PEO Consultants

14 HR Challenges a PEO Can Take Off Your Hands

By Chris PetersonFirst published Updated

The short answer

For 2019, Employee Benefit News listed 15 HR challenges, from compliance and recruiting to leave, benefits and harassment. A PEO can help with 14 of them: it saves money through pooled insurance, saves time by running payroll and benefits, and lowers risk with compliance help and training.

Employee Benefit News identified 15 HR challenges businesses would face in 2019. A professional employer organization (PEO) can help with all but one of them:

  1. The federal political climate and federal policy changes
  2. State and municipal rules
  3. Workforce planning
  4. Cyber breaches and data security
  5. Recruiting
  6. Technology
  7. Workplace violence and active-shooter situations
  8. Employee leave
  9. Benefits and the Affordable Care Act
  10. Employee well-being and mental health
  11. Employee handbooks
  12. Drug testing and substance abuse
  13. Diversity and inclusion
  14. Pay equity and salary history bans
  15. Harassment

Can you spot the one a PEO can't help with? It's the first. A PEO can't change who's in office, but it can keep your policies current when federal rules change.

Co-employment with a PEO gives small and mid-sized businesses benefits usually available only to large employers. Here's how it takes on HR's biggest challenges.

How does a PEO save money?

As a co-employer that pools employees from all its clients, a PEO uses economies of scale on expenses like health insurance, workers' comp and retirement plans. Its workers' comp program can carry lower rates than you'd get alone, and instead of a large deposit up front, premiums are usually billed with each payroll, which frees up cash for the business.

How does a PEO save time?

Almost every company struggles to get everything done, and small businesses feel it most, where people wear many hats. Hiring someone for every role isn't realistic. With a PEO handling payroll, benefits administration and compliance, your employees can spend their time and know-how growing the business.

How does a PEO reduce risk?

Co-employment softens the impact of regulation changes and compliance in general. Your PEO trains employees and supervisors on harassment and discrimination, safety and recordkeeping, and its compliance staff keep up with changes to labor law, regulations and health care so your business doesn't get caught out. On your own, that takes hours away from what your company does best.