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Classic PEO |
Classic PEO Detail |
Considerations for your company |
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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. |
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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. |
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Safety & Risk Management |
Claims management provided by PEO. Safety program
compliance administered by PEO. |
Since you are joining the PEO's master Workers'
Compensation policy, the PEO has a strong financial
interest in ensuring that 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. |
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Health, Dental & Vision Plans |
Coverage offered under PEO's master policy or may choose to
use client's 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. |
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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. |
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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 others, 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. The HR
services you expect should be clearly listed in the CSA. |
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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
procedures can reduce your company's liabilities in the
event of a sexual harassment suit, discrimination suit,
workers compensation or unemployment claim. |
