Putting a PEO to Work for You - What They Are and How It Works

Chances are you’ve heard the term “PEO” floating around in your networking circles but aren’t really 100 percent sure what it is and how it can benefit your organization. You’re not alone. We’ve heard this before and you’re likely not going to be the last person to land on this blog post in the exact same position. That’s why we’re here – to tell you what you need to know.

First things first. PEO stands for Professional Employer Organization. PEOs like Oasis enter into a co-employment relationship (we’ll get to what this is in a minute) with a client to enable them to cost-effectively outsource the management of their human resources, employee benefits, payroll and workers’ compensation. One of the benefits of this relationship is enabling small to midsized companies to compete with large companies for top talent by offering Fortune 500-quality benefits to their workers that they couldn’t get on their own. We’re talking health, dental and life insurance, dependent care and 401(k) plans, to name a few. In addition, PEOs provide compliance assistance with countless state and federal laws and regulations.

Here are some eye-opening statistics about PEOs provided by the National Association of Professional Employer Organizations (NAPEO):

  • Businesses in a PEO arrangement grow 7-9 percent faster, have 10-14 percent lower turnover, and are 50 percent less likely to go out of business.
  • 98 percent of business owners who are PEO clients would recommend a PEO to a business colleague.
  • A staggering 70 percent of PEO clients report increased revenues since entering their agreement.

That’s some pretty incredible statistics!

Co-employment

Back to co-employment. This is a contractual agreement that the client and PEO enter. It enables the PEO to assume specific employer rights, responsibilities and risks through the establishment and maintenance of a relationship with the client’s employees.

Don’t worry, entering into a co-employment relationship with a PEO won’t cause you to lose control of your business. Business owners retain ownership and control of operations. The PEO only assumes responsibilities associated with a “general” employer for purposes of administration of benefits and remittance of payroll and payroll taxes. This helps the business reduce employment risks, associated hassles, and possible fines. To put it simply, the PEO focuses on employment-related issues and the client goes about the business of operations.

Focus on growth

All of this enables the client to focus their time and energy on creating revenue and growing the business. The NAPEO survey also reported an annual median revenue growth for PEO clients of twice that of comparable non-PEO firms. PEO clients accomplish this by controlling employment costs, reducing overhead in hiring, streamlining technology and service infrastructure costs, and protecting against liability through compliance assistance.

Not to mention the value of the time saved and redirected toward core competencies and organizational strategic goals.

Why PEOs?

The PEO industry has been around for about two decades. The need emerged when the number of laws and regulations addressing employee and labor issues doubled between 1980 and 2000. Managing human resources went from a relatively straight-forward and pain-free process for businesses to a much more complex and labor-intensive one. Many didn’t have the level of expertise or capital to stay up to date and in compliance. 

Now, with more than 700 PEOs operating across 50 states, companies of all shapes and sizes from all industries are taking advantage of what PEOs have to offer and keeping themselves in business and thriving.

Finding the Right PEO

It’s important to note that not all PEOs are created equal. Apart from deciding to use a PEO service, a company must conduct thorough research to ensure the PEO they plan on using is the right partner for their business. It’s important to consider factors such as how long they’ve been in business, staff experience and expertise, support processes, and references pertaining to the quality of customer service. PEO accreditation is also important. Oasis is accredited by the Employer Services Assurance Corporation (ESAC) offering an increased level of confidence for its clients. ESAC’s accreditation provides verification of a service provider’s ongoing compliance with important financial, operational and ethical industry standards, government regulations and financial assurance, as the FDIC does for banks.

ESAC accreditation is the industry gold standard and less than five percent of service providers invest the time, cost and ongoing operational excellence necessary to earn and maintain this elite credential. 

It’s also important to find a provider that has completed a SOC examination. SOC exams are performed by independent auditors and help ensure the proper controls are in place relevant to financial reporting, operational processes, and data security standards.

Of course, make sure your PEO provider has a trusted staff of reliable resources available to you. Oasis has been in business for over 25 years and employs a large staff of subject matter experts in human resources, payroll and tax administration, employee benefits and risk management. You’ll never find yourself unaware and unprepared with Oasis.

About Oasis

At Oasis, we help you navigate the complexities of employment with a smarter, customized, and effective solution for your workforce. We help you provide attractive and competitive benefits, minimize your employer, liability, manage a myriad of HR transactions, and stay on top of the ever-changing state, local, and federal employment regulations. As an accredited Professional Employer Organization (PEO) partner, our services let you get back to doing what you love and focus on your business. For more information, visit OasisHR.com or contact at 800-336-1931.

James Campbell

James Campbell is a District Sales Manager for Oasis, a Paychex® Company. By removing administrative obstacles, he allows growing companies to focus on what they do best. With the use of tailored technology and HR solutions, his clients operate their businesses more efficiently and cost effectively.

Published

July 17, 2018

Posted by

James Campbell