Transcript PEO Industry - Tampa Bay Association of Health Underwriters

Presentation for Tampa Bay Assn. of
Health Underwriters
PEO is an acronym for a Professional Employer
Organization. A PEO is a third party provider of
Outsourced Human Resource, Payroll , Workers
Compensation, Risk Management and Health and
Welfare Benefits and Benefits Administration.
PEO’s operated under the Co-Employment
Doctrine. Co-Employment is a legally accepted
mechanism by which the Client /Worksite
Employer shares rights and responsibilities
involved with the management of their
Employee’s with a PEO.
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The modern day PEO got its start in around 1982 as what were
then called “Employee Leasing” Companies. These companies
however operated as “Sole employers”.
The industry grew significantly when in 1986 under the Tax
Equity reform act ,the government recognized the potential
benefits these companies could provide to their clients
The Co-Employment doctrine got it’s start in 1992 when the
State of Florida regulated the PEO Industry.
The President just signed into law the new Federal PEO
Licensing law which also will have the IRS certify PEO’s. The
IRS will require a surety bond to cover a portion of the payroll
tax liability , background checks and audited financials .
This law goes into effect 1-1-2016 to allow time for the law to
be implemented . This will eliminate duplicative taxes so PEO
clients will be able to move all year long without a tax
liability for a mid year move.
 In
1986 there were approximately 50,000
employees administered by PEO’s.
 Today projections from the Society for
Human Resource Management and the US
Chamber of Commerce estimate that there
are approximately 1100 PEO’s who
administer between 5,000,000 and
6,000,000 employees.
 PEO’s continue to grow in Double Digits.
 ADP Total Source in their Feb 13 financials
stated that their PEO division grew 19% and
it was their most profitable division.
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The average PEO client has 35 employees.
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PEO’s have clients with between 1 and 11,000
Employees
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PEO’s clients are in every industry from
Accounting Firms to Steel Erection Companies
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Nationwide the average PEO makes a gross profit
of $1500 and an average administration fee of
$1000 dollars per employee per year. It is higher
in the Northeast.
 67%
of PEO clients surveyed stated that they
went with their PEO to save money on Health
Insurance or Workers Comp. Insurance.
 94%
of those same clients said the reason
they renewed with the PEO was because the
Services offered by the PEO simplified their
business operations.
 Even
when the PEO they were with went out
of business, over 86% went with a new PEO.
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1900
1940
1980
1998
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Case law
Case law
Case law
Case law
DFWA
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Common Law
Common Law
Common law
Common law
ADA
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State Laws
State Laws
State Laws
FMLA
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Local laws
Local Laws
Local laws
USERRA
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IRC
IRC
IRC
CCBA
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RLA
RLA
RLA
DTB
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FICA
FICA
FICA
TSCA
FLSA
FLSA
FLSA
CAA
NLRA
NLRA
RLRA
CERCLA
LMRA
LMRA
SDWA
FUTA
FUTA
SWDA
LMRDA
LMRDA
WPCA
CRA
CRA
ADEA
ADEA
And
HIPAA
OSHA
OSHA
Growing
ERISA
ERISA
Every
VEVRRA
VEVRRA
Year
MSHA
MSHA
Since
JSIA
JSIA
FDA
FDA
IRCA
TRA
COBRA
TEFRA
WARN
EPPA
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Post Employer Mandate expectations
1-Health care costs are expected to go up because young people will not participate in
the plans as hoped because the penalty is too low and people who were uninsurable
can not be turned down
2- The administrative burden on employers and complexity of compliance will be a
nightmare for smaller employers ( non fortune 500 employers)
3- The IRS has strengthened the common ownership laws and is also hiring 16,000 new
agents to audit employers to make sure they are compliant and also make sure
employers with 50 or more employees are not shifting employees into corporations
owned by friends /associates so as to not have to comply with the HCRA
4- Because of this above employers this year with 100 or more employees and next year
with 50 or more employees who must comply with the law will be looking for
alternatives and PEO’s are expanding their sales forces to solicit these (Your) clients
5- PEO’s will provide expect guidance and administration of these plans so as to free
these clients up from having to worry about the HCRA. PEO’s can also in many cases
lower costs with their large group health plans hence many of your existing clients
will flock to PEO’s to free themselves of the burden of the act and to lower their
Healthcare costs.
6- Whether you’re a P and C agent or a health agent if a client goes with a PEO you will
lose one or possibly more than one revenue streams.
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Core Services of a PEO
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Human Resources Management and Support
New Client Orientation
Fair Labor Standards Act Compliance (FLSA) Wage and Hour Review of Human Resources Practices
Worksite Employee Handbook
Employment Practice Liability Insurance * offered by some PEO’s
General Worksite Employee Relations Issues
Record Keeping and File Maintenance
Worksite Employee Separation Assistance
Unemployment Compensation Claims Management
Equal Employment Opportunity (EEO) Compliance
The Family Medical Leave Act (FMLA)
Fair Labor Standards Act Compliance (FLSA) Child Labor Compliance
Payroll Services
The National Labor Relations Act (NLRA) Payroll and Tax Processing
Payroll Processing- Online
Internet Access and Time Entry via the Web
Garnishments
W-2s
Online Payroll Reports
Worksite Employee Pay Options
Tax Deposits
Quarterly Federal and State Tax Withholding
State Unemployment Rate Management
Compliance and Reporting
Tip Tax Credit
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Workers' Compensation Insurance Management
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Safety and Loss Control
On-Line Safety Training and Materials
OSHA Compliance Instruction
Assistance with OSHA Abatement
Recommendations on safe workplace and
best practices
Train-the-Trainer Programs
Accident Investigation
Loss Analysis with recommendations
Customized Health and Safety program
Safe Driving Policy
Workers Compensation Claims Management
State required notice of injury filing
Three-point contact
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Aggressive Return to Work Programs
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Hand selected treatment provider assignment
Claim monitored through closure
Daily on-line communication with insurance
carrier
Employee drug testing (if required)
Pursue any reductions in indemnity payments that are allowable by law
Assist to ensure lower claim cost and promotes a safe working environment.
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Worksite Employee Benefits
Comprehensive Large Group Health and Welfare benefits including:
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Medical
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Dental
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Short and Long Term Disability
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Cancer Care,
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Payroll Deducted Auto Insurance
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Discounted Movie and Theme Parks
Federal Consolidated Omnibus Budget Reconciliation Act (COBRA)
Section 125 Cafeteria Plan
Flex Plans Enrollment and Administration
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401k plans and Administration or IRA for smaller Employer groups
 When
a client chooses the right PEO, it
will free them up to focus on their area of
core competence, whether that is being a
construction company, restaurant or a law
firm. That means to focus on the areas
critical to revenue generation while allowing
experts in Payroll, H.R. Administration, Risk
Management and Health and Welfare Benefits
Administration to assume many of the legal
responsibilities and liabilities involved with
being an employer.
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First and Foremost we represent you and your clients and not the
PEO. We lay out all the Pro’s and Con’s of each PEO and let your
client pick the PEO best suited to their needs
We pay you 50% of the commissions . This is typically more than
you would make doing all the work yourself. This is because of
the volume of business we do with the PEO’s. We get paid
significantly more than an independent agency would that only
closed a few deals a quarter.
Last but not least as we work for you we follow your lead and
carve out what we need to in accordance with the law