| It's the $51 billion industry you've
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| | cooperation with larger companies' HR
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| likely never heard of: PEOs. Private
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| | departments.
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| Employment Organizations, or PEO's as
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| | When is your business ready to outsource
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| they're known, were deemed the fastest
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| | to a PEO? Industry experts advise careful
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| growing business service during the 1990s
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| | preparation when deciding if your
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| by the Harvard Business Review. Currently
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| | business should contract with a PEO. Do
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| over 700 PEO's operate in all 50 states
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| | your homework. Here are some questions to
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| and provide service to approximately
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| | consider (courtesy of StaffMarket.com):
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| 100,000 small to mid-sized businesses. So
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| | Are you spending too much for workers'
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| what exactly is a PEO, and how can your
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| | compensation insurance?
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| business benefit by using one? Following
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| | Are your employees asking for benefits
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| is an introduction to the basics of PEOs.
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| | you can't offer?
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| What is a PEO? A PEO is not a temp or
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| | Are you paying too much for health
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| staffing agency and it is not a payroll
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| | insurance?
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| service. As defined by the National
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| | Is your company compliant with state and
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| Association of Professional Employer
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| | federal regulations?
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| Organizations (NAPEO), a PEO is an
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| | Is your turnover rate adversely affecting
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| "organization that provides an integrated
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| | your company's performance?
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| and cost effective approach to the
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| | Is your HR department as effective or as
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| management and administration of the
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| | efficient as you believe it could be?
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| human resources and employer risk of its
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| | If the answers to these questions lead
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| clients, by contractually assuming
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| | you to believe that a PEO is in your
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| substantial employer responsibilities and
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| | future, appoint a team to the task of
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| risk, through the establishment and
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| | conducting thorough market research,
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| maintenance of a co-employer relationship
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| | attend conferences, and read case studies
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| with the client's employees."
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| | about HR outsourcing. Utilize their
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| In other words, a PEO legally hires a
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| | findings in your PEO search.
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| company's employees, which makes the PEO
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| | How do you choose a PEO? First, make sure
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| the "employer of record" for tax and
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| | the PEOs you consider are accredited by
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| insurance purposes. The employees are
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| | the Employer Services Assurance
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| leased back to the original employer
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| | Corporation (ESAC), a nonprofit
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| under a co-employment contract. The PEO
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| | organization which protects the interests
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| is then responsible for administration of
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| | of businesses contracted with PEOs.
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| payroll, workers compensation, employee
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| | Accreditation means a PEO meets ESAC's
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| benefits, and workers compensation.
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| | ethical, financial, and operational
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| Numerous duties such as 401 (k)
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| | standards.
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| administration, risk management, employee
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| | In addition, Make sure your PEO meets
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| counseling, and training and development
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| | state licensing and registration
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| can fall under these categories depending
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| | requirements. The following states have
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| on the terms of your contract.
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| | licensing laws: Arkansas, Florida,
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| Why use a PEO?
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| | Illinois, Montana, New Hampshire, New
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| Being an employer can be a headache:
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| | Mexico, Oregon, South Carolina,
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| there are over 60 different
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| | Tennessee, Texas, Utah, and Vermont. The
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| employment-related governmental
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| | following states have registration laws:
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| regulations with which a business must
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| | Kentucky, Louisiana, Maine, Minnesota,
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| comply. The U.S. Small Business
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| | Nevada, New Jersey, New York, North
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| Administration reports that owners of
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| | Carolina, Ohio, Oklahoma, Rhode Island,
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| small or mid-sized businesses now spend
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| | and Virginia.
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| up to a quarter of their time on
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| | Here are some more guidelines provided by
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| employment-related paperwork. By
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| | the NAPEO:
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| outsourcing to a PEO, employers can focus
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| | 1. Assess your workplace to determine
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| on operating and building their business.
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| | your human resource and risk management
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| Employees gain improved, comprehensive
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| | needs.
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| benefits. Some other benefits to
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| | 2. Make sure the PEO is capable of
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| consider:
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| | meeting your goals. Meet the people who
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| - Improved human resource practices can
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| | will be serving you.
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| increase your profitability. PEOs handle
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| | 3. Ask for client and professional
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| basics like employee handbooks or more
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| | references.
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| delicate HR tasks such as sexual
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| | 4. Check the firm's financial background,
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| harassment training.
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| | and ask for banking and credit
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| - Comprehensive employee benefits makes
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| | references. Ask the PEO to demonstrate
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| your business a more attractive place to
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| | that payroll taxes and insurance premiums
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| work.
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| | have been paid.
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| - State of the art HRIS systems better
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| | 5. Check to see if the company is a
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| serve you and your employees with on-line
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| | member of NAPEO, the national trade
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| access to payroll and employee
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| | association of the PEO industry.
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| information.
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| | 6. Investigate the company's
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| - Coverage under a PEOs master workers
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| | administrative and risk management
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| comp policy means insurance is more
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| | service competence. What experience and
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| affordable. PEOs yearly shop for the best
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| | depth does their internal staff have? Do
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| insurance rates, and since they have an
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| | any of the senior staff have professional
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| interest in keeping claims low, they
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| | training or designations? Check to see if
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| conduct risk management training.
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| | the PEO's risk management services have
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| - Progressive PEOs offer benefits such as
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| | been certified by the Certification
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| college tuition reimbursement programs
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| | Institute at
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| and travel services
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| | 7. Understand how the employee benefits
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| Who can benefit from a PEO's services?
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| | are funded. Is the PEO fully insured or
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| Businesses from numerous
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| | partially self-funded? Who is the
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| industries-medicine, automotive,
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| | third-party administrator (TPA) or
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| construction, retail, manufacturing,
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| | carrier? Is their TPA or carrier
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| hi-tech- outsource to PEOs. According to
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| | authorized to do business in your state?
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| the NAPEO, their member PEOs average
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| | 8. Understand how the employee benefits
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| client is a small business with 17
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| | are tailored. Determine if they fit the
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| employees. PEO clients are small enough
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| | needs of your employees.
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| that they do not have the need or ability
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| | 9. Review the service agreement
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| to staff a human resource department.
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| | carefully. Are the respective parties'
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| Even large companies with a dedicated HR
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| | responsibilities and liabilities clearly
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| department can benefit: they get access
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| | laid out? What guarantees are provided?
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| to supplemental HR expertise, competitive
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| | What provisions permit you or the PEO to
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| health insurance, and state of the art HR
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| | cancel the terms of the contract?
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| information systems. PEOs work in
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