A PEO company, or Professional Employer Organization, is defined as an employee leasing firm that arranges with clients to lease employees back to the client and handle all payroll and human resource functions for the client. The PEO relationship involves a contractual allocation and sharing of employer responsibilities between the PEO and the client. This shared employment relationship is often referred to as “co-employment.”
What is Employee Leasing?
Employee Leasing is an arrangement in which one firm transfers its employees to another firm which specializes in human resource management, payroll accounting and risk management.
What is Co-Employment?
In a co-employment relationship, the PEO acts as the administrative employer and the client acts as the worksite employer. The employer maintains control of the business and is in charge of all business decision-making including employee supervision and staffing decisions. The PEO handles the time-consuming administrative tasks associated with the employment relationship. Because of the co-employment relationship, a PEO company’s larger buying power can help small and medium sized businesses achieve lower costs that they may not be able to achieve on their own. Partnering with a PEO company can help your business succeed.
In a Co-Employment Relationship, what are the roles of each employer?
The PEO becomes responsible for the payment of wages in the co-employment relationship, as well as the management of workers’ compensation claims and various other administrative functions related to the assigned employees. The PEO handles the regulatory paperwork and compliance issues. The PEO can give managers advice on proper termination procedures, proper disciplinary procedures and more. The PEO provides the client and/or its worksite employees with workers’ compensation insurance, unemployment insurance, dental insurance, a 401(k) plan and a wide range of other employee benefits programs. The client remains responsible for directing and controlling the daily activities of the employees assigned to its worksite. The client remains responsible for ensuring a safe work environment. The client remains responsible for keeping track of actual hours worked and reporting those hours to the PEO for processing. The client is responsible for making sure payroll funds are paid to the PEO.
What types of companies use PEOs?
Companies in virtually every industry use the services provided by a PEO. Any company interested in trying to improve its performance in an increasingly competitive marketplace should consider this type of partnership.
How will my business benefit from a partnership with Phoenix Payroll Solutions?
When you partner with Phoenix Payroll Solutions, you are better positioned to: Focus on Your Core Business – Remove non-revenue producing tasks and spend more time on what counts: managing and growing your business. Lower Expenses and Increase Profits – Outsource your human resources, benefits and payroll administrative tasks to a provider who has a larger buying power and broad expertise. Become an Employer of Choice – Receive Employee Benefits programs that enable you to attract and retain great employees. Maintain Peace of Mind – Protect your business and ensure legal compliance with improved risk management, safety support, training and claims processing services.
Does Phoenix Payroll Solutions have to process the payroll?
Yes. Paying wages is an essential component of the co-employment relationship. Without this component, a PEO would not be able to provide workers’ compensation, health benefits and various other services that rely upon the co-employment relationship’s existence. Employers provide the salary and hours for each worksite employee and the PEO processes the payroll with your company name on each check and files all payroll-related taxes and reports.
Will we lose our company relationship with our employees when we partner with a PEO?
No. The management relationship that you have with your employees will continue, but the partnership enables you to offer improved Human Resources related products and services.
Do we have to buy all of the products and services Phoenix Payroll Solutions offers? Can we only use and pay for those services we need?
Virtually all products and services offered by Phoenix Payroll Solutions are included at no additional cost as part of our Service Agreement. Additional services are offered on an “a la carte” basis. This allows us to create a customized plan specific to your needs. You can choose as many of these additional services as you need and only pay for the ones that you use.
Will we be locked into a contract?
No. The Phoenix Payroll Solutions Service Agreement provides for a mutually beneficial working relationship between our companies. It may be discontinued at any time with written notice.
Who is responsible for employment taxes?
While the client is responsible for providing the funds to cover payroll and payroll taxes, a PEO administers payment of wages to employees and payment of taxes to the appropriate agencies.
Who is responsible for compliance with employment laws and regulations?
One of the responsibilities of a PEO is to provide clients with guidance and education regarding employment laws and regulations. Ultimately, the responsibility for complying with most of these laws lies with the client.
How does Phoenix Payroll Solutions help us recruit the best employees and reduce turnover?
By providing a comprehensive benefits plan, Phoenix Payroll Solutions gives employers the opportunity to attract better employees, retain existing employees, compete with larger employers and become an employer of choice.