| Classic
PEO |
Classic
PEO Detail |
Considerations
for your company |
| Employer of Record Responsibilities |
Employer
and employee taxes reported and deposited under the PEO’s
FEIN. |
Relief
from responsibility for making tax deposits to the
government or risk getting fined for incorrect withholding
amounts. 940 and 941 reports are filed by the PEO.
All issues with tax compliance are the PEO's responsibility.
Payroll is done by the PEO.
The PEO will require you to sign a Client Service
Agreement (CSA) when becoming a client. This is an
important document which defines each party's responsibilities
in the PEO relationship. |
| Workers’ Compensation Insurance |
Coverage
provided under PEO’s master policy, with each client
maintaining their modification rate. |
Your
employees are covered under the PEO's master policy and the PEO
has the responsibility for managing the claims.
When seeking a PEO relationship, most PEOs will want to
see a history of your Workers' Compensation claims (risk
underwriting). PEOs want to pool "good
risk" accounts. In most states your modifier rate will
follow your company. By joining a PEO your company may be
able to enjoy significant discounts or get coverage that
is otherwise difficult to obtain. |
| Safety and Risk Management |
Claims
management provided by PEO. Safety programs compliance
administered by PEO. |
Since
you are joining the PEOs master Workers' Compensation policy,
the PEO has a strong financial interest in ensuring the claims
are managed. The PEO will work to ensure that the
questionable claims are contested and legitimate claims are paid
promptly. They will work to implement or improve
safety programs in your company. If your company
needs assistance with reducing your claims, quality
PEOs maintain expert staff to assist you. PEOs work hard
to ensure that their PEO has an attractive policy in place for
all of their clients. This means that PEOs will shop
insurance companies (annually) to ensure the PEO group is
obtaining competitive coverage. Be sure to ask the PEO
about the carrier providing the coverage and their rating. |
| Health, Dental & Vision Plans |
Coverage
offered under PEOs master policy, may choose to use clients
policy. |
Many
PEOs negotiate master policies for all of their
clients/employees. These policies may be Health
Maintenance Organization (HMO), Preferred Provider Organization
(PPO) or Point of Service (POS) policies. Options vary by
PEO and by state. Most PEOs require your company to
obtain a "participation rate" that is calculated by
dividing the number of employees seeking coverage divided by the
number of employees eligible for the plan (less people covered
elsewhere, eg: under a spouse's policy). Participation
requirements vary by PEO. Most PEOs will allow your company to
split premium costs between your company and the employees. Companies
who offer to contribute to the premium costs are more
attractive to a PEO. All PEOs want to review an
"employee census" that shows the age, sex and level of
dependent coverage (single, family, etc) for the group, and will
work with you to ensure ERISA compliance. |
| Supplemental Benefits & Retirement
Plans |
Supplemental
benefits offered under PEO's master policy. 401(k) provided by
PEO Multiple Employer Plan (MEP) or as a Standalone Plan in
client's name. |
Supplemental
Benefits cover a large area of services including; Life
Insurance, Short Term Disability, Long Term Disability, 401(k),
Flexible Spending Account (FSA), etc. PEOs often have a
master policy in place that will be made available on a
voluntary basis to your employees. For 401(k) plans, the
rules for PEOs have changed recently, PEOs can assist your
company in setting up a 401(k) plan that meets your needs and
satisfies governmental regulations. Types available may include:
Traditional 401(k), Simple 401(k), Safe Harbor 401(k) or Profit
Sharing. |
| Human Resources |
Majority
of human resource
(HR) services are included in PEO pricing. |
PEOs
vary widely in their offerings and pricing for HR services.
Some services, like preparation of employee handbooks, are
included while other, such as drug testing, may be provided for
an additional fee. Be sure to check your CSA for details
about your co-employment responsibilities. Once you are
engaged with a PEO you will be assigned a dedicated HR
professional to assist with most of your HR needs.
If you currently have an HR staff member the PEO can act
as an invaluable advisor to them. The HR services you
expect should be clearly listed in the CSA. |
| Regulatory Compliance |
Required
to be provided by PEO in conjunction with client. |
PEOs
work to ensure compliance with a multitude of governmental
regulatory agencies. If you do not have a dedicated HR
staff member or department, the PEO will act as one.
Employer rules regarding policies, procedures, employee
handbooks and other regulatory issues vary from state to state.
Clarifying and distributing formal policies and procedure
can reduce your company's liabilities in the event of a sexual
harassment, discrimination suit, workers compensation or
unemployment claim. |
