Workers' Comp Insurance – PEOs
Many people say yes.
Let’s modify the question.
Do You Like Shopping for Payroll Services, Workers’ Comp, HR, or Benefits?
The answer is usually no!
We have a division, EmployerNomics, which does that for business owners. Please check us out!
PEO Pros broker services has transitioned to a new division, EmployerNomics, which handles the retail side of PEO. To clarify, if you are an employer, and your employees aren’t perfect, you might want to consider some HR outsourcing solutions. You can reach EmployerNomics on this site or go to the direct site.
Either way works.
Of course, you can always call us at 407-490-2468. Remember, we can’t help you unless you reach out.
If you are a PEO owner and looking for insurance options for your PEO, this is the right place to be.
What’s The Difference?
In many ways, a Professional Employer Organization (PEO) and an Employee Staffing (Staffing) company are similar, but in fact they live at opposite ends of the HR spectrum. In this article, John Will Tenney of EmployerNomics and PEO Pros explains the history and formation of PEOs and a little of the differences and similarities between PEOs and Staffing.
A Brief History of Staffing and Employee Leasing Companies (which are now called PEOs)
In the early 80’s, a few enterprising, hi-tech individuals left their large traditional companies and formed their own hi-tech firms, with an emphasis on bidding on large government contracts, including military and other DOD contracts.
These problem solvers saw a way to better control costs by avoiding permanent hires, and hence avoiding the liability of permanent employees, by forming and using hi-tech staffing companies. The staff of these companies were only “employed” when the hiring firms had existing contracts that could cover the costs of the staff. Hence, they were able to bid a fixed cost with lower overhead, these new hi-tech firms were very competitive and won many contracts.
In response, the older, traditional hi-tech companies (who also had some brilliant business minds) put their heads together to come up with an answer to this challenge.
The idea of firing all their employees and hiring long-term staffing employees was not attractive, so they came up with what was called “reverse staffing.” All of their current employees were “transferred” to staffing companies created just for this purpose, maintaining longevity and seniority. These initial “reverse staffing” companies came to be known as Employee Leasing Companies, or ELCs.
In this case, the ELC was the employer of record, and handled all payroll, benefits, insurance and HR needs for the employees. In this way, the employee cost became a line item for the hi-tech firm, which in the accounting world is very desirable for simplification of taxes.
It wasn’t long before the owners and operators of the ELCs discovered that this benefit didn’t need to be restricted to the parent company, but could be shared, or more to the point sold, to third parties.
The construction and security industries were the first to recognize the advantage (hence Wackenhut was one of the first ELCs) but others soon followed. It was convenient and reassuring to place employees with an outsourcing firm that assumed much of the reliability and headaches associated with being an employer.
Currently, it is estimated that about 40% of the Florida workforce is either employed by a staffing company or a PEO (formerly known as an Employee Leasing Company).
So How Are They Alike?
Both entities provide payroll, insurance, benefits and HR services for employees “leased” to other companies. Both have advantages of “master” insurance policies which allows leveraging for better rates. Both can take advantage of professional HR systems and procedures to insure a safer workplace and lower unemployment rates.
OK So How Are They Different?
The easiest way to explain it is that if you don’t have employees yet, but are thinking of adding some staff or labor to your workforce, you may consider a staffing company. Kelly is a famous temp staffing company. There are also many hi-tech staffing companies still around such as Volt Technical. If you already have employees but wish that someone else would take care of the headaches of payroll, the hassles of workers’ comp insurance, the difficulties of large group health plans, the perennial fear of increased unemployment tax rates or even just remove the fear of an employee lawsuit by getting professional HR assistance, you would consider entering into an agreement with a PEO.
So What is Co-Employment and How is it Different than Leasing?
Recently, many states are passing legislation and codes to limit the complete transfer of employment to a PEO, and a new term has emerged, called “co-employment.” In this case both the PEO and the client are considered employers of record, but the duties and responsibilities of each or both are defined in the contract between the client and the PEO, called the Client Service Agreement (or CSA). It is very important to read this CSA thoroughly before entering in to an agreement with a PEO. It will be the governing document in any future employee disputes.
