What is a PEO?
A PEO is a Large Professional Employer Organization that will co‐employ all of your employees and make your employees theirs for the purposes of payroll, workers compensation, and taxes. The PEO must thereby run your payroll, provide you with workers comp insurance, and pay and process all of your taxes. All of these services are required to join a PEO.

What are the major advantages of a PEO?
Different PEOs can provide different advantages. Some PEOs can provide unparalleled human resource and benefit advantages that you would need be a fortune 500 company to offer. Depending on your particular industry, PEOs can offer tremendous savings on workers comp because of strong relationships with insurance carriers. Some PEO’s can provide risk management services that will improve your losses and overall experience mod.

What are the major disadvantages of a PEO?
More than half of all PEOs are not properly structured and are exposing themselves and your business to potential liability. PEOs unfortunately have a bad reputation for a reason. While they may look appealing because they can help you save money, they are usually miss‐representing their legitimacy. Picking a good PEO is a process of elimination and only a veteran PEO Insurance Broker can really lead you to the legitimate ones.

Can a PEO leave me with liabiliy for workers comp cliams?
Not if you go with a properly structured PEO that is issuing a separate Multiple Coordinated Policy (MCP) where your actual name appears on the certificate in the 'named insured' box. Many PEOs don’t have properly structured programs and try to trick you into being in the certificate holder box only. This would mean that you don’t have exclusive remedy coverage and could possibly still have a liability if a claim where to get out of control. In California and 15 other states in the U.S., PEO’s are required by law to issued proper (MCP) policies.

Will I lose my experience modification if I go with a PEO?
Not if you go with a properly structured PEO that is issuing a separate (MCP) policy where they report your loss and premium data directly to the WCIRB. Many PEOs do not have properly structured policies and cannot provide you with this and wont tell you until it’s too late. It is just about impossible for a customer to tell if the PEO is properly structured in this way so if you don’t use a PEO broker, then you are on your own.

How does a PEO work with health benefits?
Every PEO is different, some will require that you participate in their health plan, and some will allow you to keep your own health plan. Most PEO’s are very flexible on this topic.

What if the PEO doesn't pay my taxes?
When you join a PEO, you are no longer responsible for employee taxes because your employees are technically employees of the PEO. The PEO is responsible to pay the employee taxes, however they will bill you the amount they paid for your employees. So you don’t have to be all that worried about it. Some PEOs may buy your State taxes under your ID number, so in that case you should just ask for a copy of the quarterly report and the proof of payment slip to reconcile.

Who is responsible for Employment Practices Liability (EPLI) Claims?
Ultimately your business, the worksite employer, will always be responsible for (EPLI)claims. Since you collect their time cards, your are responsible for overtime, breaks,and hours dispute claims. You are also responsible or sexual harassment claims since you are in contact your employees on a daily basis. Since you are the one who decides to hire, fire, or promote the employees, you are responsible for discrimination and wrongful termination claims. However, many PEO’s offer a EPLI policy for an extra charge that is less than what it would cost you on your own.

Is it difficult to leave a PEO an get regular workers comp insurance again?
Yes you can as long as you know what your doing, but the rumors are true and it is more difficult for most. However, if you are using an experienced PEO broker to get you out of a PEO, you shouldn’t have any problems.

Will I have loss runs when I leave a PEO?
As long as you go with a properly structured (MCP) PEO that can give you loss runs directly from the insurance company.


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