Friday, October 2, 2015

What's a PEO and How Can It Help My Business?

What's a PEO, and why should I use one?

A: Here's all you need to know: A Professional Employer Organization (PEO) is one of the best-kept secrets of many successful small businesses. Essentially, these bodies handle all your HR needs, including payroll and administration, employee health and retirement benefits, workers' compensation insurance, state and federal compliance issues and even worker training.

All you're left to do is hire, supervise and promote (or fire) your employees as needed. Of course there is a cost for contracting out your HR department, but consider this list of positives.

  • PEOs manage thousands of employees and can therefore purchase insurance and benefit plans at a significant savings or allow you to offer higher-quality plans to attract and retain skilled employees.
  • Experienced professionals in HR, benefits, payroll, risk management and other aspects of employee administration are on the job. Want to institute a 401(k) plan or flexible spending account? The PEO will do it. No need for you to figure it out yourself.
  • The PEO will provide HR manuals for your employees, and the policies and procedures will be maintained in compliance with ever-changing state and federal laws and regulations.
  • A PEO will help with employment-related regulatory compliance (ADA, payroll, OSHA, EEOC, etc.), a huge advantage that can be worth more to your business than the money saved on benefits costs.
  • The PEO can provide effective management and access to payroll records, benefits, personnel data, vacation and sick-time accruals and specialized reports.
  • If you have an HR-related employee claim, such as a discrimination allegation, a PEO will know what to do and will take the lead on managing the claim process.

Ordinarily the savings on group health and benefit plans alone will more or less outweigh the cost of hiring a PEO to tackle these duties. But don't forget the peace of mind that a PEO offers. Take one of my fast-growing clients: When this team opened a new office in a distant state, they had no clue how to administer payroll there. When I came onboard, we hired a national PEO that was able to make the process of opening offices and hiring employees in other states painless and risk-free.

The most important bit of advice when it comes to hiring a PEO: Do your due diligence. You want your PEO to be financially responsible and stable. The best are accredited by the Employer Services Assurance Corporation and have a current Statement on Standards for Attestation Engagements No. 16 audit (formerly known as an SAS 70). Make sure they have a deep presence in your industry, and get references.

As to knowing when your business could use a PEO, I believe it's the moment your accounting department asks for a dedicated HR person (even a part-time one) to handle all the paperwork. The sooner they can offload that work to someone who really knows what they're doing and return to managing your balance sheet, the better.

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Thursday, September 24, 2015

Don't be confused, PEOs are not just a Staffing Agency.

Is a PEO just a staffing agency?

PEOs are often confused with temporary staffing agencies. While the two share some slight similarities, the model is different.

PEOs assign their own, existing employees to take over your human resources administrative tasks. The PEO is responsible for most of the behind-the-scenes human resources tasks, such as negotiating health insurance, benefits packages and retirement plans. PEOs deal with reporting wages to the IRS. Essentially, the PEO is handling all the business and administrative tasks related to employment.

These tasks can result in positive outcomes such as:

Fewer administrative tasks. Companies don't have to spend time focusing on tasks like payroll and benefits administration, freeing up hours for you to focus on running and improving the business.

Fewer mistakes. For small businesses in particular, the rules and laws surrounding payroll, benefits and tax reporting are often outside their realm of expertise. PEOs specialize in human resources tasks, so they're less likely to make a costly or harmful mistake.

Legal protections. Most PEOs provide civil defense and employment liability insurance in case a former employee sues the company for discrimination or wrongful termination.

Cost savings, better benefits. Because PEOs are often large companies, they can negotiate better benefits packages and lower insurance costs than most small businesses. However, keep in mind that you are paying the PEO a fee for this benefit. To make sure you're coming out ahead, it's important for you to weigh the service fees against the added benefits.

Staffing agencies, on the other hand, typically provide companies with short-term or special-project employment. They provide the labor, but they do not handle behind-the-scenes administrative tasks like benefits negotiation and tax reporting. If you use a staffing agency to hire human resources employees, those administrative responsibilities will lie with your company.

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Friday, September 4, 2015

Slower Job Growth May Give Fed Pause on Raising Rates

The American economy added 173,000 jobs in August, a weaker showing than expected that makes it more likely the Federal Reserve will delay its long-awaited increase in interest rates when policy makers meet in two weeks.

But there was just enough positive data in the report on Friday from the Labor Department to keep a September move in play, even as Wall Street increasingly looks at the possibility of a Fed move in October, or at the central bank’s last meeting of the year, in December.

The report was hotly anticipated, mainly because it represents the last major piece of data that the central bank will have on hand before its meeting on Sept. 16 and 17.

Although hiring in August was well below the 220,000-job gain that economists had expected, the unemployment rate fell to 5.1 percent from 5.3 percent, the lowest since early 2008.

At that level, joblessness is nearing the level that economists and the Fed consider close to full employment, and inflation foes worry that an unemployment rate significantly less than that might result in an overheated economy in the long term.