Where Can I Find Out More?
You can consult a labor attorney of course, and you should also consult a competent PEO broker. We became brokers because we could see the need for a third party in the agreement between a client and a PEO, much the same as any company will always need an insurance agent to negotiate with an insurance company.
And of course you can always contact one of us at PEO Pros or EmployerNomics. But remember, we can’t help you if you don’t call.
407-490-2468
No matter what the outcome of the elections in November, change is in the air. Obamacare will change one way or the other. Medical costs are rising. Associated legal costs are also rising. This will affect payroll, payroll taxes, workers’ comp premiums, health premiums, HR issues and no doubt increase employer liability.
We heard this quote in a recent PEO services meeting: “No matter who wins in November, things are going to change. While you can’t plan, you can certainly prepare by choosing a professional HR partner.”
Small businesses will need to be prepared. So while it may be impossible to plan for what may happen, since it is such an unknown, there are still ways to prepare for whatever may come.
At PEO Pros, we have prepared by expanding our HR Outsourcing Brokers division, EmployerNomics. Not only have we added staff at our corporate office, we are now adding regional franchises.
We hope to assist small to medium sized employers with outsourcing these services, now more than ever:
We are here if you need us. If you would like to consider joining us, we have several attractive franchise areas still open. But either way, we can’t help you if you don’t call. So call us at 407-490-2468 or use the contact form below.
Wouldn’t it be great if employers could make all their employee problems go away? Make them “Somebody Else’s Problem”?
We believe that when the Employee Leasing industry chose “PEO” as their new, politically correct moniker, they chose the wrong letters. We think they should call them Employer SEP’s – where the Employee Problems become Somebody Else’s Problems. When an employer and a PEO form a business partnership, defined by the Client Service Agreement (CSA), many of the risks and responsibilities are transferred (in whole or in part) to the PEO and are no longer the employer’s headache.
Will Tenney talks about the choice of the letters “PEO”
Some of the headaches that can be shifted or at least alleviated include:
Since the employees are now employees of the PEO for tax purposes, and registered on the PEO’s FEIN, IRS payroll tax audits are not as much of a threat anymore. In most cases the client isn’t even involved. The PEO is audited, shows their records and it’s all over. In rare cases, a PEO might have to produce information supplied by the client, but this happens so seldom you might call it a Payroll Unicorn.
The PEO will be the employer of record, so they will be responsible for paying all workers’ comp premiums, and involved in negotiating the claims. In most states, the experience modifier will stay with the PEO, and the client will not be adversely affected in the future by past claims. In addition, the PEO has safety expertise, training and written programs to put in place to reduce the frequency and severity of claims.
Similar to workers’ comp, this becomes the responsibility (and liability) of the PEO, who is the employer of record. The State Unemployment Tax Act rate (SUTA rate) of the PEO is the SUTA rate that gets affected (in most states. There are some exceptions) and the client can maintain a clean record. In addition, the PEOs are much more experienced at handling and negotiating claims and experience has shown they are much more effective at removing false claims.
Again, since the PEO is the employer of record, some or all of the liability shifts to the PEO in these cases. This could include:
… to name but a few.
If you would like to make some of your employer problems become Somebody Else’s Problem, please feel free to use the contact form below, or call us at 407-490-2468
One of the unforeseen negatives of the Affordable Care Act was increased costs for workers’ compensation insurance, coming both from higher taxes assessed to insurance companies and higher costs of claims. The claims costs are on the rise due to more dependance on workers’ comp vs. traditional health insurance, increased medical costs and the big one, increased legal fees.
As the costs rise, the profit margins diminish. Naturally, the carriers are seeking to reduce their risks to maintain acceptable profit margins. This has led to a “hard market” where risks that were previously accepted are now being cancelled or non-renewed.
It is important to any employer who depends on having reliable workers’ comp insurance to remain off the radar of the carriers and their underwriters. The squeaky wheel get’s the grease, or on this case, the cancellation.
