Enticing good employees to work for you can be challenging. While competitive pay is important, so is having an appealing benefits package. This is where a professional employer organization (PEO) becomes a great option for your small business.
PEOs can serve your small business if you don’t have a substantial human resources team performing standard HR tasks. They also offer top-notch benefits plans. This frees up time to hire top talent and build a solid workplace culture to grow your company.
The perks that your small business can offer through a PEO can improve your staff’s morale and the company’s culture, and instill a better work-life balance for your employees. Creating a great place to work for your employees can result in higher retention rates and positive employee reviews, which, in turn, can lead to a broader, stronger workforce.
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PEOs can provide your small business with benefits packages typically only offered by Fortune 500 companies. This is key to attracting and retaining top talent. Here are some of the top benefits a PEO can offer your staff.
A PEO can help you build a custom benefits package with the best employee benefits for your company’s specific needs.
In addition to offering employees quality benefits, PEOs can cut through mountains of paperwork. For example, when it comes to annual enrollment alone, PEOs can save you hours that would otherwise be spent researching benefit options, explaining those benefits to your staff and then fielding questions.
“Employees no longer need to turn to overworked HR departments to get a comprehensive understanding of what they’re signing up for,” said Gary Stevens, front-end developer and founder of Hosting Canada. “Instead, any questions employees may have can be turned directly to the PEO. Since one of their main functions is finding the best plans available, employees no longer need to worry that they’re making a mistake during their yearly enrollment.”
A PEO solution with high-quality perks can help boost employee satisfaction. When your employees know they’re receiving quality perks, they can focus on being productive members of your team.
A PEO performs many HR tasks, which can free up time for you to focus on more pressing matters and ease pressure on your internal HR staff.
Shraga Jacobowitz, a consultant at ARC PEO Consultants, explains small businesses can benefit from using a PEO in these four ways:
The companies with the best benefits usually have comprehensive health insurance plans. PEOs generally allow small businesses to provide their workers better health benefits than what they could otherwise provide from standard employer-sponsored health insurance plans.
An additional advantage of having your health insurance sponsored by a PEO is that the PEO is responsible for compliance related to administering health insurance plans, according to Michael Roloson, director of PEO Focus.
“Most PEOs will offer access to master health plans or association health plans that allow for more cost consistency and predictability when it comes to health insurance costs and renewals each year,” Roloson said. “Other perks include offering multiple health insurance plan options, tiering employer contributions by employee responsibility or tenure, and coupling options with access to FSA and HSA plans without incurring additional costs or administrative burden.”
The companies with the best benefits generally have highly rated retirement plans, such as 401(k) plans that include profit-sharing contributions and vesting, which encourage employee retention.
PEOs also assume fiduciary liability and sign all necessary compliance forms, which can shield your company from potential legal issues associated with employee retirement plans.
“PEOs allow access to a multiple-employer plan (MEP), which shifts compliance responsibility to the PEO as a co-employer,” Roloson added. “In the event the funds that employees have access to underperform in a way that severely impacts retirement balances negatively, it is the PEO [that] would be responsible in the event of litigation.”
Child care leave provides new parents (whether by birth, fostering, or adoption) a certain period to recuperate from childbirth and/or care for new family members. The best child care benefits include maternity or paternity leave, sick leave, onsite child care and backup child care.
Some employers are required to offer eligible employees unpaid sick leave in certain medical situations.
Under the Family and Medical Leave Act, eligible employees can take unpaid, job-protected leave for family and medical reasons with the continuation of group health insurance. Being a federal law, this is not to be confused with specified state laws or requirements regarding parental leave.
For instance, New York’s paid parental leave benefit provides most workers, including part-time employees, the right to take paid time off without losing their job or health insurance so they can welcome a new child or care for an ill family member.
A PEO that offers child care benefits for your employees gives them a significant reason to stay and work for your company, said Simon Hansen, founder of HomeBrewAdvice.com. “As working parents no longer need to worry much about their children, they are more emotionally and mentally healthy.”
A PEO can administer your payroll, pay payroll taxes, maintain workers’ compensation insurance and manage the regular compensation of your employees.
When your company uses a PEO for payroll processing, the PEO becomes a co-employer and assumes the duties of managing your payroll-related tasks, such as paying wages, depositing taxes and issuing employee W-2s.
These are three advantages of using a PEO when it comes to managing payroll, according to Nidhi Joshi, business manager at Kernshell:
Joshua Stowers contributed to the writing and reporting in this article. Source interviews were conducted for a previous version of this article.