A professional employer organization (PEO) works technically in the same way as a staffing company that provides temp employees. A temporary staffing service sends recruits to employers who then assign them to duties as a replacement for a worker on vacation or extended leave. This enables employers to supplement a depleted workforce. The job of the temp agency is to fill any number of work situations when a regular full-time employee is not available.
PEO services contractually assume and manage employee administration for all, (or a majority) of a client’s workforce. This employment arrangement often sees these temp employees remaining with the organization for a year or sometimes longer. PEO insurance allows employees the ability to participate in a full range of employee benefits, including health benefits and a retirement savings plan as well.
Many employers prefer using a PEO to facilitate their needs
PEO firms provide an invaluable service by offering leased employees. An employer is given the means to outsource employee management tasks they would prefer not to have to handle themselves, such as workers’ comp, employee benefits, payroll, recruiting, risk and safety management, along with training and development. In this arrangement, the PEO becomes the employer of record for these temp employees for tax purposes and insurance purposes.
PEOs are primarily based upon the co-employment of an existing workforce. One of the advantages of this arrangement is that the leased employees return to the staffing service for re-assignment to other companies once the completion of their contract for that particular client has been reached.
PEO insurance is required for all of the same risks and exposures businesses in other lines of work also have. Every company needs to provide financial security, quality health insurance, a safe working environment, and opportunities for retirement savings in order to retain a solid workforce. This can include higher quality employee benefits including dental and life insurance, vision care, and a 401(k) savings plans.
Leased employees, much like a regular staffing may get sick from time to time which results in days absent from work. They’ve come to depend on health insurance to get them through any illness, pay for medical bills or if they wind up with an extended hospital stay. Having a 401k provides them with a retirement fund, while safety manuals and a sound risk management strategy show’s that the PEO is concerned with matters such as workplace safety. Having peo insurance shows everyone that the organization cares and wants everyone to have the same benefits and security.