Buyer's Guides
Check the Quality of Your PEO
By Tam Harbert
AllBusiness.com
Date:Wednesday, May 3 2006
AllBusiness.com
Date:Wednesday, May 3 2006
We asked two expert sources how to make sure we're getting a responsible PEO. Some of these suggestions come from David West, of The Center for a Changing Workforce; some come from NAPEO; and some are, frankly, more practical than others.
- Conduct a thorough legal search of the principals in the firm to see if they've ever been accused or convicted of any crimes.
- Check with your state government. Some 27 states now regulate PEOs, requiring them to file information on their financial condition. Even if your state doesn't specifically regulate PEOs, you can check with your state's insurance commission to see if the company has been involved in any workers comp or health insurance problems.
- Make sure the PEO is bonded. The amount required will depend on the size of the PEO, but it should be enough to cover at least two to four weeks of payroll, benefits and any other liabilities the firm would handle for both you and its other clients.
- Be careful if the PEO is growing fast and acquiring other PEOs or staffing firms. Fast growth could stretch resources too thinly. Check out the histories of the acquisitions to see if they were involved in any shady activity.
- Ask the PEO for the names of its third-party providers, like health insurers or benefit providers. Then call the actual providers to check on the PEOs' history with them.
- Ask the PEO for proof that it is paying payroll taxes and insurance premiums.
- Understand how the employee benefits are funded. Is the PEO fully insured or partially self-funded? Who is the third-party administrator (TPA) or carrier? Is its TPA or carrier authorized to do business in your state?
- Is the PEO is a member of NAPEO?
- Has the PEO been certified by the Certification Institute?
- Does the PEO have ESAC accreditation?
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Additional Steps in Outsourced HR: Using a PEO: A Buyer's Guide
- 1. Introduction to HR Outsourcing Using a PEO
- 2. When Is It Time To Get HR Help?
- 3. Some HR Offloading Options Besides the PEO
- 4. Outsource Your 401(k) Plans Too!
- 5. Another Option: Keep HR In-House
- 6. What Does a PEO Do for Me?
- 7. Check Out the Quality of Your PEO
- 8. How to Choose a PEO
- 9. The PEO We Use at AllBusiness.com
- 10. A List of PEO Vendors
- 11. How to Request Free Quotes for HR Outsourcing
- 12. A List of PEOs with ESAC Certification
- 13. Resources on State Regulation of PEOs
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