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Austin
12885 Research Blvd
Suite 210
Austin,
TX 78750
Corpus Christi
101 N. Shoreline Drive
Suite 304
Corpus Christi, TX 78401
Rio
Grande Valley 929 E. Esperanza
Suite 9
McAllen, TX 78501
PEOs can step in to rescue business owners from red tape purgatory, helping to reduce their exposure to fines and other penalties, which is no small task.
American Payroll
July 2007
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Nationwide, thousands of companies are finding that
outsourcing their human resources function to a full-service
professional employer organization (PEO) is the solution to their HR
needs. This strategic management option allows a company to remain
focused on its core competencies, helping enable them to further develop
and meet their business goals and objectives.
Biz Arizona
Feb 2006 |
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A Professional Employer Organization (PEO) provides extensive human
resource and administrative support services, often much more
affordably, through a co-employment relationship with its
clients. PEO clients benefit from the PEO having legal
responsibility for payroll tax filings, deposits, reporting, and
certain other legal compliance matters. The PEO arrangement also
offers clients reduced exposure to rate fluctuations in workers'
compensation premiums and unemployment tax rates, since the PEO
manages a large collective pool of employees with its team of
claims management professionals and worksite investigators to
aggressively manage each claim far beyond the resources and
attention most employers could ever pay to such matters.
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Co-employment, as recognized under Texas law (and most other
states as well) is a legally and contractually shared
relationship between the client and the PEO. Under the
co-employment relationship, the client and PEO share certain
employment-related responsibilities. In this relationship, the
PEO is responsible for payroll, payroll taxes, unemployment
claims, workers' compensation insurance and claims management,
and other important employment responsibilities. The client
retains the responsibilities of hiring, supervising, discipline, and
termination of employees, though with the additional expertise and
support of the PEO's human resources staff. The most important aspect of
this relationship for the client company is that they are able to focus
more time and attention on the company's core business functions rather
than the time consuming burdens of employment related tasks. |
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An Administrative Service Organization (ASO) can provide client
companies many of the same types of services as a PEO only on an
a-la-carte basis. This program provides both advantages and
disadvantages for companies depending on their unique circumstances and
business needs. An ASO arrangement will offer clients a flexible range
of services from basic payroll and payroll tax processing to benefits
management, claims support services, safety training programs, and more. |
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To worksite employees, the relationship between the client company and
service provider may seem pretty much the same, whether the client
utilizes an ASO type arrangement or PEO arrangement. However,
co-employment, with all its advantages for small and mid-sized
businesses, does not exist in an ASO arrangement. Therefore, the ASO
client must consider that it wouldn't share liabilities with the service
provider, but the liabilities would remain entirely with the client
company. The ASO may provide claims management services as a component
of its service agreement, but the exposure to claims costs and premium
increase rest with the client.
However, for larger companies (250+ employees) with on-staff human
resource professionals, the ASO arrangement may provide a cost-effective
solution for managing the exhausting administrative burdens of payroll,
taxes, and HR administration. |
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