Inland Empire Business Journal -- November 2001

PEOs Provide Solution to Employer-Related Challenges

By Tim Dennis

Business owners understand how quickly an employee complaint or incident can escalate into legal action. What's more, they realize that their companies are not immune to sexual harassment claims, wrongful termination lawsuits, discrimination complaints and similar types of employer-related liabilities.

From ADA, ADEA and COBRA to FMLA, HIPAA and WARN, the alphabet soup of employment regulations continues to grow. In fact, the number of government regulations has doubled since 1980, with no end in sight. If a business fails to comply with these types of federal and state regulations, then fines or litigation - or both - could result in having disastrous consequences on its bottom line.

Unfortunately, complying with complex workplace-related regulations is just one of the many challenges faced by businesses today. They must also deal with issues such as payroll and related tax filings, unemployment and wage claims, workers' compensation coverage and claims resolution, employee benefit packages, and training and recruiting. The list goes on.

Dealing with these types of personnel issues and responsibilities can be a time-consuming burden. Consequently, an increasing number of businesses have taken the popular outsourcing concept to a whole new level - entering into a co-employment relationship with a Professional Employer Organization (PEO), which essentially serves as an offsite human resources department to the company. Under this arrangement, the PEO assumes or shares many of the responsibilities of being an employer, and the employees gain a wide array of value-added benefits and services not typically available at small businesses.

PEOs come in all shapes and sizes and offer a variety of services. On a basic level, most PEOs share responsibility for processing a company's payroll and related tax filings, unemployment and workers' compensation claims, and assist with employer-related regulatory compliance as well as benefits management and administration.

In addition to those core services, PEOs can provide human resources support covering employee handbook and policy development, employee counseling and performance appraisal assistance as well as HR-related training, recruiting, interviewing and employee selection. Of course, clients still make the strategic business decisions and can delegate various human resources projects to the PEO as they see fit.

At the most sophisticated level, full-service PEOs provide other vital employment resources, including productivity-based training courses, an expanding array of online support services, and access to a network of best-of-class service providers that can help employees achieve their personal and professional goals more efficiently and effectively. The result is win-win: employees value the opportunity to grow professionally while the business benefits from increased productivity.

PEOs also offer business owners the opportunity to reduce their employment liability exposure. Under the co-employment arrangement, the PEO assumes a number of the employer-related liabilities. Other liabilities are shared. With those that are left, the PEO can provide resources such as safety consultants and human resource specialists to provide the backup needed to further reduce a client company's liability exposure.

According the National Association of Professional Employer Organizations (NAPEO), there are three principal reasons the PEO industry continues to grow rapidly:

1. The increase in the number and complexity of workplace-related regulations.
2. The need to attract and retain quality employees.
3. The need to control operating costs by better managing administrative expenses.

A full-service PEO addresses each of these areas, providing vital human resource services that allow companies to protect net profits by minimizing employer-related risk, become more systematic and strategic in the role that people play in the success of their company, and better manage employee-related expenses.

Timothy Dennis is the Inland Empire district manager for Administaff, the nation's leading Professional Employer Organization (PEO). For more information about Administaff's comprehensive personnel management services, call 1 (800) 465-3800, or visit the company's Web site at www.administaff.com.