PEO Purchasing Guide. Produced & Distributed by G&A Partners. 1 (888)

Transcription

1 PEO Purchasing Guide Produced & Distributed by G&A Partners 1 (888)

2 PEO Purchasing Guide What is a PEO? PEO stands for Professional Employer Organization. A PEO allows business owners to outsource many of the administrative functions associated with human resources (HR), such as payroll, compliance, and employee benefits administration. There are various ways to structure an administrative or HR outsourcing arrangement, and most full-service PEOs can structure their offering to match your needs. One outsourcing structure unique to PEOs is co-employment. In a co-employment relationship, a PEO becomes the employer of record to your workers, assuming much of the responsibilities (and sharing the risks) for your company s complex employee matters while you continue to direct your employees day-to-day activities. Why do companies need a PEO? PEOs provide proven processes and advanced technology to help growing companies more effectively and efficiently manage their day-to-day HR, like recruiting, hiring, payroll administration, and benefits. And because PEOs maintain teams of accredited HR experts, they can also handle the more complex HR matters that often confound business owners things like claims administration and complex HR compliance issues. Some business owners choose to employ a PEO to be able to focus on their core business, others to achieve greater operating efficiencies, and others to save money. Companies that use PEOs often realize all of these benefits and more. Does your business need a PEO? Ask yourself these questions: Are your employees asking for benefits you can t afford or aren t equipped to administer properly? Is your company consistently in compliance with all state and federal regulations? Is your turnover rate adversely affecting your company s performance? Is your HR department as effective or as efficient as it should be? Are you spending too much for workers compensation insurance? 2 (888)

3 Selecting the Right PEO Selecting a PEO should be a process conducted by engaged decision-makers who understand your company s business goals and what it is looking for from a PEO relationship. A steady, slow-growth business may merely want to alleviate some of its administrative burdens. In that case, an a la carte model that allows the company to outsource several select functions, like payroll and benefits administration, may be appropriate. On the other hand, a more dynamic, faster-growth business may decide it wants more strategic, consultative HR services to support its growth objectives. Decision makers also need to understand the breadth of a PEO s service offering to determine if that firm can help the company achieve its goals and contribute to greater operating efficiencies. Understanding a PEO s Service Offering A PEO s service offering will distinguish it from other PEOs. Some PEOs try to commoditize tactical services, while others can deliver strategic services that are both high-tech and high-touch. Knowing the breadth of services available can aid decision makers in selecting the right PEO partner for them. Below is a list of services G&A Partners provides. Which of these services could help your business operate more efficiently or achieve greater productivity? Recruitment Sourcing of candidates Web-based applicant tracking tool Job description review and classification Job description support Job postings Resume screening based on client criteria Access to pre-hire job assessments Pre-hire drug testing Pre-hire background testing Pre-hire medical exams 3 (888)

4 Payroll Payroll setup Client training Payroll tax filing Form W-2 & W-4 printing, filing, and mailing Direct deposit Payroll processing of weekly/bi-weekly/semi-monthly/monthly payroll cycles PTO and sick time accrual Employment verification of current or past employees Online payroll submission Automated standard deductions Standard reporting Child support administration Garnishment & levy administration New hire reporting Access to integrated time and attendance system Benefits Administration Access to group medical, dental, vision, life, STD, LTD, etc. Access to voluntary benefits Access to employee assistance program On-site assistance for open enrollment Web-based benefits enrollment tool Add/delete employees in carrier system Handle employee calls regarding coverage and claims Reconcile carrier invoices and remit payments COBRA administration 401(k) plan and administration Section 125 Plan administration PTO tracking PPACA guidance and support 4 (888)