That might seem strange to tens of millions of workers still looking for raises and full-time positions, but there are nascent signs that wages are finally beginning to tick higher. In contrast to the disappointing headline number, average hourly earnings rose by a better-than-expected 0.3 percentage point rate in August.

Payroll gains for June and July were revised upward by 44,000.

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Wednesday, August 19, 2015

Obamacare's latest trend: sticker shock

Sun Sentinel By Sally C. Pipes

Americans rank health costs as their top financial concern, according to Gallup.

That's not likely to change anytime soon. Health insurers are requesting massive premium hikes for next year -- some in excess of 50 percent.

This shouldn't come as a surprise. The Affordable Care Act has been driving up costs since its creation. And thanks to a new wave of mergers among health insurers prompted by Obamacare, America's health cost crisis will only grow worse.

Premiums are skyrocketing nationwide.

Regulators in Oregon just green-lit a 25 percent increase for Moda Health Plan. A popular Utah insurance plan is seeking a 45 percent increase. Blue Cross Blue Shield is requesting price hikes ranging from 23 percent in Illinois to 54 percent in Minnesota.

Nationwide, premiums for the most common plans will increase by an average of 14 percent next year.

Even in states where premium growth is slowing, people are stretching their budgets to pay for insurance. On California's exchange, rates are slated to increase just 4 percent next year.

But the state's premiums have long been among the highest in the nation. Folks in northern California will pay $384 a month, on average. That's $70 higher than the average premium for a mid-level plan nationwide.

It's no wonder that four in 10 Californians shopping on the exchange say that they struggle to pay their premiums.

Obamacare has caused premiums to spike before, especially for younger folks. Since the law went into effect in 2013, premiums for 23-year-old women have risen an average of 45 percent, while men of the same age experienced 78 percent increases. Premiums for 30-year-olds surged 35 percent for women -- and 73 percent for men.

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Tuesday, July 28, 2015

The 5 employee benefits trends you need to know

The landscape is abuzz with reports on the importance of benefits in attracting and retaining employees.

To help bosses recognise the most popular benefit packages in the market in the past five years, Human Resources picked out five interesting trends in employee benefits based on the 2015 SHRM Employee Benefits Survey.

Firstly, the report showed that the percentage of organisations that offer health care and wellness benefits has increased.

Some of these benefits included mental health care coverage (91%), contraception coverage (83%) and vision insurance (87%).

The increased cost of health care in recent years has also led in a shift in health care costs to employees with an 8% increase in the use of health savings accounts (HSAs) (43%) and a 10% increase in employer contributions to HSAs (30%) over the past five years.

Secondly, companies have been offering preventive health and wellness benefits – one of the strategies to bring down the cost of health care benefits.

Some perks under this category include wellness resources and information (80%), general wellness programmes (70%), health and lifestyle coaching (46%) and preventive programmes specifically targeting employees with chronic health conditions.

Thirdly, there has been an increase in monetary related benefits such as financial and compensation benefits and retirement savings and planning benefits.

More organisations have been seen to offer spot bonuses/awards (34% in 2011 and 45% in 2015) as well as non-executive incentive bonus plans (43% in 2011 to 49% in 2015).

At the same time, more organisations are offering Roth 401(k) or similar defined contribution retirement savings plan (31% in 2011 to 48% in 2015) and retirement-preparation specific planning advice (37% in 2011 to 48% in 2015).

Fourthly, there has been an increase in several leave benefits since 2011 such as paid sick leave plans (37% to 42%), paid family leave (25% to 27%) and paid maternity leave (16% to 21%).

Despite this however, fewer organisations are offering paid vacation leave donation programmes (15% to 8%) and a paid vacation cash-out option (16% to 8%).

Lastly, as compared to 2011, there has been a decline in the provision of certain family-friendly benefits such as bringing children into work in emergencies (33% to 22%), child care referral services (17% to 9%) and on-site parenting seminars (4% to 1%).

30/06/2015 Tue 12:50 in All markets by Jerene Ang

Tuesday, July 7, 2015

Obamacare Sticker Shock Arrives: Insurance Premiums To Soar 20-40%

Two months ago, we outlined why the CPI-boosting Affordable Care Act is on the verge of bankrupting that all important driver of the US economic growth engine — the American consumer.

Put simply, inflation in medical care services costs hadn’t yet reared its ugly head because many insurers were as yet unable to gauge the full base-effect impact of Obamacare on their P&L. That, we said, was about to change: “After finally digesting the true cost of Obamacare, any recent insurance prime hikes will seem like a walk in the park compared to what is coming.

Sure enough, insurers have now taken a close look at exactly how much socialized medicine is costing them.

Not surprisingly, the picture isn’t pretty.

In some cases, forecasters grossly underestimated the number of claims they would likely receive, and indeed, even a PhD economist can tell you that when the amount going out for claims is greater than the amount coming in via premiums, there’s a problem with the model and because staunching the outflow is effectively now forbidden, something has to give on the receivables side of the equation which means dramatically higher premiums.

Submitted by Tyler Durden of