Professional Employer Organization Enrollment Fees
Most Professional Employer Organizations (PEO) charge an enrollment fee for joining them. First let's examine what an enrollment fee is and why PEOs charge one, when you join a PEO they do an immense amount of work and require a significant amount of resources to ensure a smooth transition to their platform. Therefore they charge an enrollment fee to offset the expense of the resources utilized.
There are currently about 700+ PEOs operating in the US and their enrollment fees vary as much as they do. Some charge a flat fee per employee and others charge a set fee per company joining, so you should inquire about that fee and always negotiate the most advantageous terms for your organization.
Since this fee is variable with each PEO, you should also ask if there are additional fees for terminating employees or adding new employees and for administering COBRA. Many PEOs will charge a reduced rate for enrollment but will charge for each change in an employee's status and this could be costly.
Man taking notes from this blog on PEO Enrollment Fees.
A good rule of thumb is somewhere about $50-$75 per employee and this again ranges with the number of employees you have full and part-time. When picking any partner it's imperative that they are transparent and that you ask the right questions. Ensure what the enrollment covers and how the breakdown of the fees to ensure you are getting the best price for your group.
It's also important to discuss with your potential PEO vendor what costs are incurred if a new employee is hired, terminated or the employee goes on COBRA. Some PEOs charge for items that arise and you should check as to exactly what they charge for and the amounts.
All PEOs will provide a Schedule of Fees and they should be analyzed and reviewed with your PEO representative. You should also have any PEO you are involved with breakout and clearly define what the Administration Fee is per employee per month. Even if the Administration Fee is a percentage of payroll, the fee should be disclosed.
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