Posted on: 19 October 2015
In today's economy, outsourcing through a Professional Employer Organization, also known as a PEO, is a popular way to save time and money, while also limiting your legal liabilities to your employees. Outsourcing tedious tasks such as bookkeeping, recruiting, and training allows you to save money by not needing to directly employ the people that provide those services, resulting in what is known as joint employment. Joint employment frequently provides less expensive worker's compensation insurance and fewer legal liabilities The laws impacting the use of a PEO vary by state, so it is helpful to work with a PEO broker to find the most appropriate Professional Employer Organization for your business.
#1-It is Possible To Save Money By Changing The Employer Of Record To The PEO
It is first necessary to remember that larger companies typically are able to negotiate steeper discounts on the different types of insurance supplied to employees, including worker's compensation. When you work with a PEO, you will no longer be the employer of record and the PEO will now hold that responsibility. Since PEOs typically include many companies, they are likely to get lower costs than your company could, which frequently results in almost immediate savings. It is important to note that by working with a PEO, you do not lose any administrative rights, you simply shift some responsibilities to a third party.
#2-Changing The Employer Of Record Also Allows To Transfer Many Human Resources Responsibilities
There is no doubt that the need for effective record-keeping and recruiting qualified staff is crucial in any industry. Unfortunately, doing so is often time-consuming and expensive. As a result, outsourcing some or all of the duties of human resources will allow you to minimize your own staff and be able to refer employee's complaints or other issues to a third party.
Transferring the employer of record to a third party can also protect your company from some future litigation, since claims of discrimination, illegal firings or other employee issues will be directed away from your company. Even when your company did nothing wrong, the costs and negative public opinion can be immense if lawsuits were to be filed by angry former applicants or employees.
#3-It is Frequently Possible To Have The PEO Perform Background Checks On New Or Prospective Employees
Over the years, many lawsuits have been filed by employees over issues relating to background checks that were required as a condition of employment. There have already been many lawsuits that have been filed by former job applicants or ex-employees, due to the belief that the background checks were done illegally or did not provide the accurate information. As a result, it is a good idea to consider working with a PEO firm to transfer both the financial and legal responsibilities away from your business.
In conclusion, outsourcing some of the tasks that would normally be done by the human resources or similar departments of your business is often an ideal way to minimize the expenses related to those tasks. In addition, the use of a PEO broker often makes it possible for your company to reduce the legal responsibility held towards employees, without losing any administrative rights.Share