Co-Employment, Part 2: What Is a PEO?
In our previous article, we reviewed two types of co-employment relationships: Joint-Employer and Employer-of-Record.
In this post, we discuss the third and most comprehensive co-employment relationship: a Professional Employer Organization, or PEO.
In this type of relationship, a PEO and the client sign a contractual arrangement in which they share the responsibilities of being an employer.
The "Administrative Employer" The PEO becomes the "Administrative Employer" and assumes the responsibility of managing most employment-related liabilities, such as payroll, tax and insurance requirements.
More specifically, in a co-employment relationship, a PEO:
The PEO aggregates workers' compensation insurance, health insurance and retirement plans.
This enables them to establish relationships with large regional carriers and to offer more competitive premiums with a wider range of plan options.
The net result for small and mid-sized employers is greater buying power and cost effective economies-of-scale.
Furthermore, PEOs help manage their clients' employment liabilities by developing compliant workplace policies and procedures, assisting in investigations and disciplining worksite employees, and monitoring their clients' ongoing compliance with all state and federal employment laws.
The "On-Site Employer" While the PEO assumes the role of the "Administrative Employer" in matters relating to HR management and compliance, the client company maintains the role as the "On-site Employer.
" As such, they continue to direct and controls the worksite employees in their day-to-day activities, such as production, customer service and overall delivery of its products and services.
Additionally, it is the on-site employer who is responsible to provide their employees the tools, instruments and worksite necessary to perform their job.
Simply put, in the co-employment relationship, the PEO assumes the responsibility for helping keep their clients in compliance with payroll, tax, insurance and employment laws, while the client is responsible for managing the onsite operations, such as hiring, managing and training their staff to perform their day-to-day activities.
Working with a Professional Employer Organizationis the ultimate win-win business relationship for the client - they get to focus on the work they love while the PEO helps keep them out of trouble along the way.
To investigate if a PEO is right for your company, contact CPEhr today for a complimentary HR analysis.
In this post, we discuss the third and most comprehensive co-employment relationship: a Professional Employer Organization, or PEO.
In this type of relationship, a PEO and the client sign a contractual arrangement in which they share the responsibilities of being an employer.
The "Administrative Employer" The PEO becomes the "Administrative Employer" and assumes the responsibility of managing most employment-related liabilities, such as payroll, tax and insurance requirements.
More specifically, in a co-employment relationship, a PEO:
- Processes payroll
- Administers all PTO benefits (vacation, sick, personal days, etc.
) - Submits all quarterly and year-end tax filings
- Provides health insurance for the staff
- Administers all employee benefits, including open-enrollment, changes, and COBRA
- Ensures compliance with the Affordable Care Act
- Manages Unemployment Insurance and unemployment claims
- Issues and maintains workers' compensation insurance coverage
- Manages work-related injuries, claims and insurance carrier audits
- Overall, provides guidance and assistance to their clients to comply with all relevant state and federal employment regulations.
- Collects, deposits and reports state and federal employment taxes
The PEO aggregates workers' compensation insurance, health insurance and retirement plans.
This enables them to establish relationships with large regional carriers and to offer more competitive premiums with a wider range of plan options.
The net result for small and mid-sized employers is greater buying power and cost effective economies-of-scale.
Furthermore, PEOs help manage their clients' employment liabilities by developing compliant workplace policies and procedures, assisting in investigations and disciplining worksite employees, and monitoring their clients' ongoing compliance with all state and federal employment laws.
The "On-Site Employer" While the PEO assumes the role of the "Administrative Employer" in matters relating to HR management and compliance, the client company maintains the role as the "On-site Employer.
" As such, they continue to direct and controls the worksite employees in their day-to-day activities, such as production, customer service and overall delivery of its products and services.
Additionally, it is the on-site employer who is responsible to provide their employees the tools, instruments and worksite necessary to perform their job.
Simply put, in the co-employment relationship, the PEO assumes the responsibility for helping keep their clients in compliance with payroll, tax, insurance and employment laws, while the client is responsible for managing the onsite operations, such as hiring, managing and training their staff to perform their day-to-day activities.
Working with a Professional Employer Organizationis the ultimate win-win business relationship for the client - they get to focus on the work they love while the PEO helps keep them out of trouble along the way.
To investigate if a PEO is right for your company, contact CPEhr today for a complimentary HR analysis.
