Professional Employer Organization (PEO) aka “Staff Leasing”
Professional employer organizations (PEOs) enable staffing companies to cost-effectively outsource human resource management including workers’ comp. This allows your staffing firm to concentrate on the operational and revenue-producing side of its operations. A PEO option:
- Provides a workers’ comp solution often with less expensive rates than some direct carriers and State Funds (depending on your comp loss experience.)
- Administers workers’ comp claims
- Manages employee benefits and payroll
- Manages payroll tax compliance
- Administers unemployment insurance claims
- Manages health benefits
As employee related requirements become more and more complex, a PEO solution assumes all these human-resource management responsibilities using a business model identical to ADP’s or Paychecks. A PEO provides integrated services to effectively manage critical human resource responsibilities and employer risks for clients. A PEO delivers these services by establishing and maintaining an employer relationship with a staffing company’s employees and by contractually assuming certain employer rights, responsibilities, and risks.
The staffing company still controls the daily management of employees and controls all aspects of the employees’ work schedules.
Hundreds of staffing companies use PEOs, and estimates show 2-3 million Americans are currently “co employed” through a PEO. Even though there are over 800 PEOs in 50 states, LeastSaff has found only about five PEOs that specialize in servicing the staffing industry, and can effectively manage the large employee turnover that most staffing companies incur. These PEOs manage about $1 billion of payroll annually each. The PEO industry currently generates between $136 billion and $156 billion in gross revenues. PEOs have an 88 percent client retention rate due to strong client satisfaction.