5 Human Rescources HR manager/employee web-based self service portal Customer Care Center (7am 7pm, Mon Fri) Customized employee handbook Access to electronic new hire onboarding tool Employment practices liability insurance Worksite postings EEO-1 reports Annual HR audit HR investigations Assistance with employee performance management Access to web-based employee performance management tool Employee disciplinary support Employee termination support Employee exit interviews UI claims administration HR & Customer Care Training Monthly HR updates/bulletins On-site supervisory HR training Access to online supervisory HR training On-site customer care training G&A web-based learning tool Risk Management & Safety Services Workers compensation coverage and claims administration Written accident prevention Safety training On-site safety inspections Post-accident investigations OSHA assistance Safety and risk management consulting services Buying PEO s Services Once you ve identified one or more PEOs that are qualified to deliver the services your business needs, you are ready to begin the buying process. Engaging a PEO is a smart move for growing companies, but the process of purchasing services and transitioning your company s HR functions can be daunting. Understanding the steps involved will help make the process run more smoothly for you and the PEO you select as your future business partner. 5 (888)

6 The PEO buying process generally consists of four steps: Choosing services Gathering information Generating a quote Client onboarding Choosing Services When deciding which PEO services your company needs, it is important to recognize your organization s own strengths and weaknesses so you can determine precisely which services will best support you and your employees. Knowing your needs as well as the different services each PEO provides can help you make make a better buying decision. Another tip to keep in mind when selecting services you may want for your business don t skimp. PEOs may be able to offer you a better price per service if they can group multiple services together at the outset of the engagement rather than having new services added piecemeal through the life of the contract. Gathering Information...don t skimp. PEOs may be able to offer you a better price per service if they can group multiple services together... When you have narrowed a list of prospective PEOs to the few that can best meet your company s needs, you can request price quotes. To generate accurate quotes, PEOs need to collect considerable information about your company and your business goals. This information gathering process may seem cumbersome, but providing accurate information during this stage is the single most important factor in the bidding process now and in the successful transition to outsourced PEO services later. When you provide complete and current data, it makes it easier for PEOs to understand your needs and give you the best, most precise pricing. In addition to knowing what services you need, PEOs will need to understand your company s demographics, risk exposure, current HR and recruiting initiatives, payroll and accounting processes, and existing benefits. To give you a more detailed example, G&A Partners collects the following information from prospective clients: 6 (888)

7 Contact Information and Company Demographics In addition to general company contact information, PEOs will need to know your federal ID number, years in business, website addresses, business sectors, number of employees and their locations, SIC codes, NAICS codes, and whether or not you are involved in government contracts. PEOs may also ask you to compile a list of people who will be involved in the transitioning stage and their contact information. Accounting PEOs will need to know what accounting software you currently use and whether your current systems allow for integration between your Payroll and Accounting Software. Workers Compensation/Risk PEOs will need to assess your company s exposure to risk and learn about your existing workers comp insurance. Be prepared to provide PEOs detailed information about your workforce. Below is an example of a table you would be asked to complete for G&A Partners. For each job type per state, you would provide a workers comp code, a brief description of the job, the number of full time employees, the number of part time employees, and the annual wage for the position. Annual Payroll by Worker s Compensation Classification Code STATE WC CODE SKILL / JOB DESCRIPTION / GROUP FT PT ANNUAL WAGE TOTAL You will also need to tell PEOs about any workers comp provider you are using, how many years you have been with them, what you pay in annual premiums, and what kind of deposit you put down originally. You will also be asked to supply a copy of your current Declaration Pages, NCCI experience modifier worksheet, and a copy of Loss Runs for the past 3-5 years. 7 (888)

8 Finally, PEOs may ask you to complete a questionnaire like the one below to further assess your company s risk exposure and workers comp requirements. Workers Compensation Questions 1. Is your company engaged in any other type of business? 2. Does your company have a light duty return-to-work program for injured employees? 3. In the past 3 years, has your company had any employment-related lawsuits, grievances, or EEOC claims? 4. Does your company use subcontractors? 5. Does your company have a formal safety program in place? 6. Has your company ever been cited by OSHA, EPA, or the state for violation of a law, regulation, or ordinance? 7. Do you conduct safety meetings? Human Resources To generate a thorough quote, prospective PEOs will delve further to determine the HR initiatives your company currently performs and those it needs to improve its productivity. PEOs may ask about your hiring methods and whether or not you could benefit from recruiting services. For example, will you need assistance with background testing, employee profile testing, drug testing, or other pre-employment screenings? Are you interested in implementing applicant tracking, performance management or E-learning systems? PEOs will also want to know if you have an up-to-date employee handbook or a written drug policy. If you are experiencing issues with turnover in the first 90 days of employment, PEOs will want to review your turnover rates. And finally, if you are currently using a PEO to provide HR services, prospective PEOs will need the name of your current service provider and the date you initiated that relationship. Payroll One of the first questions a PEO will ask regarding your payroll systems is likely to be, How do you track your employees time and attendance? 8 (888)

