PEO Considerations

8 Things to Consider BEFORE Joining a PEO While PEOS seem like a convenient, one-stop-shop, employers should be mindful the following PEO features RESTRICTIVENESS 1 PEOS are a bundled solution and operate with a “take all or nothing approach." You may be paying for services that you don't really need. COST Costs vary among PEOS. On average, companies pay $150 per month per employee. That's alot, especially if all the services are not being used. 2 DIFFICULT TO UNBUNDLE The process of terminating the PEO relationship can be complicated, making it difficult to transition out. FICA RESTART If a PEO relationship is started after Jan. 1st, the company's tax clock may restart. The company reports taxes 4 under the PEO's FEIN which can create additional costs. UNEQUAL EMPLOYMENT POOLS Since PEOS pool together all worksite employees, groups with higher utilization benefit while groups with better experience do not. 5 LACKING BENEFITS EXPERTISE While PEO consultants are well trained in some areas, they are NOT benefits experts. With Healthcare Reform, employers need a trusted benefits advisor now more than ever. SERVICE RATIO Most 'dedicated'HR reps work on 7 the behalf of 400 to 800 worksite employees at a time. It's important to find out the PEO's service ratio. MORE LAWS AND REGULATIONS 8 When in a PEO, a company may become subject to additional labor laws, like COBRA, FMLA AND ADA. ISU San Francisco 8 Things to Consider BEFORE Joining a PEO While PEOS seem like a convenient, one-stop-shop, employers should be mindful the following PEO features RESTRICTIVENESS 1 PEOS are a bundled solution and operate with a “take all or nothing approach." You may be paying for services that you don't really need. COST Costs vary among PEOS. On average, companies pay $150 per month per employee. That's alot, especially if all the services are not being used. 2 DIFFICULT TO UNBUNDLE The process of terminating the PEO relationship can be complicated, making it difficult to transition out. FICA RESTART If a PEO relationship is started after Jan. 1st, the company's tax clock may restart. The company reports taxes 4 under the PEO's FEIN which can create additional costs. UNEQUAL EMPLOYMENT POOLS Since PEOS pool together all worksite employees, groups with higher utilization benefit while groups with better experience do not. 5 LACKING BENEFITS EXPERTISE While PEO consultants are well trained in some areas, they are NOT benefits experts. With Healthcare Reform, employers need a trusted benefits advisor now more than ever. SERVICE RATIO Most 'dedicated'HR reps work on 7 the behalf of 400 to 800 worksite employees at a time. It's important to find out the PEO's service ratio. MORE LAWS AND REGULATIONS 8 When in a PEO, a company may become subject to additional labor laws, like COBRA, FMLA AND ADA. ISU San Francisco