No one likes to be alone. When employers partner with a PEO they’ll never be alone again. A PEO provides shared liability. Shared liability is the X-factor many businesses have discovered in order to thrive, have more stability, and gain a competitive edge.
As the saying goes, “Go into business for yourself, but never go into business by yourself.”
Don’t make the mistake of believing that being alone in business means you don’t have to answer to anybody. You still have to answer to the government and agencies who enforce regulations, tax compliance, and employment law. You also have to answer to yourself and your employees. What if a PEO could answer for you? What if you could have someone share your risk, lighten your load and allow you to take a few more deep breaths during the day?
See also: What is a PEO and What it Means to You
When a business is protected by the strength of a PEO through shared liability, you no longer have to worry about costly mistakes falling through the cracks, stay awake at night thinking about how Obamacare will affect your company, or whether you’ve continued to pay benefits for that employee you terminated last quarter.
Aside from the worry and stress that shared liability can help relieve, you will enjoy added protection when a mistake is made. The fines/penalties/fees that need to be paid won’t fall on your shoulders alone. When you are responsible for everything in your business, you’re also liable for everything in your business.
We believe this shared liability that a PEO offers a business owner is truly the X-factor because it creates a real change in the owner’s life. They have freedom to focus (without worry) 100% on profit-generating activities for the business – knowing that all their HR, administration, and compliance details are handled.
How Does a PEO Provide Shared Liability for a Business?
Unlike payroll companies, HR consulting companies, and hired bookkeepers, when you partner with a PEO they have the unique ability to become a co-employer for the client. They become the “employer of record.” This partnership, called co-employment, is what enables the PEO to assume the responsibilities (and most liabilities) involved with payroll, workers’ compensation, benefits administration, tax and regulatory compliance, unemployment insurance claims, and general HR duties. The PEO is your new partner sharing the risk of your business with you.
Circumstantially, since the PEO houses professionals who handle these tasks, your risk of administrative mistakes and missed deadlines happening decreases as well. They are motivated to do a great job because their neck is on the line too!
Does This Mean Less Control of Your Business?
No! You’ll actually feel more in control of your business than ever before. Many business owners worry that if they let go of some of the responsibilities for their employees in these areas that they will lose a certain degree of control. This is simply not the case. You remain in complete control of your business and you call all the shots. You still determine your business objectives, dictate your agenda, and most importantly, direct your employees’ daily activities. The PEO acts as your upgraded HR department, a second pair of eyes, and constantly offers support and expertise when you need it.
Will it Change Anything?
Yes. Co-employment will free up more of your time and improve your ability to focus back on your core business activities. Your customer experience, brand, products and services all remain unchanged when a PEO partners with you. However, after a few months of working with a PEO most companies see an increase in positive customer experiences because they are focusing more on their customers instead of their HR administrative headaches.
The Shared Liability Areas of a PEO
Shared Liability for Legal Expenses
For most small businesses, one employee lawsuit could jeopardize its very existence. However, when they have the added support and shared liability of a PEO they have an added layer of protection and stability. The PEO shares the risk of employment-related legal issues and other financial burdens.
It is unrealistic to assume that a small company with few employees can turn over enough profit to easily settle lawsuits and claims. This is where a professional employer organization (PEO) can ease the burden for many small businesses.
Employers Resource clients also benefit from our innovative Alternate Dispute Resolution (ADR) policies. We help our clients set up and implement the ADR to protect themselves from costly litigation and courtroom battles. Learn more about our ADR services here.
Shared Liability for Compliance Risk
As the co-employer, a PEO assumes responsibility for all compliance that would be covered by the core functions of human resource management. This means that a PEO provides coverage for your employees for all employment laws and regulations. This includes liabilities from state, federal, and local discrimination laws such as:
- Title VII of the 1964 Civil Rights Act
- Age discrimination in the Employment Act
- Pregnancy Discrimination Act
- Fair Labor Standards Act
- Immigration Reform and Control Act
- Health Insurance Portability and Accountability Act (HIPPA)
- Employee Retirement Income Security Act (ERISA)
- Federal Insurance Contributions Act (FICA)
- Federal Unemployment Tax Act (FUTA)
- State unemployment compensation
- Workers’ Compensation Laws
The list goes on and on as the compliance burden grows each year for employers. Since the professional employer organization takes care of payroll activities and HR management, they are able to ensure that you stay compliant. Read more from NAPEO about this here.
Shared Tax Liability
Because the payroll process is laden with opportunities to make mistakes, it can be a huge exposure to risk for employers. When you are running your payroll (and even if you have a payroll company running your payroll) and you miss a tax payment, you are liable for the penalties. If a PEO is responsible for your payroll, they are liable for the penalties. They are “the employer of record” and this means the paper trail leads to them. The PEO’s neck is on the line, not yours. Stop worrying about the hundreds of regulations surrounding payroll – let experts handle it and take the responsibility for mistakes.
Safety and Risk Liabilities
Safety truly is a competitive advantage you can’t ignore. Because PEOs have a much larger pool of risk, they typically maintain a lower experience modifier rate (EMR). They offer the benefits of this to their clients which allows them to enjoy much lower insurance premium rates for workers’ compensation. This lower EMR often allows their clients to bid on projects in the government space or strict contractors that demand certain EMR requirements. They take responsibility for processing claims, preventing them, getting employees back to work, submitting workers’ comp premium payments, and risk assessments.
Employers Resource also helps our clients create a culture of safety through strategic safety programs and training for your employees. We perform risk assessments and create customized plans for our clients to improve their workplace safety. With an on-the-ground team of experienced safety professionals, we will help your business lower the average number of accidents and claims.
Benefits Administration Liabilities
Is there risk exposure for employers when it comes to Benefits Administration? Yes. There are many ways a PEO will protect you from liabilities related to benefits. A PEO will ensure you are not paying for benefits of terminated employees or paying excessive premiums. They will also help you provide a more complete benefits package to your employees. This not only improves recruiting strength, but also ensures that you are not losing money by paying disproportionate premium costs.
HR Management Liabilities
As an employer you will face tough HR decisions. Don’t face them alone – protect yourself from making the wrong decision. When it comes to terminating employees, creating policies, and employee handbooks, small mistakes can have huge consequences. A PEO provides the advice you need when you need it. We protect employers from lawsuits and back you up in the toughest HR situations.
Our suite of experts have extensive knowledge that covers breadth and depth that even HR departments of fortune 500 companies can only dream about. With a knowledge of a variety of HR disciplines, we will catch the small details that an in-house HR professional may not have the expertise or time to catch. Plus, when an in-house HR manager misses something, you are still liable. We have the systems, processes, and policies in place to help you or your HR employees avoid costly HR blunders and we’ll back it up.
Enjoy Shared Liability. Enjoy Freedom.
We love seeing the lives of business owners improve because of our solution freeing them from compliance and HR burdens. We know first-hand that business owners really do have superpowers, but no one can truly know how to do everything and/or remember to do everything for a business. That’s why many employers are choosing to stick with what they are good at, go back to why they started the business, and share some of these responsibilities with a PEO. This also allows them to achieve a peace-of-mind they could never reach before.
Interested in experiencing what it would feel like to have the HR weight lifted from your shoulders? We wonder why any business owner wouldn’t be!
Employers Resource offers the strategic bundled HR services and shared liability through co-employment that could be the X-factor for your business. Contact us to receive a free HR analysis and no-obligation quote today.