{"id":11028,"date":"2021-02-04T21:06:01","date_gmt":"2021-02-04T21:06:01","guid":{"rendered":"https:\/\/www.naylor.com\/associationadviser\/?p=11028"},"modified":"2021-02-04T21:06:01","modified_gmt":"2021-02-04T21:06:01","slug":"peo-professional-employer-organization","status":"publish","type":"post","link":"https:\/\/www.naylor.com\/associationadviser\/peo-professional-employer-organization\/","title":{"rendered":"To PEO or Not to PEO, that is the Question"},"content":{"rendered":"

No, Hamlet wasn\u2019t a human resources specialist, but he certainly can frame the common dilemma of keeping work in-house or outsourcing that many associations face. In today\u2019s competitive workforce environment, for-profit and non-profit organizations alike are constantly looking for strategic advantages as well as cost savings to attract and retain the best talent. With many associations embracing the virtualization of the workforce, the idea of outsourcing as much as one reasonably can has certainly grown in appeal. Enter the PEO.<\/p>\n

What is a PEO?<\/h2>\n

A PEO, or Professional Employer Organization, is a company that establishes a joint-employment relationship with an employer by leasing<\/em> employees to that employer, thereby allowing the PEO to share and manage many employee-related responsibilities and liabilities. Functionally, this arrangement allows the employer to outsource many human resource tasks, such as employee benefits, compensation and payroll administration, workers’ compensation, and employment taxes to the PEO. The partnership of an association and a PEO is called co-employment.<\/p>\n

How does a PEO work?<\/h2>\n

This model is all about buying power. PEOs take on multiple clients, allowing them to pool one company\u2019s employees with another\u2019s. PEOs provide a wide range of offerings that an association may not be able to afford on its own if they have a smaller employee count. PEOs are generally not geographically restricted nor limited in the number of employees they can accommodate.<\/p>\n

How much does it cost to work with a PEO?<\/h2>\n

The cost for their services is usually a fee tied to payroll volume or a per-employee headcount. Because the association\u2019s employees also become the PEO company employees, the association reports its wages under the PEO’s federal employer identification number (FEIN) and as a result, the employee liability shifts to the PEO.<\/p>\n

Often, the main value driver is that associations may gain economies of scale along with shared liability and enhanced HR expertise and support. PEOs may be able to reduce insurance and benefit costs by transferring their buying power to the association.<\/p>\n

Shared employee responsibilities<\/h2>\n

Unlike HR outsourcing firms, PEOs are contractually tied to your employees and share the legal responsibility for them. In other words, your employees have two employers \u2013 the association as their direct supervisor and the PEO for legally-compliant HR services, benefits, and payroll processing. For everyday association operations, such as marketing, member services, or general workflow, the association maintains full control. However, anything that could raise HR-related legal issues \u2013 such as safety, labor law compliance, or employee discrimination \u2013 is where a PEO can help standardize procedures. The National Association of Professional Employer Organizations<\/a><\/strong> is a good place to find resources for understanding and assessing PEOs.<\/p>\n

Advantages PEOs can provide<\/h2>\n

PEOs generally offer the value of scale and infrastructure about which many smaller sized associations are concerned. Additionally, for associations that lack HR expertise or systems capabilities, are concerned about wearing too many hats, or lack the time and resources to focus on transactional HR functions, a PEO\u2019s capacity may be a much-needed benefit, freeing the association up to concentrate on mission and membership. Generally, the value a PEO provides covers the following areas:<\/p>\n