Look at a few important factors to make sure you've chosen the right PEO partner

With Professional Employer Organization (PEO) services growing at a healthy 25-30% rate a year for several years now, the word is out on the benefits of outsourcing. So when choosing the right PEO company becomes the goal, look closely at a few important factors to make sure you've chosen the right partner.

Do a PEO Background Check

Find out how long the PEO has been in business. Are they registered with the state? There have been bad apples among the trees over the years, just as any industry has. What local or national trade associations are they a member of?

Also, pay attention the marketing material the PEO provider has. A company's website, brochures and business cards can give you immediate feedback as to what kind of industries they serve.

Workers' Compensation Questions

Who is their workers' compensation carrier, and for how long? Like any other business, employee leasing companies face yearly workers' comp audits, and if the insurer finds bad claims and management, a renewal is not awarded. Obviously without workers' compensation they can't continue to operate, and the scramble begins to find a replacement. If a company has had several carriers over the years, you need to know why.

Does the workers' compensation policy cover your employees when working out of your state? Many of the policies don't provide this coverage, so it's important that you ask. Also, find out specifically what types of deductibles apply if claims occur.

Understand the Tax Caps

Ask if your rate drops when the $7,000 Federal and state unemployment tax caps are met on employees. A large percentage of PEO companies continue to bill at the same rate throughout the year. While one particular company's rates may look lower than the others, if they don't lower your percentage on these taxes, you could end up paying much more in the end.

Ask if your rate drops when the Federal and state unemployment tax caps are met on employees

PEO Costs Vary

Compare the little numbers, such as new employee setup fees, minimum payroll run fees- even delivery costs can vary dramatically. A difference in delivery fees of only $10 a week is a $520 disparity between companies over one year.

Compare Employee Benefits

If employee benefits are important to your company, make sure they are suitable for where your employees live and work. Even companies like Aetna or Blue Cross Blue Shield have areas where coverage is limited. Having benefits that require lengthy travel dampens the perk.

Get References 

It can require a great deal of time, depending on the size of your company, to begin using the services of a PEO company. References can calm a lot of fears regarding the consistency of payroll delivery, how workers' comp claims have been handled and the overall service the Employee Leasing company gives to their clients.

The benefits of using PEO services can have an immediate impact on a business' profitability.

Get Some Help

The benefits of using PEO services can have an immediate impact on a business' profitability. Doing your homework up front to choose which company to partner with will determine how much!

ELQ was created to help businesses choose a Professional Employer Organization that fits their unique needs. Please call or fill out our online form if you're interested in seeing what advantages a PEO company could do for your business. We can be reached by calling 1-888-582-8388 between the hours of 8:30-5:30 EST.

professional employer organization peo workers compensation insurance employee benefits
About the Author: Mike Burgelin

With two decades of experience in the PEO Employee Leasing industry, Mike Burgelin is an expert in helping business owners maximize their growth potential through the outsourcing of human resources and payroll tasks. He is also a fully licensed insurance agent, whose skills and knowledge in workers’ compensation insurance help his clients save over $40 million in premiums each year.

mike@employeeleasingquotes.com
888-582-8388