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PEOs are co-employers that provide cost-effective shared management services to small to medium-size business owners. PEOs offer integrated services to assist in affording businesses with quality benefits, effectively managing human resources, employer risk issues, workers' compensation, employee benefits and payroll. A PEO becomes the "employer of record" and manages the complex employee-related matters such as health benefits, workers' compensation claims, payroll, payroll tax compliance and unemployment insurance claims.
The US Department of Labor Statistics predicts that by the year 2020, more than half of American employees will be employed by a PEO.
According to research by the Society of Human Resource Management (SHRM) Foundation, PEOs allow their clients to "reduce costs and free up time to devote to revenue-generating activities and improvements that can be instrumental to gaining a competitive advantage."
Why use a PEO?
Business owners want to focus their time, energy and expertise on what they do best, which is running their business. By partnering with a PEO, small business owners can receive:
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• Relief from the time-consuming hassles of employment administration. |
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• A wide range of personnel management solutions backed by HR expertise. |
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• Improved employment practices, compliance and risk management functions, which reduce liability. |
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• Access to a comprehensive employee benefits package, allowing employers to be competitive in the labor market. |
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• Assistance to improve overall productivity and profitability. |
Top 10 guidelines for choosing a PEO for your business
Following these guidelines can help you decide if a PEO is right for your business and then select a PEO that is credible and fits your needs.
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1. Assess your workplace to determine your human resource and risk management needs. |
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2. Make sure the PEO can meet your individual needs by consulting with your company and its representatives |
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face-to-face to understand how they can best help you. |
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3. For your Nevada business, confirm that the PEO is registered with the Nevada Division of Industrial Relations. |
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4. Check to see if the company is a member of the national trade association of the PEO industry, NAPEO. |
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5. Investigate the company's administrative and management expertise and competence by asking them |
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the following questions: |
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a. What experience and depth does their internal staff have? |
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b. Does the PEO have a dedicated staff to follow through on their commitments? |
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c. Does their senior staff have professional training, certifications or designations? |
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6. Understand how the employee benefits are managed by asking them these questions: |
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a. Who is the third-party administrator (TPA) or carrier? |
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b. Is their TPA or carrier authorized to do business in your state? |
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7. Understand how the employee benefits are tailored and determine if they fit the needs of your employees. |
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8. Review the service agreement carefully by asking yourself: |
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a. Are the respective parties' responsibilities and liabilities clearly laid out? |
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b. What guarantees are provided? |
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c. What provisions permit you or the PEO to cancel the terms of the contract? |
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9. Make sure that the company you are considering meets all Nevada law and requirements for a PEO. |
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10. Confirm that the PEO provides the full range of services available through a PEO, including health benefits, |
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workers' compensation claims, payroll, payroll tax compliance and unemployment insurance claims. |
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