PEOs proving to be "recession proof" business choice

Are PEOs turning out to be a virtually recession-proof business model? A prominent association of Professional Employer Organizations credits the soundness of its $68 billion industry to an economy that is forcing more small businesses to outsource services, in order to save money.

“The most essential thing for businesses to drive revenue is for the owner to get back into the core of how his business makes money,” said Milan P. Yager, executive vice president of the National Association of Professional Employer Organizations. “To do that the business is outsourcing its back office functions to PEOs.”

PEOs are taking on more clients who are outsourcing human resources, payroll, employee benefits and workers’ compensation.

However, Yager says the PEO industry is not growing as quickly because many clients have fewer employees.

“A lot of PEOs have reported an increase in sales, but the industry is not growing nearly as fast because the sales that we’re having have fewer employees,” Yager said.

A PEO can best help your company put in place an employee incentive program. To find the right PEO for your company, please visit our directory at www.PEO7.com for more info.

How does a PEO help handle Workers' Comp cases?

PEOs work closely with agencies that properly determine exact compensation amounts. The organization responsible in many states for determining proper Workers' Compensation classifications, experience modification factors, and collecting data used for ratemaking is called The National Council on Compensation Insurance (NCCI). NCCI also writes the manuals used in many states to calculate Workers' Compensation premiums, and also administers the Assigned Risk Plan in many jurisdictions. NCCI is a private organization, not connected with government, although it is often mistakenly thought to be a governmental agency. In fact, it is a non-profit privately held corporation owned by major insurance companies, whose executives constitute a majority of the directors on NCCI's board.

PEOs routinely work with this and other national organizations whose sole aim is to assist employers with things such as payroll, workers' comp and compliance with state and federal laws.

A PEO can best help your company put in place an employee incentive program. To find the right PEO for your company, please visit www.PEO7.com's directory for more info.

PEOs popular with successful entrepreneurs

Some entrepreneurs--the truly insightful ones--have opted to meet their human resource demands by enlisting the services of a professional employer organization.

The primary reason PEOs exist is to provide employee-related services for owners of small to medium businesses, so they can focus on the one on one and day-to-day vision which is vital for any company to remain fresh and grounded.

This can be a highly valuable service for business owners, of course, especially for the owners of small businesses who struggle to find the time to adequately cover their companies’ human resource needs. Keeping up to speed on being in legal compliance, and dealing with the host of issues that come with it can be daunting on your own.

Instead of employing people directly, you and your employee become legal employees of the professional employer organization. You retain all the functions of an employer, though, in terms of hiring employees, setting wages, etc. The PEO handles everything else--including payroll, benefits administration, workers’ compensation, employer health insurance, and retirement accounts.

All you have to do is write lump sum checks to the professional employer organization covering all your payroll expenses and an additional fee for the PEO itself, and they take care of the "dirty work". No wonder PEOs and HR outsourcing have traditionally been a big part of the recipe for success for those entrepreneurs who plan on taking it to the top.

A good PEO can best help your company put in place an employee incentive program. To find the right PEO for your company, please visit www.PEO7.com.

Two States Changing Employment Laws, Altering Employer Requirements

Texas PEO Bill Becomes Law, Florida Businesses To Pay More Unemployment Tax

Two states are making substantial changes to their employment law codes. Amendments to the Texas PEO licensing statutes (HB 2249) were signed into in early June, providing more security for the thousands of Texas small businesses who outsource with employee leasing/PEO services.

Passage of the bill strengthens working capital requirements and requires PEOs to provide audited financial statements, which further protects small businesses engaged in a PEO arrangement.” Provisions of the new law become effective on September 1, 2009. PEOs have until the end of 2011 to comply with enhanced financial statement requirements.

The Florida Unemployment Compensation Trust Fund has been paying out more funds than it has been taking in, due to increased unemployment in Florida. As a result, effective January 1, 2010, employers must pay tax on the first $8,500 of wages per calendar year, rather than the first $7,000 of wages per calendar year.

The amount of wages subject to unemployment tax will remain at $8,500 through December 31, 2014. The taxable amount will return to the first $7,000 of wages effective January 1, 2015 - so they say?

A PEO can best help your company put in place an employee incentive program. To find the right PEO for your company, please visit www.PEO7.com.

Former South Florida PEO Chief Executive Convicted of Fraud

A federal grand jury in South Florida has indicted-and now convicted, as of July 20--the former CEO and president of failed professional employer organization Certified Services on charges alleging he collected an estimated $10 million in premiums to secure bogus workers' compensation coverage from unlicensed companies.

Danny L. Pixler and two other former principals of the Fort Lauderdale-based company in May 2008 settled civil claims with the U.S. Securities and Exchange Commission alleging the group used phony letters of credit to create $47 million in fake assets and concealed $65 million in claims liabilities before Certified Services filed for bankruptcy protection in May 2006.

The other principals, former chief risk officer Otha Ray McCartha and former company consultant Charles J. Spinelli, pleaded guilty to criminal charges in connection with the federal investigation last year and received 24 and 21 months in prison, respectively.

In a case related to the SEC complaint, Washington State Insurance Commissioner Mike Kreidler has filed suit against Pixler and other principals of Certified Services alleging that Certified's misreporting of assets and liabilities played a key role in the collapse of Cascade National Insurance Co.

A PEO can best help your company put in place an employee incentive program. To find the right PEO for your company, please visit www.PEO7.com.

Myth Busting: PEOs Vs. Employee Leasing Companies

Contrary to what you might read or hear elsewhere, a Professional Employer Organization (PEO) is not the same thing as an employee leasing company. The basic function of the latter is to achieve economies of scale through volume purchasing of employee health benefits and other “big-ticket” items. What employee leasing companies don’t generally deliver are the value-added services that a reliable PEO provides.

