Workers’ compensation insurance is an essential part of any business—it’s legally required in most states and it’s crucial for keeping your workers protected. Whether you have one employee or one hundred, ensuring that they’re covered in the event of an accident is imperative. Workers’ comp coverage can help with medical expenses, rehabilitation costs, and lost wages during the recovery process.
Not only does workers’ compensation help protect employees who get injured at work or become ill as a direct result of the job, but it also helps protect you and your business. Without workers’ compensation, if an accident happens, you could be required to pay out-of-pocket for what would otherwise be covered by insurance.
Workers’ comp is a necessity for your company, but it can also be costly. One cost management strategy for workers’ compensation is to partner with a professional employer organization (PEO) for your coverage. Let’s take a look at how PEOs help manage workers’ compensation expenses and cost-reduction strategies with PEO partnerships.
How PEOs Help Manage Workers’ Comp Expenses
When you partner with a PEO, that PEO and your company enter into a co-employment relationship. The PEO steps in to take care of administrative tasks like payroll, workers’ compensation, and risk management while you continue to focus on the day-to-day operations of your business.
When it comes to workers’ compensation insurance, each company the PEO works with is grouped together in one large pool of employees. This means the PEO is able to secure fantastic coverage at a more affordable rate than what you would normally see. The more employees the PEO partners with, the lower your premium cost will be.
Working with a PEO also means you may be able to avoid paying large lump sum deposits upfront. The PEO will handle these costs, and you’ll pay the PEO over time.
Cost-Reduction Strategies with PEO Partnerships
There are several cost-reduction strategies that come with PEO partnerships—from educating employees on workplace safety to offering pay-as-you-go insurance programs.
First and foremost, PEOs aim to create safe working conditions for their client companies. Risk management is a large part of what PEOs bring to the table as a co-employer. They create and implement safety training programs for new and existing employees to help educate them on workplace safety. PEOs also specialize in compliance with state and federal regulations, so they know what’s needed in order to keep your company up-to-par with current labor and safety laws.
Creating a safe work environment is crucial for reducing workers’ compensation claims. By keeping the number of claims at a minimum, premium costs will also remain low.
Beyond claim reduction, PEOs offer pay-as-you-go programs that are great for small or medium-sized businesses with contract-based workers. While traditional workers’ compensation may make sense for larger corporations, having fewer employees or employees that work on a project-by-project basis tends to require a more customized approach.
With a pay-as-you-go program, you only pay for what you need when you need it. As the employer, you can choose the exact coverage that fits best for your industry and the category of workers you have. You can also choose the duration of time your employees will have coverage so that you aren’t paying for unnecessary insurance between projects.
PEOs also administer payroll, so you won’t need to worry about surprise costs when audit season arrives. When you have the expertise of a PEO on your side, you can rest assured that the most cost-effective strategies will be put in place when it comes to workers’ compensation for your company.
Maximizing Savings in Workers’ Comp with PEOs
Partnering with a PEO can offer incredible cost management strategies for keeping your employees protected with workers’ compensation insurance. If you’re ready to reduce your workers’ comp costs and ensure that your employees have the best protection possible, partnering with a PEO could be a great option for your company. Reach out to the team of experts at PEOPayGo to help maximize your savings in workers’ compensation.
If you’re a business owner, you likely have a lot on your plate—no matter how many employees you have. Not only are you in charge of brainstorming new ideas that align with the big picture of your company, but it’s also up to you to handle the day-to-day tasks that keep things running smoothly.
Professional employer organizations (PEOs) step in for small and medium-sized businesses to handle their administrative tasks. This can include anything from the initial onboarding process for new employees to payroll and workers’ compensation. Partnering with a PEO does have legal implications that are important for business owners to understand. Let’s take a look at the key legal considerations in PEO contracts as well as employer liability and PEO services.
Key Legal Considerations in PEO Contracts
Partnering with a PEO is considered a co-employment relationship. When your business works with a PEO, it’s crucial that you fully understand the contract you sign with them. Your PEO agreement will lay out who is responsible for what within the co-employment relationship.
Typically, a PEO agreement includes a client service agreement, which states exactly what the PEO will provide for your business, the responsibilities of your business within that agreement, and the expected costs. This should also include terms and conditions—both for the PEO to adhere to as well as your business—including the duration of the contract and any renewal conditions.
When entering into a contract with a PEO, it’s imperative that you understand where responsibility lies for things like payroll, taxes, workers’ compensation, and other benefits. What does the PEO need from you each month in order to maintain accuracy?
Employer Liability and PEO Services
Understanding liability within a PEO agreement can feel a little unclear or overwhelming as an employer. As a business owner, you want to feel confident that you are still in control of your company. Who is in charge of hiring and firing? Additionally, what happens if a PEO makes a mistake? Who is financially responsible for potential errors?
First and foremost, as an employer, you should have full control of your company. PEOs help with administrative tasks, but you should not be relinquishing control of your organization to them. Your company will likely remain in charge of daily operations that keep your business running smoothly. A PEO will typically administer pay, take care of taxes and benefits, and handle workers’ compensation claims.
Hiring and firing is left in the control of the client company as well. PEOs often offer recruitment services, however, to help businesses find people who fit well with the company culture and whose skills meet the needs of the organization. With that said, no decision is made to hire new employees without the approval of the client company itself.
Ultimately, your company is responsible for all taxes due to the government, which can feel a bit nerve-racking if you’ve partnered with a PEO. If they do make a mistake and fail to pay on your behalf, you may be held liable. Depending on the situation, however, the IRS may first reach out to the PEO for payment.
Partnering with an experienced PEO can help eliminate the possibility of error and ensure the process runs smoothly. While there are risks if a PEO makes a mistake, for many small and medium-sized businesses, the benefits of working with a PEO far outweigh those risks.
Ensuring Legal Compliance in PEO Agreements
If you enter into a PEO agreement as a business owner, it’s important to understand what’s necessary in order to ensure legal compliance. Does the PEO require specific data from you each month in order to maintain accurate records? Be sure to also familiarize yourself with exit strategies should you want to end your relationship with the PEO. How much notice is required to end your contract without consequences?
Co-employment means shared responsibility between your company and a PEO. When you choose to partner with a PEO, having a legal agreement or contract is crucial for protecting you and your business. If you’re ready to outsource your administrative tasks to an experienced PEO, reach out to our team at PEOPayGo today to get the support you need!