PEO Buyer's Guide

Employee leasing solutions tips

Happy New Year. It's beneficial to sign up for employee leasing solutions as early in the new year as possible. Certain HR responsibilities (like unemployment insurance) require you to pay up to a certain amount (typically $8,000) by the end of the year. If you began the year paying unemployment insurance, you would have to start paying again when you switch to your PEO's tax ID. Since everyone gets a fresh start at the beginning of the year, that's the opportune time to consider employee leasing solutions.

If you have it, use it. Understand and take advantage of all the employee leasing solutions and benefits you're entitled to. If you're not using the services offered, you're wasting of money. Some options, like direct deposit, are included in PEO services and can be easily overlooked.

Liability limits. The PEO industry claims to relieve you of all liabilities and responsibilities for your employees, but that's not always the case. Sometimes, both parties share the responsibilities. You need to find out exactly what the PEO has exclusive responsibility for and what you're required to stay on top of. These limits can vary from state to state, so check with your local officials to understand your situation.

Benefits input. If you really want to enhance the benefits you can offer employees through PEO services, just ask them. Employees can be a great source of input for new benefits since they know exactly what they want. Employees may have families or be part of a younger demographic who don't use a lot of standard benefits, so requests may vary. However, you should get a sense for what new benefits would make your entire team happy and help keep them on board.

401k transfer. Transferring 401(k) plans from your current provider to a PEO services provider can be difficult. Employees are not allowed to open a second 401(k) plan because of limits on how much they can contribute in a year. In order to transfer an employee to the PEO vendor's plan, the vendor needs to provide documentation to prove that employees have only one active 401(k). This can be time consuming and can cost the PEO vendor money in fines if it's not done properly.

Broker awareness. It's difficult to gauge if there is a conflict of interest with PEO services brokers. Since they are paid by PEO providers, you want to make sure they are looking for your best interest and not simply a larger commission for themselves. Make sure they work closely with several different employee leasing solutions providers.

Here's to your health. If you only need to outsource the management of your health benefits, consider working with Administrative Services Only (ASO).

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