Employee Leasing and PEO Insurance
A professional employer organization (PEO) is intrinsically the same as a temporary staffing company. Like a temporary staffing service, employee leasing recruits employees and assigns them to clients to support or supplement the client’s workforce. Their job is to fill any number of work situations when a regular full-time employee is not available, such as; employee absences (long and short-term), temporary skill shortages, or seasonal workloads.
Traditionally, these workers represent only a small portion of the client’s overall workforce. PEO services contractually assume and manage employee administration for all or a majority of a client’s workforce. Industry ratios identify the employment company arrangement as a long-term relationship with nearly 90% of clients and worksite employees remaining with the organization for a year or longer. PEO insurance allows employees to participate in a full range of employee benefits, including health benefits and a retirement savings plan.
Why many employers prefer using a PEO
These firms provide an invaluable service. By using these employee-leasing service providers an employer can then outsource employee management tasks, such as workers’ compensation, employee benefits, payroll, recruiting, risk and safety management, and training and development. The PEO is able to do this by hiring a client company’s employees, thus becoming their employer of record for tax purposes and insurance purposes.
PEOs are based upon the co-employment of an existing workforce. The major distinction is that an employee leasing or staffing service supplies new workers on a part-time or temporary basis or for a specific project. These leased employees return to the staffing service for re-assignment to other companies after the completion of their contract for the client.
PEO insurance is needed for all off the same risks and exposures that other companies have to consider before they ever open their doors, since their staff seeks financial security, quality health insurance, a safe working environment, and opportunities for retirement savings. They also often provide higher quality employee benefits including:
- Dental and life insurance
- Vision care
- 401(k) savings plans
- Aggressive workplace risk management, and
- Safety manuals
Leased employees may get sick and miss work, much like full-time employees. They depend on health insurance to get them through their period of illness, pay for any medical bills or extended hospital stays, and eventually for their return to work. Having a 401k provides them with a retirement fund, while safety manuals and a sound risk management strategy shows both, the employer and the employees that the PEO is concerned with workplace safety and is instrumental in providing the proper training and awareness about what activities should or should not take place in a work environment.