Here are some tips to stay off the radar:
1: Do not shop your workers’ comp policy right now. This will only draw attention to you or your company. Many lesser experienced agents use software that “shotguns” your application to several carriers, and several intermediaries who may duplicate your submission. Nothing sends a red flag to an underwriter more than seeing a submission come in from multiple sources at the same time.
2: Don’t do anything to jeopardize your policy. Don’t hide information, improperly describe working conditions or in any other way try to deceive your agent or your carrier. This is not the time to try to get them to change you to a lower priced code.
3: Do everything you can to minimize claims. Institute a safety program, and if you already have one, make sure everyone is following it.
4: Make sure your website does not advertise you doing “high risk” activities. We’ve seen landscaping company websites showing workers on the roofs of houses, cleaning out gutters. That is NOT in the landscaping comp code description.
5: Pay your premium on time and in full. Slow pay and low pay are great ways to get “on the radar.”
Below is a video of our lead agent John Will Tenney with further discussion:
If you would like more information please use the contact form below.
What can possibly go wrong with a small business?
Why would a small business need a professional HR partner?
Isn’t that a waste of time and money?
No one wants to fine us do they?
Our lead agent, John Will Tenney, appears below in a candid video discussing this situation:
Business owners, if you’ve ever asked yourselves these or similar questions, consider the recent judgment handed down in Georgia where a business was fined 1.7 million dollars for I-9 violations. That’s right, $1,700,000. If that’s not a significant amount of money to you, there is no reason for you to keep reading.
The Employment Eligibility Verification Form I-9 is a U.S. Citizenship and Immigration Services (USCIS) form. It is used by an employer to verify an employee’s identity and to establish that the worker is eligible to accept employment in the United States. (*1)
The form requires documents that establish both identity and employment authorization. The USCIS defines these documents in three “columns” on the form: A, B and C.
Column A are documents that establish both, and if one of these can be documented, there is no need to go to the other two columns. Examples of a column A document are:
Column B are documents that establish identity only and include:
Acceptable Column B Documents for persons under age 18 who are unable to present a document listed above:
If a Column B document is presented, a Column C document must also be provided to establish authorization to work in the USA.
Examples of Column C documents are:
Are your I-9s filled out properly? Could you handle a USCIC (formerly the INS) audit today?
If you’ve though about making this “Somebody Else’s Problem” perhaps you should contact us and let us find a Professional HR Partner, a PEO, to take this problem away from you. Please use the form at the bottom of this screen to contact us.
References:
(*1) Wikipedia
(*2) USCIS Website List A Documents
(*3) USCIS Website
(*4) USCIS Website List C Documents
Jason Irving returns to us as a client with his new company, Engenium Staffing, a technical, engineering and professional recruiting and staffing firm.
“PEO Pros was and still is our best option for securing workers’ compensation and other insurance products.” Jason tells us, “We come here first and never need to go anywhere else. Now that they are partnered with Stonehenge Insurance and Hourglass Property and Casualty, they can take care of our other needs as well.”
We are happy to provide Jason and his company with workers’ comp, general liability, umbrella liability and even have one of our partner agencies working on his homeowner’s policy.
Here is a short interview with Jason where he tells us of some exciting positions available in his industry:
Can making a mistake in hiring or firing an employee cost you money? Your business? Your personal possessions?
What do you think in this litigious society?
You may be expecting an insurance agency to recommend getting Employment Practices Liability Insurance (EPLI) and it’s not a bad idea, but how about avoiding the need for it as much as possible in the first place?
Is it possible to know the right way to do everything with employees? Possible, but easy? No. It would certainly require staying on top of all the latest laws, practices and codes. Sounds like a lot of research to us.
Wouldn’t it be easier to have it be Somebody Else’s Problem?
Entering in to PEO relationship may be an easier (and safer) solution. After all, it is their job to handle all the employee issues related to employment. In most cases their EPLI policy offers you, the employer, some coverage as well.
Here is a brief story from one of our clients:
“A few years ago we had an employee who was not performing satisfactorily. We didn’t know what to do. She was very well liked and a personal friend of ours. We tried to talk to her but she told us what ‘we wanted to hear’ and still failed to do her job satisfactorily.
