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The Costs of Working with a PEO

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PEO (professional employer organization) is defined as “ a firm that provides service under which an employer can outsource employee management tasks, such as employee benefits, payroll and workers compensation, recruiting, risk/ safety management, training and development. The PEO does this by hiring a client company’s employees, thus becoming their employer of record for tax and insurance purposes. This practice is known as joint employment or co-employment.” 

Some of the benefits to working with a PEO are:

  • Saving money on benefits
  • Reducing employer liability
  • Simplified business operations

Some disadvantages to working with a PEO are: 

Segmented Workforce

Employees are employed by the PEO not the company they are performing tasks for, which can lead to confusion on who to report to and who to ask job-related questions.

Choice is Limited 

As a company using a PEO you rely on them for your staffing needs, so you don’t get to choose the candidate to fill an open position.  This can raise a few questions.

  • Is the employee going to represent your company well?
  • Are they familiar with your area of expertise?
  • Is there a possibility of them being replaced suddenly?
If you consider doing business with a PEO, make sure it is someone you trust to do your hiring. It’s important to have employees that fit your company culture who represent you properly both on and off the clock. So be sure to do your research, check references, shop around and ask questions. 

 

Benefits

When you hire a PEO, the benefits that are offered are left up to them. Healthcare prices have been on the rise in recent years, and workplace benefits are more important than ever. Having no control over the benefits offered means you don't have control over the quality of candidates you'll attract. This also leaves the opportunity for your employees to grow frustrated with the benefits the PEO offers. 

It is important that if you are considering bringing on a PEO that you view it similar to hiring an employee. Look around at other PEO reviews, check their references and weigh the benefits of working with them. Depending on the business, PEO’s can be a great investment but you must make an informed decision before choosing one.

If your business is looking to outsource its payroll and HR, schedule a demo with Dominion. We offer payroll, time management, and talent management in single-easy-to-use software. We also take care of your tax filing when the time comes. See how Dominion can help your company. 

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