PEOs enforce sound business practices and proper documentation to adhere to government compliance regulations, including but not limited to: Government Compliance Reporting and Agency Interface, Unemployment Claims Administration, the Federal Insurance Contributions Act (FICA), the Federal Unemployment Tax Act (FUTA), state unemployment tax acts (SUTAs), safety services, Drug-Free Workplace Administration and Equal Employment Opportunity Commission (EEOC) administration.

Companies that currently execute such HR practices can benefit from the expertise of skilled PEO assistance. Personnel can increase proficiency and streamline their procedures to increase their ability to prevent liabilities. However, businesses without such a system stand to benefit drastically from professional employment organization constructing or restructuring of their current liability management system.

A PEO can best help your company put in place an employee incentive program. To find the right PEO for your company, please visit www.PEO7.com.

Small Businesses Ahead of Big Business in Planning for Aging Workforce

Small business owners aren't waiting for further evidence of the 'brain drain' as more than 19 million American workers reach traditional retirement age of 65 in the next three years. In fact, twenty-eight percent of the small-business owners in a recent survey have planned for 'knowledge transfer' from these experienced older workers to newer workers.

A survey of 404 small businesses owners, conducted February 12-26, 2008, revealed their plans for dealing with an aging workforce. The trade group, whose members manage human resources responsibilities for small businesses, believes these firms are more attuned than some larger ones to the demographic impacts on their competitive advantage.

On the other side of the Atlantic, one in five nurses on the United Kingdom (UK) professional register is aged 50 years or older. Over the next few years, the profession will lose, through retirement, many of its most experienced practitioners. The significance for policy makers and for employers of this age-shift is two-fold. Firstly it is clear that greater numbers of nurses and midwives are reaching, or soon will reach, potential retirement age. Secondly many more nurses are now reaching their middle years and they are likely to have different requirements and attitudes to nursing work.

How close is your business to the impact of these mass retirements? Have you got the right PEO to handle this mass changeover?

A PEO can best help your company put in place an employee incentive program. To find the right PEO for your company, please visit www.PEO7.com.

The PEO industry continues to reduce small business injury costs

Three top professional employer organizations (PEOs) have attained additional workers' compensation risk management credentials from the Certification Institute. This comes at a time when the insurance industry is coming under increased scrutiny, and workplace health and safety have proved to be a crucial investment to a small business's long-term success.

Statistics show that small businesses who have a strong health and safety culture that includes comprehensive health and safety procedures, on average reduce their injury and sickness costs by 20 percent. A well planned health and safety program is obtainable even for small businesses and doesn't have to be an administrative burden if outsourced to a PEO or professional employer organization.

PEOs routinely: arrange workers' compensation coverage, provide risk management, manage claims and provide back to work programs for several million workers as part of their service to small and mid-sized businesses.

A PEO can best help your company put in place an employee incentive program. To find the right PEO for your company, please visit www.peo7.com.

Employee Incentive Programs Help Build Motivation, ROI

The most effective types of promotional programs are built around a specific need or problem faced in the workplace. One of the most effective types of promotional programs is the Promotional Employee Incentive Program. Why would this program be so effective? Because incentive programs focus on a key issue: your employees’ motivation.

More than a few studies have been performed that prove what common sense tells us to be true: if you want to increase performance while decreasing accidents and increasing profitability, your employees need to be motivated and alert while on the job. Promotional Incentive Programs, when applied well, can be extremely effective at raising the profitability of your organization.

Here are some basic tips to help you build your next Employee Incentive Program:

As was alluded to earlier, the best place to start when trying to solve human resource-related issues is with employee motivation. For example: in a recent study conducted for the United States Federal Motor Carrier Safety Administration, it was found that programs aimed at increasing employee motivation in trucking companies showed the most promising and effective results in reducing accidents and increasing productivity.

When designing your program, make sure to factor in some sort of plan for analyzing its effectiveness. At the end of the year, compare your program expenditures against the financial gains/losses and the increase/decrease in efficiencies. Obviously, you want to get as high a return as possible on your Promotional Employee Incentive Promotional Program, so it may take a little tweaking after the first year or so to get the results you need. It is not uncommon, in some industries, for these types of programs to show a 3:1 benefit to cost ratio. This means that for every dollar spent, 3 dollars will be shown in savings or profits.

Employee Incentive Promotional Programs usually hit their peak stride in their second or third year. Why? Because it takes time for a staff to fully get on board and get involved with a program. Understand that, in order for a program of this type to be successful, your people have to believe in it and be excited about it. Developing that level of trust and enthusiasm can take time and experimentation. Employees talk amongst each other, and if people start having positive experiences, they will start sharing them with others. The excitement will build and snowball almost by itself after that.

Federal Budget Provisions for 2010 to Affect Employee Leasing and PEO-Employer Arrangements

President Barack Obama’s recently-announced 2010 budget proposal contains some payroll-related provisions that will have a major impact on the way that payroll taxes are reported after December 31, 2009.

Currently, there is uncertainty as to whether an employee leasing company or its client is liable for unpaid federal employment taxes arising with respect to wages paid to the client’s workers. When an employee leasing company or professional employer organization files employment tax returns using its own name and employer identification number, but fails to pay some or all of the taxes due, or when no returns are filed with respect to wages paid by a taxpayer that uses an employee leasing company, there can be confusion as to how federal employment taxes are assessed and collected.

The proposal establishes standards for holding employee leasing companies jointly and severally liable with their clients for federal employment taxes. The proposal also sets standards which will place responsibility for, and hold employee leasing companies and PEOs solely liable for payment of taxes, in some cases. The provision would be effective for employment tax returns required to be filed with respect to wages paid after December 31, 2009.