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Call Us Today
- (334) 386-0357
1-877-MAX-EFF2
(1-877-629-3332)
- Fax: (334) 386-0377
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HR Focus:
Application Review
When considering an applicant for an interview, review the
application carefully. Incomplete applications or that have
any of the issues listed below should not be considered for
employment.
- Scratch outs of important items
- P.O. boxes for addresses
- 800 numbers for phone numbers
- Items about criminal convictions left blank
- Gaps in employment history
- Only friends/family listed as references
- Job hopping
- “Victim-like” reasons for leaving prior jobs
- Failure to sign the application
- No phone numbers provided for previous employers
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1. What is a PEO?
Professional employer organizations (PEOs) enable clients
to cost-effectively outsource the management of human resources,
employee benefits, payroll, and workers' compensation. PEO
clients focus on their core competencies to maintain and
grow their bottom line.
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2. Why would a business use a PEO?
Business owners want to focus their time and energy on the "business of
their business" and not on the "business of employment." As businesses
grow, most owners do not have the necessary human resource training; payroll
and accounting skills, the knowledge of regulatory compliance, or the backgrounds
in risk management, insurance and employee benefit programs to meet the demands
of being an employer. PEOs give small-group markets access to many benefits and
employment amenities they would not have otherwise.
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3. Who uses a PEO?
Any business can find value in a PEO relationship. An average client of a NAPEO
member company is a business with 17 worksite employees. Increasingly, larger
businesses also are finding value in a PEO arrangement, because PEOs offer
robust Web-based HR technologies and expertise in HR management. PEO clients
include many different types of businesses ranging from accounting firms to
high-tech companies and small manufacturers. Many different types of professionals,
including doctors, retailers, mechanics, engineers and plumbers, also benefit
from PEO services.
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4. How does a PEO arrangement work?
Once a client company contracts with a PEO, the PEO will then co-employ the client's
worksite employees. In the arrangement among a PEO, a worksite employee and
a client company, there exists a co-employment relationship in which both the
PEO and client company have an employment relationship with the worker. The
PEO and client company share and allocate responsibilities and liabilities.
The PEO assumes much of the responsibility and liability for the business of
employment, such as risk management, human resource management, and payroll
and employee tax compliance. The client company retains responsibility for
and manages product development and production, business operations, marketing,
sales, and service. The PEO and the client will share certain responsibilities
for employment law compliance. As a co-employer, the PEO will often provide
a complete human resource and benefit package for worksite employees.
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5. Are
PEOs recognized as employers
at the state and federal levels?
Yes. PEOs operate in all 50 states. Many states provide some form of specific
licensing, registration, or regulation for PEOs. These states statutorily recognize
PEOs as the employer or co-employer of worksite employees for many purposes,
including workers' compensation and state unemployment insurance taxes. The IRS
has accepted the right of a PEO to withhold and remit federal income and unemployment
taxes for worksite employees.
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6. Do
the business owners lose control
of their businesses?
No. The client retains ownership of the company and control over its operations.
As co-employers, the PEO and client will contractually share or allocate employer
responsibilities and liabilities. The PEO will generally only assume responsibilities
and liabilities associated with a "general" employer for purposes
of administration, payroll, taxes and benefits. The client will continue to
have responsibility for worksite safety and compliance. The PEO will be responsible
for payroll and employment taxes, will maintain employee records and reserves
a right to hire and fire. Because the PEO also may be responsible for workers'
compensation, many PEOs also focus on and improve safety and compliance. In
general terms, the PEO will focus on employment-related issues and the client
will be responsible for the actual business operations.
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7. What
is the difference between employee
leasing and a PEO arrangement?
A PEO or co-employment arrangement involves all or a significant
number of the client's existing worksite employees in a long-term,
non-project related, employment relationship. The PEO brings
services to the client, including the management of human
resources, employee benefits, payroll and worker's compensation.
The PEO assumes employer responsibility for employment tax,
benefit plans and other human resource purposes. Through
the use of a PEO relationship, client companies make a long-term
investment in their workers, because in most cases, the PEO
provides access to health insurance, retirement savings plans, and other critical
employee benefits for their worksite employees. If a PEO relationship is terminated,
the co-employees will cease to work for the PEO but will continue as employees
of the client.
By comparison, a leasing or staffing service supplies new workers on a temporary
or project-specific basis. These leased employees return to the staffing service
for reassignment after completion of their work with the client company. Some
would define employee leasing as a supplemental, temporary employment arrangement
where one or more workers are assigned to a customer for a fixed period of time,
often for a specific project.
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8. How
many Americans are employed
in a co-employment PEO arrangement?
It is estimated that 2-3 million Americans are currently
co-employed in a PEO arrangement. The average PEO has grown
more than 20 percent per year for each of the last six years,
according to a survey of NAPEO members. About 700 PEOs that
offer a wide array of employment services and benefits are
operating today in 50 states.
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9. How
do PEOs help their clients
control costs and grow their bottom
line?
The PEO's economy of scale enables each client company to
lower employment costs and increase the business's bottom
line. The client can maintain a simple in-house HR infrastructure
or none at all by relying on the PEO. The professionals at
the PEO can provide critical assistance with employer compliance, which helps
protect the client against liability. In many cases, the client can pay a small
up-front cost for a significant technology and service infrastructure or platform
provided by the PEO. In addition, the PEO provides timesavings by handling routine
and redundant tasks for its clients. This enables the business owner to focus
on the company's core competency and grow its bottom line.
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10. How do employees benefit from a
PEO arrangement?
Employees seek financial security, quality health insurance,
a safe working environment, and opportunities for retirement
savings. Job satisfaction and productivity increase when
employees are provided with professional human resource
services, training, employee manuals, safety services and
improved communications. And in many cases, a co-employment
relationship provides employees with an expanded employee
benefits package, to include a 401(k), life insurance,
disability insurance, discount plans, a flexible spending
plan and more.
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11.
Who is responsible for the employees' wages
and employment taxes?
PEOs assume responsibility and liability for payment of wages and compliance
with the rules and regulations governing the reporting and payment of federal
and state taxes on wages paid to its employees. PEOs have long established their
role as reporting income and handling withholding, FICA and FUTA.
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12.
Who is responsible for employment
laws and regulations?
As employers, both the client and the PEO have compliance
obligations. However, PEOs provide worksite employees with
coverage under many employment laws and regulations, including
federal, state, and local discrimination laws, Title VII
of the 1964 Civil Rights Act, Age Discrimination in Employment
Act, ADA, FMLA, HIPAA, Equal Pay Act, and COBRA. In many
cases, these laws would not apply to workers at small businesses
without the PEO relationship, since many statutes have exemptions
based upon the number of workers in a work force. Once included
in the PEO's workforce, the workers are protected by these
laws.
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