Easy Button Your HR Functions with a PEO
By Chris PetersonFirst published Updated
The short answer
Most businesses juggle several vendors just to run HR: payroll companies, insurance brokers, accountants, safety specialists, trainers and lawyers. A PEO replaces much of that with one partner that handles payroll and taxes, workers' comp, benefits, safety and compliance, and manages the vendors behind them.
Payroll companies, insurance brokers, accountants, safety specialists, training coordinators, legal counsel: most businesses need several vendors just to keep HR running. Each takes time to choose and set up, and then needs ongoing oversight.
A PEO makes life easier by managing those vendor relationships and the administrative work that comes with them, from health benefits and tax compliance to workers' comp and payroll. Instead of drowning in vendor details, you can spend your time on what matters to your business.
What vendor work does a PEO take over?
A PEO covers these HR areas and finds the right vendors for your business:
- Payroll and payroll taxes: processing and distributing payroll, deductions, taxes and compensation.
- Workers' compensation: coverage, cost containment and return-to-work programs.
- Employee benefits: leave policies, health coverage including dental and vision, life and disability insurance, and retirement plans.
- Safety: OSHA compliance, safety manuals and safety training.
- Compliance: federal wage and hour rules, Family and Medical Leave, EEO, Title VII and the ADA, down to the employment rights posters on your wall.
Because a PEO has a large pool of employees across its co-employment partnerships, benefits, insurance and other employee programs can cost less, which makes it a smart choice for the bottom line.
Why does it matter?
Management writer Peter Drucker said PEOs “free up managers to focus on the business rather than employment-related rules, regulations, and paperwork.” He also said, “If you want something new, you have to stop doing something old.” Juggling HR vendors yourself is a good old habit to stop.