First of all, lets discuss the primary differences between a PEO and a temp staffing firm. A temporary staffing service recruits employees and assigns them to clients to support or supplement the client’s workforce in special work situations, such as employee absences, temporary skill shortages, or seasonal workloads. A PEO contractually assumes and manages employer responsibilities for all or a majority of a client’s workforce. Worksite employees participate in the PEO’s full range of employee benefits including, health, dental, and life insurance, vision care, and retirement savings plans. The client company through a co-employment relationship will still maintain the right to hire and fire employees while most all the liability is offset though the leasing contract.
In the absence of many work comp options in the temp staffing work comp marketplace there are many asking if a PEO relationship is right for you and your company. The main hurdles we run into are typically the payroll administration. This is typically for companies with daily labor or daily pay that do not have bank accounts. This does create a hurdle in the administration of payroll through a third party. There are some PEOs that will allow their clients to print checks remotely through their software so this could be a solution. In other cases a pay card is a better option. But the main concern here is how much back office admin this creates and does this make it cost prohibitive for the PEO to handle the account.
Outside of daily pay or day labor temp firms there is a more stable workforce and there are less issues. There are other things to consider once we get past the administration hurdles. The one plus that many need to consider is that there can be a considerabl;e savings on SUTA costs and Work Comp. We also want to check the PEO though to make sure it is a reputable company with client references and verifiable tax information and work comp coverage. When it comes to work comp, the PEO is responsible for all claims as the employer of record. You can verify coverage of the PEO has active coverage on the work comp verification services for your individual state. Even through a PEO relationship you should be able to verify your insurance coverage via the state department of labor in your name. Here is a link
You also want to ask for tax payment verification of on time payments and verify if they have any outstanding tax liens or debts. Its good to check in their domociled state and the main state of which you are doing business in. This is a HUGE red flag if they have tax issues because they have been operating on a trust account that should be setup for tax payment pass through only and this is NOT a good indicator of goodwill or financial stability.
If you are considering a PEO relationship you need to work with a well informed broker that can guide you through the quoting process. This may or may not be the right solution for you and you certainly don’t need to make this decision without all the necessary information disclosed. If you would like to discuss any insurance solutions for your staffing company please feel free to stop by my website at www.StaffingWC.com or www.CoverStaffing.com