6 Tips for Picking a PEO Firm

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Using a professional employer organization, or PEO, can offer many benefits for your business; these firms act as ‘’co-employers’’ where they take on the administrative tasks such as administering payroll ,and help manage risk by ensuring your company complies with all the laws and regulations that pertain to  managing employees. Using their services can help you get more attractive benefits packages; you have more time and energy to focus on the activities that will help grow your business. If all that sounds good to you, you now need to decide on which firm will provide all these beneficial services to your company. Here are some tips for picking the firm to partner with.

Look for Companies that Are Members of the NAPEO

It would be a good idea to start your search by finding firms that are members of the National Association of Professional Employer Association (NAPEO.) This is the national trade association for this industry.

 Certifications and History of Adhering to Industry Best Practices

It is important to check on the financial history of any PEO firm you are considering—have their financial statements been audited by an independent CPA? Have their risk management practices been certified by the Certification Institute? Do they have accreditation from the Employer Services Assurance Corporation (ESAC)? To receive this certification, a firm must meet stringent standards for financial management, ethics and professional conduct. Another important certification is the PEO Workers’ Compensation Risk Management Best Practices Certification, which indicates the company adheres to the insurance’s industry’s best practices regarding workers’ compensation risk management and cost containment.

Check Qualifications of Staff

The services of any company will only be as good as the staff administering them. There are important certifications that suggest a high level of competence and knowledge in matters of human resources. Examples include  the PHR which is awarded by the Human Resources Certification Institute and the Certified Payroll Professional, which is given by the American Payroll Association.

Understanding of Employee Benefits Funding

When deciding on a PEO firm, it is important to have a full understanding of how employee benefits are funded. Does the PEO have full insurance or is it partially self-funded? Who is the carrier or the third party administrator (TPA)? Is said organization fully authorized to do business in your state?

Review Contracts Carefully

Working with a PEO firm is a very involved relationship and they will be handling very important aspects of your business. It is important to thoroughly go over the contract. Each party’s responsibilities and liability must be clearly outlined. Under what provisions are you or the company allowed to terminate the relationship? What guarantees are provided?

Seek Providers with Strong Professional Relationships with Relevant Industries

A PEO firm that has strong working relationships with certified public accountants, attorneys and insurance professionals who are well-versed in human resources issues is preferable. These connections can prove beneficial to your relationship with the PEO firm. This is particularly advantageous for a small business outsourcing its various responsibilities since you can leverage your relationships.

Kelli Cooper is a freelance writer who blogs about a variety of business topics.

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