Common PEO Terms Explained


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To handle ever-increasing HR challenges, businesses are turning to Professional Employer Organizations (PEOs), which help small and medium-sized businesses with their human resource functions. Here are some common terms PEOs use to describe their services

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Common PEO Terms Explained

  2. 2. To handle ever-increasing HR challenges, businesses areturning to Professional Employer Organizations (PEOs),which help small and medium-sized businesses with theirhuman resources functions. According to the NationalAssociation of Professional Employer Organizations(NAPEO), there are about 700 PEOs serving tens ofthousands of businesses in the U.S. And NAPEO estimatesthat the PEO industry grew $10 billion to reach $81 billionin gross revenues in 2010.These numbers alone show that HR outsourcing is growing.And with this trend comes new terms to follow.Here are some common termsPEOs use to describe their services:2w | Sharet | 800.465.3800
  3. 3. Client employer/client companyThis is a term PEOs use to describe the legal entitythat signs the contract. So when you see “clientemployer” or “client company” listed in a contract,this is typically your role.
  4. 4. Co-employment/Co-employerNAPEO defines co-employment as a contractualallocation and sharing of employer responsibilitiesbetween a PEO and its client. In a PEO relationship,workers are technically employed by two separateentities: you the business owner and the PEO. Thebusiness owner controls the company’s day-to-dayduties and core job functions. And the PEO (co-em-ployer) handles personnel-related functions such aspayroll, benefits, HR, workers’ compensation, etc.“A typical HR manager has to be an expert in many differentfields of HR and employee relations,” says Emily Dusablon,human resources advisor for Insperity. “When you work witha PEO, you get trained specialists in all of these fields.”4w | Sharet | 800.465.3800
  5. 5. Reduced business liabilityWhen a PEO refers to “reduced business liability,” itsimply means the PEO helps manage and reducemuch of your company’s liability. PEOs arecomprised of knowledgeable professionals whospecialize in HR and can be trusted to handle issuesin a timely and thorough manner, includingemployee relations support, employee liabilityawareness training and EEOC claim investigation,reporting and mediation.5w | Sharet | 800.465.3800
  6. 6. Government complianceEvery company has to abide by certain state andfederal rules with regard to HR. But exactly what thoseare and how they might differ between locations is notalways clear to the individual business owner. Manyof the larger PEOs offer client companies “governmentcompliance” services, or HR regulatory assistance,guiding them through the often cumbersome processand helping to ensure that the business remains infull compliance.6w | Sharet | 800.465.3800
  7. 7. Researching benefits packages and managing planscan eat up a lot of your time.A PEO will allow youremployees access to various insurance plans, flexiblespending accounts, retirement plans and otheressential employee benefits. By providing high-qualityemployee benefits, you’re able to attract and retain topemployees through competitive benefits packages.Employee benefits management7w | Sharet | 800.465.3800
  8. 8. HR administrative reliefPEOs take on your administrative duties to ensurethat important issues will be handled correctly, suchas government compliance, hiring employees, employeebenefits and employer liability management. Decreasingadministrative responsibilities – often busywork – isa quick way to increase productivity.Learn more about the advantagesof PEOs and co-employment.
  9. 9. To find out more or learn howInsperity can help your company,call us at 800-465-3800.Visit us at information contained in this document is for general, informational purposes only andis not intended to be legal advice. This information is not a substitute for the guidance of aprofessional and should not be relied upon in reference to any specific situation without firstseeking the advice of a qualified HR professional and/or legal counsel regarding applicablefederal, state or local laws. Insperity and its employees make no warranties, express or implied,and make no judgments regarding the accuracy of this content and/or its applicability to a specificsituation. A reference or link to another website is not an endorsement of that site or service.Insperity, a trusted advisor to America’s best businesses for morethan 26 years, provides an array of human resources and businesssolutions designed to help improve business performance. InsperityTMBusiness Performance Advisors offer the most comprehensive suiteof products and services available in the marketplace. Insperitydelivers administrative relief, better benefits, reduced liabilitiesand a systematic way to improve productivity through its premierWorkforce OptimizationTMsolution. Additional company offeringsinclude Human Capital Management, Payroll Services, Time andAttendance, Performance Management, Organizational Planning,Recruiting Services, Employment Screening, Financial Services,Expense Management, Retirement Services and Insurance Services.Insperity business performance solutions support more than100,000 businesses with over 2 million employees. With 2011revenues of $2 billion, Insperity operates in 56 offices throughout theUnited States.9w | Sharet | 800.465.3800