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Employers Liabilities

How can a PEO reduce my liability cost?

There are 180 federal labor laws that employers must comply with plus numerous state and local employment related laws. PEO's assist businesses in staying compliant with these laws and regulations. By providing guidance and support on compliance matters, PEOs help businesses reduce the risk of legal disputes and associated costs. Compliance failures can result in fines, penalties, and legal expenses, which can be minimized through the expertise and resources provided by a PEO.

  • 43% of business owners will be threatened with a lawsuit.
  • 1 in 10 business owners will have to defend employment related lawsuits.
  • $160,000 is the average cost to the settlement stage on these lawsuits.
  • 97% of the lawsuits settle before going to trial.
  • $40,000 is the average settlement.
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How can a PEO reduce my employers liabilities?

Employers Liabilities with a PEO are the legal responsibilities and obligations that a business owner has when they partner with a professional employer organization (PEO) to outsource some of their HR functions. When a business owner enters into a co-employment relationship with a PEO, they share some of the employer liabilities with the PEO, but they do not transfer them entirely. The PEO typically assumes the liability for payroll, tax filing, benefits administration, workers’ compensation, and compliance with employment laws.

However, the business owner remains responsible for:

  • Direction and control of operational activities assigned to employees
  • Providing a safe work environment
  • Payroll funds to be paid to the PEO
  • Keeping track of employee hours worked and reporting those to the PEO
  • Employment practices liability insurance (EPLI), which covers claims brought by employees for wrongful employment acts, such as wrongful termination, harassment, retaliation, discrimination and other workplace torts

Therefore, it is important for business owners to understand their employer liabilities with a PEO.

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What are some of the benefits of working with a PEO?

A PEO, or Professional Employer Organization, is a service that helps small and medium-sized businesses with various aspects of human resources, such as payroll, benefits, compliance, and risk management. Working with a PEO can have many benefits for both employers and employees. Some of these benefits are:

  • HR Administration: PEOs can handle various HR administrative tasks, including payroll processing, tax withholding and reporting, benefits administration, and employee recordkeeping. By outsourcing these functions to a PEO, businesses can save time and resources, allowing them to focus on core business operations.
  • Employee Benefits: PEOs often offer access to a wide range of employee benefits, such as health insurance, dental and vision coverage, retirement plans, flexible spending accounts, and employee assistance programs. PEOs can negotiate favorable rates and packages due to their collective purchasing power, which can provide more comprehensive and affordable benefits for employees.
  • Compliance and Risk Management: Employment laws and regulations can be complex and constantly changing. PEOs have expertise in HR and employment regulations, helping businesses stay compliant with various laws, including those related to wage and hour, discrimination, and employee leave. They can provide guidance on compliance matters, assist with policy development, and handle employee relations issues, reducing the risk of legal penalties and disputes.
  • Payroll and Taxes: PEOs handle payroll processing, including calculating wages, tax withholdings, and issuing paychecks to employees. They also handle tax reporting and remittance, ensuring businesses meet their tax obligations accurately and on time. PEOs can assist with year-end tax forms, such as W-2s, relieving businesses of the administrative burden and potential errors associated with payroll and tax compliance.
  • Employee Relations and Training: PEOs can provide guidance and support on employee relations matters, such as performance management, disciplinary actions, and termination procedures. They can assist with developing employee handbooks, policies, and procedures, fostering a positive work environment and helping businesses handle employee issues effectively. PEOs may also offer training programs for employees, covering topics such as harassment prevention, workplace safety, and compliance.
  • Recruitment and Onboarding: PEOs can assist with the recruitment and onboarding processes, helping businesses find and attract qualified candidates. They may offer applicant tracking systems, assist with job postings, conduct background checks, and handle the necessary paperwork for new hires. This support streamlines the hiring process and ensures compliance with employment laws.
  • Employee Development: Some PEOs offer training and professional development programs for employees, including online learning resources and skill-building workshops. These programs can enhance employee skills and contribute to overall workforce development.
  • Scalability and Flexibility: PEOs can support businesses during periods of growth or downsizing. They can handle the administrative tasks associated with hiring new employees, managing benefits enrollment, and processing terminations. PEOs provide flexibility to businesses, allowing them to adapt to changing workforce needs without significant administrative burdens.
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What is employers liabilities with a PEO?

