The best solution for employers today is to purchase comprehensive employment practices liability insurance (EPLI), which covers a business against potential liability losses such as sexual harassment, discrimination and wrongful termination. However, the policies are expensive: companies often pay $5,000 to $100,000 in annual premiums for the plans. Many plans also contain high deductibles.
Enter the Professional Employer Organization (PEO). A growing trend in business today, PEOs contract with companies to handle all of their human resource functions. PEOs are full-service human resource organizations that manage the day-to-day administrative headaches of small- and medium-sized companies.
PEOs establish a co-employer relationship with their clients and contractually assume substantial employer responsibilities and share specified employment-related liabilities, including employment practices liability (EPL) management. A PEO leverages its access to far greater resources than most companies can obtain to provide EPL insurance at little or no cost to its clients.
The key to preventing employment-related problems is an informed workforce. PEOs provide comprehensive training to reduce their clients’ exposure to lawsuits. Supervisors are taught to be aware of problems such as sexual harassment in the workplace and recognize relevant laws and employees’ rights and responsibilities under the law.
There are many benefits in hiring a PEO. The most difficult decision will be which PEO to choose. A business owner should conduct a thorough background check of a PEO before entering into any agreement and look for answers to the following questions:
How long has the PEO been in business and does it provide references?
Does the PEO have a stable financial history? Are the benefits plans offered properly funded and backed by a reputable insurance company?
Does the PEO have a license, if it operates in a state that requires one?
Is the PEO accredited by the Employer Service Assurance Corporation (ESAC)? The ESAC is an independent body that is nationally recognized for its monitoring of professional responsibility standards and financial benchmarks in the PEO industry.
Achieving business success requires a relentless focus on the basics: the core product or service, customers, distribution channels, competitors and the bottom line. Utilizing a PEO to deal with a company’s human resource duties can significantly advance a company’s growth potential and profitability.
Vol 5, Issue 7