PEOs help small businesses manage day-to-day HR Issues

By Mike Gorham, Special to Orlando Business Journal

"We, the jury, find for the plaintiff and award damages in the sum of $10 million."

This is one of the most dreaded scenarios in business today. It can hit your business suddenly and from many different angles. A manager was sexually suggestive to a secretary. A worker was injured on-the-job. One employee was paid less than another for the same job. You thought you had already fixed it all...then the lawsuit hits your desk.

Is there a guarantee that you will never face this?

No.

Is there a way to help prevent it?

Yes.

A large department full of human resource (HR) experts would be a good start, but small business owners usually canÿt afford a department dedicated exclusively to HR issues.

Or can they?

A growing trend in business today is the use of professional employer organizations, commonly referred to as PEOs, to manage day-to-day HR issues. When a business contracts with a PEO, the usual employer-employee relationship doesn’t end, it just changes a little. The relationship becomes a three-party employment relationship, with the PEO assuming various roles and responsibilities, including employee liability management.

As a co-employer, a PEO provides the benefits of a fully accessible off-site human resources department. The small business owner then has access to expertise generally found only in large, multinational corporations.

PEOs: a small business solution to liability issues

Most small businesses have informal or "understood" policies on things such as harassment, drug-use and discrimination. But how many have formal, documented plans with clearly defined steps for action and implementation? Not many.

Small business owners can literally lose their businesses with one misstep. However, there are things a PEO can do for the small business owner, starting at the beginning of the hiring process, to reduce the risks and liabilities.

Among the areas a PEO can impact your business are:

Harassment: Your PEO can conduct an in-house sexual harassment seminar to educate your staff and management that harassment of any sort will not be tolerated. Also, an official written policy can be integrated into the employee handbook.

Drug Use: The PEO can provide drug abuse awareness seminars, enhancing employee awareness about the dangers of substance abuse in the workplace. A substance abuse/drug testing policy and proper implementation and supervision can significantly reduce the threat of liability.

Discrimination: Specific job description and performance review policies keep potential hiring, firing and promotion liabilities to a minimum. A PEO helps businesses stay current on all laws and regulations pertaining to these events.

Employment Process: PEOs conduct pre-employment testing, scoring and reporting that can screen out potential problem employees. Complete background and reference checks are also possible.

Mike Gorham is regional manager of Administaff.

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As a co-employer, a PEO provides the benefits of a fully accessible off-site human resources department. The small business owner then has access to expertise generally found only in large, multinational corporations.

Reprinted with permission of Orlando Business Journal.