Employers Liabilities with a PEO are the legal responsibilities and obligations that a business owner has when they partner with a professional employer organization (PEO) to outsource some of their HR functions. When a business owner enters into a co-employment relationship with a PEO, they share some of the employer liabilities with the PEO, but they do not transfer them entirely. The PEO typically assumes the liability for payroll, tax filing, benefits administration, workers’ compensation, and compliance with employment laws.

However, the business owner remains responsible for:

  • Direction and control of operational activities assigned to employees
  • Providing a safe work environment
  • Payroll funds to be paid to the PEO
  • Keeping track of employee hours worked and reporting those to the PEO
  • Employment practices liability insurance (EPLI), which covers claims brought by employees for wrongful employment acts, such as wrongful termination, harassment, retaliation, discrimination and other workplace torts

Therefore, it is important for business owners to understand their employer liabilities with a PEO.

What are some of the benefits of working with a PEO?

  • Competitive benefits and health insurance: A PEO can offer your employees access to cost-effective, comprehensive benefits through PEO-sponsored benefit plans, such as medical, dental and vision coverage, a healthcare flexible spending account, and life and disability benefits. A PEO can negotiate better rates for these benefits by pooling multiple businesses together.
  • Liability assurance: A PEO can help you reduce your employment-related risks by providing you with licensed HR professionals and attorneys that can help you comply with federal, state, and local employment laws and regulations. A PEO can also handle payroll, tax filing, benefits administration, workers’ compensation, and compliance monitoring on your behalf.
  • Time and cost savings: A PEO can save you time and money by streamlining your HR processes, such as payroll processing, reporting, enrolling employees, providing legal notices and handling COBRA administration. A PEO can also reduce the need for in-house payroll staff and software, which can be expensive and time-consuming to maintain.
  • Focus on core activities: By outsourcing some of your HR functions to a PEO, you can free up your time and resources to focus on the core competencies of your business and be better poised for expansion. You can also rely on the PEO’s expertise and guidance to help you make informed decisions and improve your workplace performance.

What can I save by using a PEO?

A Professional Employer Organization (PEO) can reduce employers' liabilities in several ways:

  • Co-employment Relationship: When a company partners with a PEO, a co-employment relationship is established. Under this arrangement, the PEO becomes the employer of record for certain employment-related purposes, while the client company retains operational control and direction over its employees. This co-employment structure can help distribute certain liabilities between the PEO and the client company, reducing the overall liability exposure for the client.
  • Employment Practices Compliance: PEOs specialize in employment practices compliance. They have expertise in navigating complex employment laws and regulations. By providing guidance on compliance matters, such as anti-discrimination laws, wage and hour regulations, and workplace safety requirements, PEOs help minimize the risk of non-compliance and potential liability associated with employment practices.
  • HR Support and Documentation: PEOs assist with developing and implementing effective HR policies and procedures. They can help create comprehensive employee handbooks, job descriptions, and other essential documentation that outline company policies and expectations. Clear and well-communicated policies help mitigate the risk of liability in areas such as discrimination, harassment, and wrongful termination claims.
  • Employee Relations Assistance: PEOs offer support and guidance in managing employee relations issues. They can provide advice on conflict resolution, disciplinary actions, and performance management. By having experienced professionals to assist with these matters, PEOs help minimize the risk of disputes and legal claims arising from employee-related issues.
  • Risk Management and Safety Programs: PEOs often have dedicated risk management teams and safety programs. They help identify workplace hazards, develop safety protocols, and implement training programs to promote a safe work environment. By proactively managing risks and fostering a culture of safety, PEOs can reduce the likelihood of workplace accidents and related liability.
  • Workers' Compensation Claims Management: PEOs specialize in managing workers' compensation claims. They handle the claims process, ensuring proper reporting, documentation, and compliance with legal requirements. By effectively managing workers' compensation claims, PEOs help mitigate liability associated with workplace injuries and minimize the financial impact on the client company.

It's important to note that while a PEO can help reduce certain liabilities, the client company retains responsibility for compliance and managing risks within its operations. The extent of liability reduction will depend on the specific services provided by the PEO and the terms outlined in the contractual agreement. It's essential to thoroughly review the services, responsibilities, and liability provisions in the PEO agreement to understand how the PEO can effectively reduce the client's liabilities.