What is a Professional Employer Organization (PEO)?
Depending upon your perspective, your employees can be your best friend or your worst enemy. If you truly value your employees and have treated them accordingly, you’ve probably never had a bad experience in dealing with employee issues. If this is the true, then you probably haven’t been in business for very long or you’ve been extremely LUCKY!!!
Let’s face it, having the right employees can either make or break most businesses, especially those businesses that deal with the buying public. The employment relationship itself can either make or break your business in a heartbeat. Complying with the myriad of employment related laws from federal and state governments is not only time-consuming but also non-productive and therefore, non-revenue-generating activity. You don’t make money by filling out the required Employment Eligibility Verification form (commonly called the “I-9”). But you do face stiff penalties if you don’t have one on file for each employee hired since 1984.
Many business owners solve the “Human Resource” puzzle by outsourcing their human resources administration and entering into a “co-employment” arrangement with a Professional Employer Organization (PEO). The PEO then becomes the administrative employer, or employer of record for the IRS and other government agencies. The business owner becomes the worksite employer and maintains day-to-day direction over the employees. The administrative employer maintains all of the personnel records and complies with reporting requirements.
Most PEOs today offer a wide variety of human resources consulting activities in addition to the standard payroll processing, workers compensation insurance, and employee benefits. They can assist in writing and reviewing human resources policy manuals and employee handbooks as well as written job descriptions and properly classifying employees in accordance with the Fair Labor Standards Act (FLSA). Having proper human resources guidance is just as important to a business today as having a telephone.
Information provided as a complimentary FYI