| A commonly asked question we receive from | | | | payroll, but the sharing of risk and burden of |
| small business owners asks if there are | | | | employment are well beyond the definition of a |
| disadvantages to creating a relationship with a | | | | payroll provider. |
| PEO. We have decided that this would be a great | | | | Myth #3 – "A PEO will be confusing to my |
| article to put together; to dispel some of the | | | | employees." |
| myths concerning PEO disadvantages. Many of | | | | This myth, like most others, can be handled with |
| these perceptions, while understandable, are not | | | | proper communication. In fact, the PEO will even |
| backed up by any facts. | | | | provide assistance in outlining the many benefits |
| First off let us review the common PEO services, | | | | the employees will now have available to them. |
| followed by the ‘disadvantages' of | | | | Additionally, employees will be thankful that they |
| professional employer organizations. Today, PEOs | | | | have someone other than yourself to answer |
| provide small businesses access to expertise in | | | | typical employee benefits and other related |
| human resources, payroll, tax management, | | | | questions. Now, can employees get confused? |
| benefit administration and HR compliance | | | | Yes, but with the proper planning, (not too much, |
| management. In addition, PEO's transfer risk away | | | | mind you,) you can reassure employees that you |
| from the small business by providing assistance in | | | | are still the boss, now providing them with more |
| putting together and administering best practices | | | | than the typical small business benefits you had |
| in employment, employment policies and | | | | prior to the PEO relationship. |
| procedures. Some of the methods they use are | | | | Myth #4 – "I still need to work with an |
| seemingly simple, yet they are vital to ensure | | | | insurance broker." |
| compliance such as developing employee | | | | This is an interesting myth, one that we have |
| handbooks, providing a risk assessment, or | | | | heard a couple of times. While there are a |
| procedures concerning employment policies. Some | | | | number of brokers that provide assistance in |
| PEO companies will also provide access to | | | | selecting a PEO, there are many PEO brokers |
| recruitment, background screening, and discounted | | | | that do not resell medical or other insurance. |
| drug testing services, all of which lower the level | | | | Therefore, this one is entirely up to you. If you |
| of risk on your small business. Also, as the shared | | | | have a great relationship with your broker, by all |
| employer of record, PEOs will take on the burden | | | | means, continue working with them. However, the |
| of handling or fighting unemployment claims and | | | | PEO is a one stop shop for many services, and |
| workers' comp payments. | | | | can more than make up for a broker that is not |
| The advantages of using professional employer | | | | responsive to your needs. Remember, PEO's are |
| organizations are not specific to one industry, | | | | not insurance companies and do not sell insurance, |
| which is why long term growth projections are | | | | but simply provide you with medical and other |
| expected to continue even during an economic | | | | benefits under the ‘employment umbrella' as |
| downturn such as the one that started in 2009. | | | | if you were a much larger organization. |
| Simply put, more business owners are considering | | | | Myth #5 – "PEO's are expensive." PEO's, as |
| using PEOs in their HR departments, knowing that | | | | we stated above, are not payroll only providers, |
| these work related issues take up too much time | | | | but provide a full level of employmentrelated |
| and take them away from their core business. So | | | | services. While the cost of these additional |
| having our quick review, what are the apparent | | | | services are more than a payroll vendor, a simple |
| PEO disadvantages, and why do we believe them | | | | review of the true costs of your time can be the |
| to be a myth? | | | | difference in your decision. We believe there is a |
| The PEO Disadvantage Myth List | | | | true ROI in working with a PEO, and have |
| Myth #1 – "I will lose control over my | | | | provided a few thoughts as you review a PEO |
| employees." | | | | for your needs. Examples of savings include: |
| Today, this can't be further from the truth. The | | | | - Retaining your best employees |
| PEO client services agreement is executed | | | | - Saving time learning and understanding |
| between both you and the professional employer | | | | compliance issues |
| organization of your choice. The determination of | | | | - Reducing administrative time on payroll and |
| the rights of you as the employer and the PEO | | | | payroll tax compliance |
| as the co-employer are outlined for all to | | | | - Less time (for you) finding medical and other |
| understand. If you find anything that does not | | | | benefits for employees |
| appear correct, by all means, inquire about it. We | | | | - Cost containment on the burden of medical |
| also recommend a quick review by legal counsel. | | | | costs |
| Losing control is a myth as PEO's today share the | | | | So, as we started out the professional employer |
| burden of employment, but you may hire, fire, | | | | organization disadvantages are really not |
| and give raises without the PEO getting involved. | | | | disadvantages. We believe any small business with |
| Myth #2 – "A PEO is actually a payroll | | | | an employee base between 1 and 100 should |
| provider with medical benefits." | | | | consider a PEO as an option outside of the typical |
| This concern has been voiced because the PEO | | | | payroll outsource option. You are provided with |
| and is relatively unknown in many of the 50 | | | | more services, less work and a better way to |
| United States. Although small businesses in Florida, | | | | retain your employees – which means an |
| California and Texas are very familiar with the | | | | easier time for you in leveraging your business for |
| concept, the other 47 states are not so | | | | growth. |
| enlightened. Ultimately the PEO does take care of | | | | |