1. Can a PEO provide me with better health coverage than I can find on my own?
Yes. Because PEOs work with large numbers of people, they have more buying power and can usually get better group rates. They may also have unique programs for health insurance that offer better solutions than a small employer can provide individually. Rates may vary based on specific circumstances, but in general, a PEO can provide better coverage and benefits options. They can also help you customize your benefits package to include dental insurance, vision insurance, health savings accounts, college funds, and other options.
2. What does the onboarding process for a new employee look like?
The PEO will help you get each employee enrolled in the new system using either face-to-face interviews or electronic onboarding. Most PEOs will provide handbooks outlining the employee’s options and procedures for interacting with the PEO. A PEO can also help you with recruiting, job descriptions, and job applications when you need to fill positions on your current payroll.
3. How do employees interact with the PEO?
Most PEOs will give the employer the option of whether employees have direct contact with the PEO or whether they go through a company representative. If desired, the client can have a liaison on-site to interact with employees. The PEO may also take a “train the trainer” approach, in which employees go to their managers with questions and needs.
Other interaction opportunities include a website where employees can view pay statements and benefits, a service center to answer employee questions by phone, training seminars regarding safety, benefits, or compliance, and notifications by mail. The client company usually has plenty of flexibility in determining how much direct interaction employees have with the PEO.
4. How much liability goes to the PEO vs. the business owner if there is a legal action against the company (sexual harassment, wrongful termination, etc.)?
The PEO provides liability insurance that will cover the business up to a specified amount for various types of claims. The client will usually be responsible for a portion of the claim, and this amount may vary based on the type of claim incurred. The insurance policy is designed to ensure that a lawsuit doesn’t cripple the business.
5. How much assistance does the PEO provide in settling these disputes and at what cost to me?
The PEO may retain legal counsel to help resolve legal claims. The cost of this counsel and of any HR tools designed to minimize risk will be included in the PEO’s fee. If the claim is tried in civil court, additional fees may apply.
6. Who handles state unemployment taxes and claims? Do I have to do anything, and what is the extent of my involvement?
The PEO handles state unemployment taxes and claims. The business owner may need to provide necessary data and will also be responsible for any claims filed by employees not on the PEO payroll (such as those handled before the client hired the PEO).
7. Will I lose control of certain aspects of my business if I hire a PEO?
The PEO will assume responsibility for administrative tasks, payroll, safety compliance, risk management, and benefits administration. This frees the business owner up to manage the operation and growth of the business. If desired, the PEO can also help with recruiting and hiring on an as needed basis. In these cases, the PEO handles pre-screening of candidates and initial phone interviews, but the client retains power over hiring decisions.
8. PEOs are responsible for paying payroll taxes for their clients. How can I be assured the PEO will properly remit my state and federal taxes?
As part of the process in vetting a PEO for your company, you have the option to ask them to present you with a letter from a certified CPA showing proof of timely tax payments. This will be more credible if the CPA is not “in house.” You are also within reason to ask for quarterly financial statements as proof of tax payments. Many PEOs are certified by the Employer Services Assurance Corporation (ESAC), which imposes standards for financial and operational compliance. The ESAC also provides quarterly reports, including verification of accurate payments.
In addition, the PEO may have an insurance policy for financial protection and should provide documentation of tax payments. As you research and compare PEO offerings, be sure to ask about each company’s verification and accreditation process.
9. What types of training will the PEO offer?
Most PEOs offer numerous training classes, some as many as 300 or 400. These classes cover a wide variety of topics including sales development, managerial training, blue collar courses, safety courses, sexual harassment, diversity training, worker’s compensation, compliance information, and much more. The client can usually choose whether to conduct the class online or have a live representative come and teach on site. Online classes can be scheduled immediately, while those requiring a live teacher will need to be scheduled in advance.
10. Can the PEO do anything without client consent?
No. All actions taken by the PEO are stipulated in the agreement. The PEO cannot make decisions for your business or implement changes without your consent.
As you research PEOs, keep track of the various benefits, services, and opportunities each one provides. You can easily narrow down your search using our PEO Matching Tool. This ‘go to’ list will help you choose the provider that can best meet the specific needs of your business.