We decided to call our PEO. After a very relaxing call we asked ourselves, ‘Why didn’t we do this before?’ After all, they are professionals aren’t they?
They handled it very well. They called our employee and asked if she knew what her job duties were. She listed them fairly accurately. They asked her if she could complete those tasks in the next two weeks. She said yes. They scheduled a phone meeting at the end of the two weeks. They went down the list with her and asked her if she had completed the tasks. Not surprisingly, she hadn’t completed more than a couple. They asked her ‘What should we do?’ She said ‘I guess I shouldn’t be at this job’ and they offered her a chance to resign rather than be terminated for cause. She took it.
When she handed in her resignation to us she told us that the PEO did a great job and she apologized for wasting our time. We took her out for a farewell lunch and she told us she already had a new position lined up. In fact, she entered a new career that suits her better and we are still friends. FOrgive us for stealing someone else’s tag line but:
‘That was easy’
Thanks to PEO Pros for putting us with such a Professional Employer Organization.”
If you want to have less stress and a more comfortable relationship with your employees, consider asking us to match you with the right PEO.
At PEO Pros, we are your professional PEO matchmakers. Use the contact form below for more information.
When is a worker an employee?
The IRS and state tax authorities are targeting the workforce that is incorrectly being classified as “1099 contractors” when in fact they are employees.
Why Are They Cracking Down?
The loss to tax authorities by treating legitimate employees as 1099 contractors is substantial. The employer is avoiding withholdings for workers’ comp premium, income tax, social security and Medicare. But the big reason?
Unemployment taxes.
This has become a serious issue not only on a state level, but also federal. Many states have depleted their “re-employment” funds and are relying on federal loans to pay benefits. Several states are behind in their loans and have seen their federal unemployment tax rate increase. Florida, for example, is three years behind in their loan payments and the rate has been increased from 0.8% to 1.7%. (The current federal procedure is to increase the rate 0.3% every year the payments are not made.)
So the employers who are incorrectly paying “employees under 1099” face serious fines, interest, back taxes and penalties.
In the following video, Remax of Avalon Park interviewed agent John Will Tenney to discuss the question:
When is a Worker a W-2 Employee vs. a 1099 Contractor?
Employers should be wary. Under a recent initiative from the White House, the IRS is taking a dim view of incorrectly classified employees.
For the record, there is no such thing as a “1099 Employee.” It’s W-2 employee or independent contractor.
So How Do You Know?
The State of Florida uses a list of questions which can be described as “enigmatic” at best:
A “Yes” answer for the following questions indicates that the worker is an employee:
1. Does the business provide instructions to the worker about when, where and how he or she is to perform the work?
2. Does the business provide training to the worker?
3. Are the services provided by the worker integrated into the business’ operations?
4. Must the services be rendered personally by the worker?
5. Does the business hire, supervise and pay assistants to the worker?
6. Is there a continuing relationship between the business and the worker?
7. Does the business set the work hours and schedule?
8. Does the worker devote substantially full time to the work of the business?
9. Is the work performed on the business’ premises?
10. Is the worker required to perform the services in an order or sequence set by the business?
11. Is the worker required to submit oral or written reports to the business?
12. Is the worker paid by the hour, week or month?
13. Does the business have the right to discharge the worker at will?
14. Can the worker terminate his or her relationship with the business any time he or she wishes without incurring liability to the business?
15. Does the business pay the traveling expenses of the worker?
A “Yes” answer for the following questions indicates that the worker is an Independent Contractor:
16. Does the worker furnish significant tools, materials and equipment?
17. Does the worker have a significant investment in the facilities?
18. Can the worker realize a profit or loss as a result of his or her services?
19. Does the worker provide services for more than one firm at a time?
20. Does the worker make his or her services available to the general public?
Some of the questions make sense while others have employers scratching their head and saying “huh?”
Where Can I Get Answers?
We strongly suggest consulting an HR expert or even your CPA. If you can’t get answers there you can always contact us at PEO Pros – 800.788.8343