versed and updated with complex State and Federal employment laws. This is crucial as failure to follow these laws could make your business incur costly fines.
Costs of Employing PEOs and PEO Brokers
Depending on your budget, you can choose which services you need from the PEOs.
PEO total costs depend on the following:
number of employees you have
services used that are not covered in your administration fees
PEO’s pricing structure
Total Payroll
A PEO may either charge a Per Employee Per Month Fee or a Percentage of Payroll based Fee.
Per Employee Per Month (PEPM):
A Per Employee Per Month fee is best if you have large payrolls and want to know exactly what you pay for Administration Fees. They are fixed and are based on the number of employees you have.
Percentage of Payroll (POP):
A Percentage of Payroll fee is best if you have a seasonal staff or a lower wage base because your administration fees are based on a percentage of payroll rather than a flat fixed PEPM.
Financial Stability Of The PEO
When considering a PEO, it is important to assess if it can continue to provide the support you need. Yes, you may think a prospective provider may be a good fit, but it is far wiser to ask them to provide the following:
IRS Certification that it has met the rigorous financial and reporting requirements set by the Internal Revenue Service (IRS).
Accreditation by the Employer Services Assurance Corporation (ESAC).
Client and professional references.
License and Registration with the State the PEO is operating in. Businesses that provide PEO are required to hold a PEO license.
Membership with NAPEO, the national trade association of the PEO industry.
It is also worth your time to ensure that you tick items on this checklist:
Get a demo of the PEO’s technology.
Know how long the organization has been in operation.
Make sure the HR staff is SHRM-Certified.
Service teams to Client ratio.
Satisfaction ratings from clients.
Whether they have (or are seeking) Certified Professional Employer Organization (CPEO) status.
Knowledge And Experience In Compliance And Business Practices
PEOs are trained to understand compliance laws far and wide. That means PEOs take care of the business's health to eventually give themselves more time to focus on business growth and innovation. The PEO will serve as your protector against potential fines and costly penalties.
Here are some compliance tasks that PEOs can handle:
W-2 Filings
Fair Labor Standards Act (FLSA) Compliance
Employer Payroll Tax Filings
Sexual Harassment Prevention Training
Workers’ Compensation administration
Employment Practices Liability Insurance (EPLI)
Unemployment Insurance Filings
New Hire Reporting
Statutory Disability Insurance
Posting Requirements
Family and Medical Leave Act (FMLA) Administration
PEO Brokers
PEO Brokers work with many different PEOs and helping clients find a PEO to match their business culture and needs.
They also perform a business needs analysis to check if an employer or business really needs a PEO. Then, they can easily match these needs because they have a roster of reliable PEOs. Ultimately, the owner can select the PEO with whom they want to work, retaining control over the direction of their business and making certain that they are satisfied with the choice of PEO.
Therefore, when choosing the right PEO, opt to work with industry veteran PEO brokerages.
Advantages of Employing a PEO Broker
A PEO Broker saves you time and money. They eliminate filling out multiple forms, listening to sales pitches, crunching numbers, and making an uneducated decision on which PEO to join. Moreover, having a broker is a time-saving- measure as it lifts pressure off from the business owner by taking care of the PEO selection process.
Additionally, business owners have the option to create a mini-market where PEOs compete to earn your business. As a result, it leads to a competitive environment, lower prices, and increased quality.
Conclusion
Professional Employer Organization(PEO) assists small to medium-sized businesses in employee-related duties while growing and accomplishing their goals. A PEO broker can confidently recommend a reliable PEO. In summary, let the PEO brokers play their role, so as to save time, money, and effort in the selection process.