If you are looking for help but don’t want to shoulder the extra work of locating, attracting, and hiring the best talent, an employee leasing company can provide you with the help you need quickly.
If you want to retain the ability to choose your employees and keep them for a longer period of time, PEO services can help. It can also help you to attract better employees for the long term by extending the scope of the benefits your company offers, as well as handling all the HR duties in a co-employment arrangement.
However, there are some critical differences between the two, and many people get confused and wonder which option is best for their business. Here is a breakdown of what to look for and what the difference is between PEO and employee leasing.
Understanding Employee Leasing
Employee leasing is generally a temporary arrangement employers will use to access new workers quickly when they need someone for a special project, or to cover a regular employee’s duties when they are away.
Staffing firms have temporary employees who are willing to work for companies and can provide a variety of services that fulfill just about any specialty or occupation. Depending on the firm, employees can be leased for temp assignments as secretaries, laborers, IT professionals, or just about any other job.
The employer calls a staffing company to provide them with a temporary worker until the need is fulfilled or the job is completed. The employee then goes on to fulfill other jobs elsewhere for the staffing company. Your business doesn’t worry about any HR-related duties for that worker because they are legally employed by the staffing company.
Understanding PEO Providers
Professional employer organizations (PEOs) are often confused with staffing agencies and employee leasing. A PEO, however, fulfills an entirely different function. When you choose to work with a PEO, you share specific responsibilities with that PEO in an agreement called co-employment.
In a co-employment arrangement, the PEO handles all the human resources functions and assumes the associated risks and responsibilities. This frees you to run your business as you see fit without having to obtain a deep understanding of human resources duties and liabilities.
In co-employment, you will hire, manage, and fire the employees as you deem appropriate. You retain control and make all the managerial decisions while handling the operations of the company. Your PEO deals with taxes, payroll, reporting, and keeping you compliant.
A PEO Is a Partnership That Frees You to Run Your Business
If you’ve decided that partnering with a PEO is the next step for your business, congratulations! You’ll soon be enjoying many of the benefits listed above. But before you sign on the dotted line, there are several questions you need to ask a PEO broker in order to make sure they’re the right partner for your business.
Key Questions to Ask When Looking for a PEO
Here are a list of things to consider and some questions to ask a PEO to determine if they are the right partner to meet the needs of your business.
What Services Am I Paying for?
What Employee Benefits Do You Provide?
Can You Train My Employees or Offer Professional Development?
What Is the Level of Service You Provide to Your Clients and Employees as a PEO?
What Kind of Technology or Software Does Your PEO Company Provide?
What Services Am I Paying for?
Some PEOs will charge percentages based on payroll, or they may charge per employee. NetPEO provides services that are specific to your business. You may be offered a bundle of services, or just payroll, or any other number of HR services.
The price you pay will generally depend on the workload created by the services you select and the number of employees you have or how much your payroll average is. You can pre-select the services you need and won’t be required to pay for the ones you don’t.
Get a clear understanding of what the PEO provides, and don’t be afraid to ask questions about specifics. Some service providers or packages may not offer the key services you need, so get everything in writing before you agree.
What Employee Benefits do You Provide?
One of the most effective ways to attract good talent is to offer competitive employee benefits for the industry. For some small businesses, this is an obstacle that is hard to overcome. PEO co-employment allows you to extend the benefits of the PEO to your own employees.
Find out what plans they can offer and check with your employees to ensure that it will meet their needs, lifestyles, and income levels before you sign on the dotted line. It’s all good and well to offer a benefits package, but if it is financially out of reach or irrelevant to the needs of your employees, it’s a waste of your time and money.
Can You Train My Employees or Offer Professional Development?
HR services can help you to maximize the effectiveness of your workers. Candidates and current employees may be seeking professional development opportunities, and the provision of this benefit is often overlooked.
If your employees can reach their potential with extra training or additional types of professional development, find out if your PEO can help.
What Is the Level of Service You Provide to Your Clients and Employees as a PEO?
Any PEO you choose should be available when questions arise about employment matters. Will you have a specific person designated to handle your account? Is someone always available to help with things like benefits, tax withholdings, or getting copies of W-2s?
If your employees can only access help when it isn’t convenient for your operations, this can be a real detriment. Find out what support is offered upfront so that you know what to expect.
What Kind of Technology or Software does Your PEO Company Provide?
Many companies provide technology that can help with things like time attendance management and onsite payroll tracking, but how user-friendly are they? Can your employees gain access to the information they need through an online portal from their own homes?
Employees are happier when they are not forced to jump through hoops or wait for an HR representative to be available. A good software package can offer one more benefit to your employees that allows them easier access to the payroll and tax documentation they need.
Some software can even be integrated into your current system. Be sure to think about what your needs are and ask about the various features that would benefit you and your employees the most.
PEO vs. Employee Leasing: Bottom Line
If you need to free more time to grow your business and want to hand off HR responsibilities and compliance liabilities, a PEO might be the best option. It saves you the money of having an in-house HR department and can extend better benefits to your employees.
If you only need to replace a person while they are on maternity leave, a temp agency or employee leasing agreement might be a better option. Either way, if the idea of handing off the payroll, recruiting, compliance, and tax duties to someone else sounds appealing, contact NetPEO to learn more today.
