A professional employer organization (PEO), much like a temporary staffing service, leases recruits and assigns them to clients to support or supplement the client’s workforce. The job at hand is to fill any number of work situations when regular full-time employees are not available, such as employees on leave or vacation, absences (long and short-term illness), temporary skill shortages, or to fill up seasonal workloads.
Traditionally, these workers represent only a small portion of the client’s overall workforce. PEO services contractually assume and manage employee administration for all or a majority of a client’s workforce. PEO insurance is a provision that allows employees to participate in a full range of employee benefits, including health benefits along with a retirement savings plan.
Many employers now prefer using a PEO
PEOs provide an invaluable service to the companies that use them. Employee-leasing service providers create a unique situation where an employer can then outsource employee management tasks, such as workers’ compensation, employee benefits, payroll, recruiting, as well as risk and safety management planning, and training and development. The PEO accomplishes this by hiring a client company’s employees for them. This means that they become the employer of record for tax and insurance purposes.
PEOs are based upon the co-employment of an existing workforce. The major distinction is that an employee leasing or staffing service supplies new workers on a part-time or temporary basis or for a specific project, as where the leased employees return to the staffing service company for re-assignment after the completion of their contract for the client.
PEO insurance is needed for all off the same risks and exposures that other companies have to consider before they ever open their doors, since their staff seeks financial security, quality health insurance, a safe working environment, and opportunities for retirement savings.
Leased employees are not immune to getting sick and missing work. They also depend on health insurance to get them through their period of illness, help pay any medical bills or extended hospital stays incurred, and (hopefully) eventually return to work. Having a 401k in place provides them with a retirement fund, while safety manuals and a sound risk management strategy shows both, the employer and the employees that the PEO is concerned with workplace safety and is instrumental in providing the proper training and awareness about what constitutes as a safe work environment.