PEO Add Value To The Workforce

One lesson learned by the shutdown of businesses during the pandemic is how efficient a dispersed workforce can function when the proper technology is adapted for a remote workplace. This trend has been growing for some time. According to data provided by the U.S. Census and Bureau of Labor Statistics, the number of workers telecommuting in the U.S. increased 159% between 2005 and 2017. The effort is mounting due to imposing government restrictions that forced remote employment and led to some companies reevaluating the need to return administrative responsibilities in house.

There may be cost reductions associated with allowing indirect employees to work from home. Obviously, a company’s need and expense for commercial office space is reduced. However, there are also concerns with the lack of managerial control companies will have over employees working from home. Also, there are additional expenditures necessary to facilitate the proper software to enable communication within remote departments. Gulfcoast Employment Matters (GEM) believes a more efficient alternative is to outsource many of the administrative functions to a Professional Employment Organization (PEO), especially with those companies in the construction, light manufacturing and trade markets.

Outsourcing employment responsibilities allows for the avoidance of expanding internal departments. A reduction of administrative expenses can allow those funds to then be directed towards the compensation of direct employees who contribute directly to the companies bottom-line. An increase in direct labor compensation will serve in the recruitment and retention of higher skilled laborers. Limiting the size of an administrative workplace can also lead to the additional avoidance of conflicts and expense associated withing unfavorable human resource issues. Combining the functions of administrative capabilities through one vender adds value through economy of scale. PEO’s provide a cost-effective alternative to an expanding administrative office base.

The co-employment relationship of a PEO is structured with the client of the PEO responding as the worksite employer. The worksite employer must maintain direction and control of the reassigned employees. They are responsible for the hiring and termination of employees; determining the pay scales; reporting the time and attendance to the PEO and establishing and enforcing the standards of the worksite. The PEO is responsible for the reporting of payroll taxes and reemployment taxes. In addition- since the PEO controls the payroll- they are also responsible for providing workers compensation insurance on the reassigned employees. This provides added value by transferring the risk associated with work related injury from the worksite employer to the PEO. It then becomes a function of the PEO to assist in assuring a safe worksite environment.

GEM’s Human Resource Information System (HRIS) provides data entry and tracking with payroll management from recruitment to employment. Our programs can integrate accounting functions with our client’s internal systems to define improved labor costs evaluations. GEM also offers Risk Management to assure safe working environments and to avoid increase premium expenses. These functions are inclusive of the administration fees, and since GEM’s master workers compensation insurance policy is provided by guaranteed cost, there is no assessments of deductibles to our clients. Visit www.gempeo.com for more information.