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Want to know more about a Workers Comp and how a PEO works?

1. What is a PEO? A Professional Employer Organization (PEO) is an organization that enters into a contractual co-employment agreement with a client company to cost-effectively outsource some or all human resource management, employee benefits, payroll and workers compensation allowing the client company to focus on the income producing aspects of their business.

2. Who uses a PEO? Businesses of all sizes can find value in a PEO relationship, however the average client of a PEO employees 17 worksite employees. Increasingly, larger businesses also are finding value in a PEO arrangement, because PEOs offer robust Web-based HR technologies and expertise in HR management. PEOs can partner with companies that have 500 or more employees and work in conjunction with their existing human resources department.

3. Are PEO’s recognized as employers? The Internal Revenue Service (IRS) and many state governments recognize PEO’s as the employer of record for federal and state unemployment taxes. Seventeen states require some form of licensing, registration and/or regulation. Many states statutorily recognize PEOs as the employer or co-employer of worksite employees for workers’ compensation insurance and state unemployment taxes.

4. What rights and responsibilities does the client company have? The Client maintains an employment relationship with its employees whereby the Client:

a. retains the right to direct and control worksite employees in matters related to the manufacture, production and delivery of products and services.

b. provides tools, instruments and a work place. NOTE: Work place safety and employment law compliance is overseen by the Client.

5. Why would a business use a PEO? Business owners want to focus their time and energy on the "business of their business" and not on the "business of employment." As businesses grow, most owners do not have the necessary human resource training; payroll and accounting skills, the knowledge of regulatory compliance, or the backgrounds in risk management, insurance and employee benefit programs to meet the demands of being an employer. PEOs give small-group markets access to many benefits and employment amenities they would not have otherwise. In most cases outsourcing human resource management, payroll and workers compensations insurance to a PEO is more cost effective for the client company.

6. How does a PEO arrangement work? A client company contracts with the PEO to provide human resource management, payroll and employee tax compliance, risk management, and workers compensation insurance. The PEO becomes the employer of record for state and federal income tax purposes. The client company retains full responsibility for the management and work assignments of their employees. The PEO and client share responsibilities for employment law compliance.

7. How do PEO’s help their clients control costs and grow their bottom line? Because the PEO aggregates the employees from many client companies the PEO is able to achieve a greater economy of scale than any of the individual client companies. As a result the PEO is able to leverage its labor assets to reduce the cost of employment for its client companies while providing assistance with employer compliance helping the client to reduce its exposure to risk and liability. By outsourcing some or all of the client’s human resource management, the PEO assumes responsibility for many routine and redundant tasks for its clients allowing the company to focus its efforts on income producing activities

8. Does the client company lose control of their business or employees? No. The client retains complete ownership and control of its operations. The PEO only assumes responsibility and liability for Human Resource administration, payroll, payroll taxes, benefit administration, payroll tax compliance and worker compensation insurance. The client continues to be responsible for worksite safety and compliance; however the PEO will also focus on improving safety and compliance as a result of its responsibility for workers compensation insurance. In short, the PEO assists the Client with all employment related issues allowing the client to focus on the operations of the income producing aspects of the business.

9. Who is responsible for the employees' wages and employment taxes? The PEO assumes responsibility and liability for payment of wages and compliance with the regulations for reporting and payment of federal, state and local taxes (FICA, FUTA, SUTA) on wages paid to employees. The client continues to decide how often and how much the employee is paid. Thus, the Client is responsible for compliance with FLSA and related state law provisions governing the amount of wages to be paid to the employees.

10. Who is responsible for state unemployment taxes? The PEO assumes responsibility and liability for payment of state unemployment taxes. A few states, including Tennessee, require the PEO to report SUTA payments on the client’s employer number.

11. Who is responsible for workers' compensation? Many states recognize the PEO as the employer of worksite employees for purposes of providing workers' compensation coverage. In our PEO Client Services Agreement, BPS assumes responsibility for W/C Coverage W/C Contract

12. What is NAPEO (National Association of Professional Employer Organizations)? The NAPEO is the national trade organization for the PEO industry and is the recognized voice of the industry. The NAPEO provides education, training, government relations, and a Code of Ethics to member companies.

13. Is your company a member of the National Association of Professional Employer Organizations (NAPEO)? Yes, we are a member in good standing with the NAPEO since July of 2005.