9 Automated tracking of time and attendance allows companies to more effectively and more accurately generate payroll information. (If you aren t currently utilizing a time and attendance system, G&A Partners provides a web-based solution called HourDoc. Learn more at In addition to providing information about your existing payroll software and its requirements, you will need to gather W-2 information for the prior two years as well as general payroll information like gross wages, overtime, how many employees you have with an annual salary over $106,000, and dollars over FICA cap. And if you have any changes in the near term that would require new employees being added to the payroll, such as a new office location or an acquisition, you would want to share that information with prospective PEOs as well. Finally, PEOs will need to review your last two payroll reports/register AND your State Unemployment (UI) tax return. Group Benefits Prospective PEOs will ask about the types of insurance you currently provide and whether you would like to offer additional benefits to your employees. Coverage generally includes: Medical, Dental, Vision, Short Term Disability, Long Term Disability, Group Life, Flexible Spending Accounts, 401(k) and Section 125 accounts. A prospective PEO s rep should be able to answer any questions you have about employee benefits during the information gathering stage. Medical Plan If you currently provide insurance for your employees, PEOs will need to know your current carrier, how many years you have been with them, your renewal date, and the premiums you are being charged for the various plans you offer. This information is often conveniently compiled within a recent group medical invoice and benefit plan summary. Generating a Quote Once all the necessary information is gathered and turned over to prospective PEOs, PEO reps may follow up with additional questions to clarify your existing services or future needs as they proceed to generate a detailed price quote. 9 (888)

10 The process of generating a quote can be simple, but because no two companies are alike, every proposal and price quote must be customized. PEOs will present their service proposals and answer questions to help companies understand the nuances of their proposals and its associated pricing. Client Onboarding Next Steps After selecting the best PEO for your company, the client onboarding process can begin. It often starts by both parties executing a CSA (Customer Service Agreement). Then a PEO s Implementation Specialist will schedule a kick-off meeting with the people in your organization who will be involved in the transition. This meeting is important to help outline the transition process, clarify the scope, define goals, and establish a timeline for the implementation. The process of generating a quote can be simple, but because no two companies are alike, every proposal and price quote must be customized. As your new PEO systems are being set up, your PEO s subject matter experts will engage to learn more about your company s payroll, benefits, workers comp, and other HR and administrative process to determine how they can best represent your company. Your PEO should also provide training on the services and systems you have chosen to implement. Once your payroll is transferred from a testing status to a live status, follow up training is often scheduled. During the 30/60/90 day period of implementation, the transition is watched closely to ensure that all systems are working properly and everyone has received the appropriate training. Once initial implementation is finalized and all of the action items on a transition checklist have been completed, your account can be transferred to your permanent service team, however all PEO representatives who assisted in the onboarding process will remain accessible to your company throughout the life of the contract. When you engage a Professional Employer Organization, you have at your disposal all the HR experience, qualifications, and hands-on support your company needs. What s it cost? A PEO can do the work of an entire in-house HR team for roughly what it would cost to hire one HR professional. Is it time for you to talk with a PEO? 10 (888)

11 About G&A Partners G&A Partners helps growing businesses by becoming their HR partner and helping them minimize costs, increase productivity and reduce risk. As experts in human resources, employee benefits, compliance, and payroll, G&A takes on integral HR and administrative functions and relieves business owners of these responsibilities so they can focus their time, talent and energy on growing their business. For more information visit or call today at: (888) Disclaimer: No part of this document, in whole or in part, may be reproduced, stored, transmitted, or used for design purposes without the prior written permission of G&A Partners. The white papers of G&A Partners are made available for educational purposes only and are not to be used to provide legal advice G&A Partners. All Rights Reserved.