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Member since 06/22/2005
Using A Professional Employer Organization PEO
08/28/2007 / 2:43 pm #1
A PEO or Employee leasing arrangements attract businesses by promising to cut a businesses costs and administrative work load. As the National Association of Professional Employer Organizations (NAPEO) notes, professional employer organizations (PEOs) "... assume responsibility and liability for the 'business of employment,' by establishing an employment relationship with the worker and, thereby, enabling the client to focus on the 'business of business." Although the original intent of employee leasing arrangements was circumventing pension laws, small businesses today contract with employee leasing firms to control rising employee health benefit costs and to avoid navigating the increasing complexity of government regulation and reporting requirements. With the employee leasing arrangement, small businesses need to neither stay informed about regulatory and reporting changes nor maintain the staff to complete paperwork and otherwise comply appropriately.
A PEO or Employee leasing firm go beyond traditional payroll service firms by offering more competitive rates on employee benefits. For example, a business of 10 employees would be unable to negotiate a favorable deal with a health maintenance organization, while an employee leasing firm of 2,000 employees would be in a position for volume discounts. Similarly, small businesses do not have the resources to offer their employees attractive retirement packages such as 401K plans. In tight labor markets or competitive professions, the quality of the benefit packages may help skilled employees select one employer over another.
A PEO or Employee leasing arrangements could improve the accuracy of employment and wage reporting by moving the responsibility from small businesses toward professional organizations with the resources for electronic data interchange. While the PEO or employment leasing arrangement is invisible to employees, the employment of the client business drops to zero while the employment of the PEO or employee leasing firm increases by a corresponding quantity.
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