A professional employer organization, or PEO, as they are commonly called, is an outsourcing firm that provides small and medium-sized businesses with a wide range of HR-related services such as payroll processing, risk management, employee benefits administration, human capital management, and general human resources. While large corporations typically handle these administrative functions in-house, smaller businesses often lack the time, resources, or basic knowledge needed to complete these tasks properly.
For instance, if you own a window-washing company that’s located near the border between two or more states, there’s a chance you regularly do business across state lines. Different states often have different minimum wage requirements and different workplace regulations. So when it comes time to process payroll, you may need to account for different hourly pay rates based on where certain jobs were located. Or, heaven forbid, one of your employees should fall off a ladder while working, you’ll need to know whether the state they were in at the time of the accident has its own OSHA plan or if it falls under the jurisdiction of Federal OSHA regulations.
When you partner with a PEO, you enter into a “co-employment” relationship in which you and the PEO will share responsibility for the employees. You retain the right to manage your employees as you see fit, and the day-to-day workings of your business won’t change at all. But moving forward, your employees will technically be employed by the PEO, which will handle various behind-the-scenes aspects such as human resources, payroll, disciplinary actions, workplace injuries, and the like. One of the major advantages of partnering with a PEO is that it gives your employees access to better healthcare and other benefits through workforce aggregation. Another advantage is knowing that all of your HR-related functions are being handled by seasoned professionals who can ensure compliance with complex and ever-changing regulations.
Still not sure if you need a PEO for your small or medium-sized business? Contact JanusHR today to learn more about what we can do for you.