The Benefits of Hiring a PEO During Covid-19
By Chris PetersonFirst published Updated
The short answer
During Covid-19, PEOs helped small businesses move people to remote work, handle furloughs and layoffs (unemployment, COBRA and outplacement) and apply for Paycheck Protection Program loans. A 2020 NAPEO analysis found PEO clients were more likely to get PPP loans, and less likely to close, than similar businesses without a PEO.
Written in December 2020, during the pandemic. The details are from that time; the lessons about having HR help in a crisis still apply.
PEOs are the lifeblood of many small and mid-sized businesses. What may be less obvious is how much a PEO helped businesses cope with the workplace challenges of Covid-19.
How did Covid-19 affect small businesses?
Small businesses have always closed, but not at the pace the pandemic brought. Companies with fewer than 100 employees were more vulnerable than larger ones, and the hardest-hit industries included accommodations, food service, construction, retail, health care and social assistance. Even so, there were ways for small businesses to hold their ground.
Why did HR matter so much during Covid-19?
When the pandemic started, owners had to rethink how to keep running as non-essential workers moved from the office to home. That sounds simple, but it meant laptops, meeting software, security risks and a host of other details.
Businesses that weren't faring well faced layoffs and furloughs, with all the HR work that comes with them: deciding which roles to cut, explaining unemployment and COBRA, and arranging outplacement help. That takes time. Small businesses with one or two HR people, or none, increasingly turned to PEOs to handle it.
How did PEO clients fare?
A NAPEO analysis published in 2020 (sponsored by the PEO industry association) compared PEO clients with similar businesses that didn't use a PEO. PEOs helped many clients with their Paycheck Protection Program applications, and PEO clients were more likely to receive PPP loans and to get them in the first round. Fewer PEO clients were still closed after the shutdowns, and fewer had closed for good.
What does a PEO help with in a crisis?
Pandemic assistance, payroll, benefits, retirement plans, workers' comp, lawsuits, recruiting, unemployment and regulatory compliance. When the rules change overnight, having HR experts in your corner is the benefit.