Author: GVCCC

7 Considerations in Administering and Choosing a PEO

1. Research PEOs:

  • Perform necessary due diligence as PEOs are unique and each have their own characteristics with pros and cons.
  • Check the PEO’s reputation, client reviews, and industry certifications (e.g., ESAC accreditation).

2. Evaluate Services:

  • Ensure the PEO offers a comprehensive suite of employee benefits, HR services, including payroll, benefits administration, compliance, and risk management.

3. Cost Savings and Structure:

  • PEOs can help companies save on employee benefits costs by pooling resources for health insurance, voluntary benefits, payroll, 401k, and other HR services, often leading to lower costs than handling these services in-house.
  • Understand the full spectrum of costs, including administrative fees and potential hidden charges.

4. Bundled Employee Benefits:

  • Access to better and less expensive employee benefits generally for large companies that can help recruit, attract, and retain top talent.
  • Evaluate how the PEO handles benefits like Worker’s Compensation, 401k plans, and voluntary benefits. Consider whether these are better managed bundled within the PEO or independently.

5. Customization and Flexibility:

  • Ensure the PEO can tailor their services to meet your specific needs rather than offering a one-size-fits-all solution.

6. Contract Terms:

  • Review the PEO contract carefully, including terms related to termination, setup fees, liability, and service level agreements.
  • Ensure there is flexibility in the contract to adjust services as your business needs change.

7. Transition and Exit Strategy:

  • Plan for smooth transitions, especially if you anticipate switching to another PEO or exiting altogether. Be aware of any fees or blackout periods associated with transitions.

Companies can make an informed decision on selecting and administering a PEO that aligns with their business goals and HR needs. We are here to support you in making the best decision for your business. Feel free to reach out for more tailored advice.

Jin Lee, Benefits Administrator Architect, Benefits Architects

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