Please read our PEO blog posts for expert insights on the professional employer organization industry. If you have any thoughts or feedback, don’t hesitate to comment.
When the Tax Cuts and Jobs Act of 2017 was passed last December, a major piece of the legislation cast a shadow of doubt over the PEO industry. As a result of the new law, qualifying pass-through entities will receive a 20 percent tax deduction; however, no language was provided to indicate whether these entities would still be eligible for this tax break as a client of a PEO. While I and many other industry experts surmised that it was not the intention of the new legislation to negatively impact the PEO industry and its clients, there was no concrete guidance to support this expectation.
In addition to providing core services such as payroll processing, benefits administration, and employment law compliance, PEOs offer invaluable solutions that reduce employment-related risks and create back-office administrative efficiencies.
However, one of the great competitive advantages of a professional employer organization is the ability to offer its clients access to large group medical plans that a small business could not otherwise procure on its own. Because of the new association health plan rules introduced by the Trump administration, there is uncertainty as to how these changes may impact the PEO industry. The following reasons explain why they are not a threat.
Tis the season for when you may be evaluating whether or not the PEO model is the right fit for your business. You will cover many topics throughout this evaluation process such as the PEO’s human resources delivery model, HRIS technology, employee benefits, and costs associated with the PEO services. However, there is one very important issue you will likely not review before you make your decision—the PEO agreement. The client service agreement (CSA) is the binding contract that dictates the responsibilities of each party in this arrangement.
As a PEO consultant to many of the nation’s largest insurance agencies, we are often asked why so many documents are required in order to receive a proposal and what is a PEO doing with that data. Your complete information is vital so that the PEO can give your company an accurate pricing quote.
After decades of unending employment laws, regulations, updates and revisions, employers have found a lifeline in the form of professional employer organizations (PEOs). In order to focus on the business of your business, PEOs take the time-consuming job of managing wage and hour laws, EEO compliance, the Affordable Care Act, workers’ compensation, and so many more burdensome tasks out of the hands of the entrepreneur and into the hands of the trained professional. PEOs help businesses in every state of which 39 have already developed registration and licensure requirements.
Is a professional employer organization engaged in a co-employment or employee leasing relationship with its clientele? The answer seemingly depends on who you ask. There are many within as well as outside of the industry that consistently refer to what a PEO does as employee leasing. This may have been true at the onset of the industry however, those who currently refer to a PEO’s engagement with its clients as employee leasing are off the mark. In today’s marketplace, every organization that calls itself a professional employer organization is engaged in a shared or co-employment model.
In today’s increasingly competitive marketplace, small and mid-sized businesses need to utilize all available advantages. This means finding opportunities to ramp up efficiencies and boost cost effectiveness. Professional employer organizations (PEOs) are providing the types of services that save companies time and money by outsourcing employee related administrative functions to a dedicated service provider. Understanding the role and possible benefits of a PEO can be critical for smaller firms looking to obtain a complete strategic outlook on their futures.