What is a PEO - The 4 Fundamental Services that the PEO Provides.
Below is a quick list of services that PEOs provide.
1. PEO Payroll Administration – the most basic role of a PEO as well as the most well-known, because all small businesses have the shared responsibility to pay employees and monitor regulations.
• Payroll check preparation and distribution
• Physical paychecks, direct deposit and, a debit card arrangement
• W2 and W3 year-end preparation
• Payroll information backup and maintenance
• Tax withholding and payment for federal, state and local taxes
• Payroll record keeping and maintenance
• Responding to payroll audits and inquiries
• Will respond to I-9 questions
• Payroll reporting and breakdown including job costing and certified payroll
• Time clocks, time & attendance software
• Vacation, sick or PTO Tracking
• Maintain and upgrade payroll software (usually online)
• Incorporate an export to a general ledger/accounting system
• Tax changes maintenance and administration
• Support for hourly, salary, commissions, tipped or piece-work payments
• Report payroll by telephone, fax, email or directly input online
• Filing paperwork to local, state and federal governments for items such as W2, W4, FICA
• Governmental tax reporting and compliance
2. PEO Employee Benefits Administration - to maintain a competitive edge and retain key employees, small businesses can compete with large companies by having an extensive employee benefit programs. By pooling its employees into one group, the PEO is able to provide this access to the small business. PEO’s spread medical claims over a larger premium base which can mean lower average rate increases.
• Long Term Disability (LTD) & Short Term Disability (STD)
• Life Insurance, Accidental Death & Dismemberment (AD&D)
• Flexible Spending Accounts (FSA)
• Health Savings Accounts (HSA) & Health Retirement Accounts (HRA)
• Vision Plan
• Pre-paid legal, pet and other supplemental insurance
• 401(k) and IRA admin, including company matching
• Employee Assistance Programs (EAP)
• Plan discrimination and compliance review
• Annual enrollment support manage ongoing changes to enrollments, and eligibility tracking
• Annual enrollment communications including conference calls & meetings with employees
• Handbook creation, distribution and ongoing maintenance
• COBRA administration and compliance, payment processing
• Carrier payment, and synchronization of employee changes
• Section 125 compliance review
3. PEO Human Resources Administration and Risk Management – With ever increasing employment related laws, most small business owners and managers simply do not have the time to become as involved or educated as they should. As a result, they may find themselves involved in a lawsuit that could have been avoided had they teamed up with a PEO that would have provided initial guidance on the situation.
• Provides guidance on discrimination, sexual harassment, FMLA in addition hiring and firing practices
• Personalized and legally compliant employee handbooks
• Pre-Employment drug and background testing
• Implementing a Drug-Free Workplace program
• Recruiting assistance, position description development, salary surveys, job posting, resume screening, interviewing training
• Performance management software and performance appraisal templates
• Rewards and Recognition Programs
• Online and local, technical, developmental and compliance related training for managers and employees
• Legal and HR employment related guidance
• Provide guidance, development and communication on employment policies
• Develop, publish and maintain compliant employee handbooks
• Provide coverage under Employment Practices Liability (EPLI)
• Compliance related posters and notices
• Unemployment claims administration
• Help with compliance on FLSA, ADA, EEOC, OSHA
• Employment applications development and maintenance
• Recruiting training (interview questions, best practices)
• I9 compliance and review
4. PEO Worker’s Compensation Administration – Regulations vary on the level of workers compensation insurance that is required for each business. Many PEOs will include this insurance as a part of the service offering but others may allow you to keep your individual policy. Depending on the circumstance the business may benefit by going direct to access better rates. Sometimes these savings offset the cost of the PEO services. Finally, the PEO’s worker’s comp offering may include reviewing and processing claims which is a tedious manual effort.
• Worker’s comp claims review and administration
• Safety experts that develop a safety plan and provide training, in addition to performing audits/reviews
• Reporting and documenting worksite accidents
• Worker’s Compensations billing reconciliation
• OSHA Compliance
• Annual policy and dividend plan reviews
About the Author
Carolyn Stoll is a frequent contributor to PEOcompare and writes about issues that may affect small businesses such as workers comp. She is a founder of PEOcompare.com which helps match small businesses with the right PEO for their particular needs. Her background is in marketing and communications, employee education and training, development of policies and procedures and the ongoing delivery of outstanding service to customers.
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