PEO & Employee Leasing

Sometimes businesses may wish to expand the workforce in their companies, but do not want to deal with the difficulties associated with human resources departments. In other words, the business needs staff, but does not need to deal with payroll, benefits, vacation schedules, and the other aspects of having employees on staff. Businesses that find themselves in this situation sometimes turn to employee leasing for their staffing needs.

In an employee leasing situation, a third party comes in to help match employees with businesses looking for workers. This third party is called a professional employment organization, or PEO. The PEO handles benefits, time off, salary concerns, and other issues that a business’s human resources department would normally attend to. The PEO sends qualified employees to the business after conducting interviews and determining whether or not the employee is a good fit. The company can help with the hiring procedures, but technically, anyone hired through a PEO is an employee of the PEO, not the company.

Sometimes the employee leasing procedures appear to be similar to the process of hiring an employee through a temp agency. Temp agencies, popular employment venues for those between jobs or looking for seasonal work, place employees into work situations where a temporary need is found. Sometimes a worker may be off for extended sick time or maternity leave, and they leave a spot that needs to be filled temporarily. Temporary employees are considered employees of the temp agency, while they work at the location where they have been placed.

Similarly, staff leasing allows companies to find employees through a third party called a PEO. Using a PEO and employee leasing is different than a temp agency, however, because the employees are usually employed on a more permanent basis. Those seeking an employee leasing company are typically looking to lease employees long term. While no job is completely permanent, these jobs are longer lived than most temp agency jobs.

Also, employees found through a PEO employees leasing program are usually more of a professional or technical nature than those found through a traditional temp agency. The PEO will interview the company to find out details about the type of jobs they need filled and the caliber of staff they are looking for. While PEOs can be found in factory working environments, they are also found in executive type work environments.

A PEO can be an option for any business looking to increase the workforce of the company, without adding a human resources department. Some smaller businesses find that they need employees, but they are not large enough to put together an attractive benefits package to entice the best workers to their businesses. A PEO and employee leasing is a good option for a business that finds itself in this position.

Workers can also find a PEO to be a good place to go to look for work. Some workers choose to apply with a PEO while pursuing their other job leads. Whichever source of work comes up with the right job for the worker will be the chosen job venue. As such, PEOs are highly motivated to find work for their employees, to avoid losing them to other job offers.

The biggest benefit to employers who choose to use a staff leasing company is the fact that they may not have to staff and maintain several departments in their company. They will not have to worry about having a human resources department who take care of scheduling, benefits, and employee complaints. They also will need a much smaller accounting department, if they even need one at all. This is because they do not have a payroll department to deal with in their accounting department. Other accounting tasks, such as taxes and bookkeeping, can often quite easily be outsourced at a much more affordable rate.

When an employer works with a PEO, the company is saved the hassle and frustration of conducting employee interviews over and over before qualified personnel are found. The PEO works through potential candidates and if any interviews are held, they are with only the cream of the crop of all of the potential candidates. This saves the employer much time. When the employee leasing company interviews employers who are interested in employee leasing, the employer can indicate how much of the interview process he wants to be involved in. There can be little involvement, or much involvement, depending on the employer’s desires.

Finally, employee leasing saves the company money. When staff leasing is pursued, the employer does not have to pay for many benefits, because benefits are handled through the PEO. Of course, the employer may want to have a benefits package for the management team, but the employees that are leased do not require benefits. Also, the cost of working with a PEO is generally cheaper than hiring accounting and human resources personnel.

So, why would employees seek the help of employees leasing and PEOs? For one thing, the PEO may be able to find a job for the employee faster than traditional job searching methods. When an employee seeks work through a PEO, he only has to prepare one resume, fill in one application, and often only needs to attend one interview. This is in contrast to the traditional job searching process that requires countless interviews, applications, and resumes. The PEO does much of the searching for the individual.

Also, when an individual seeking employment finds work in a smaller company, the benefits package is often lacking because the fewer employees on a plan, the more expensive each part is. When seeking work through employee leasing, the PEO has a much broader employee base, so the benefits the PEO offers its employees are usually much better than a smaller company can afford. So workers with highly specialized skills that put them in demand for smaller companies can still receive the same insurance and other benefits as a worker in a large company.

Also, an employee working with a staff leasing company has the benefit of being the employee of the PEO, not the company where they report each day for work. Why is this a benefit? Well, the PEO is the one that can hire and fire the employee. This eliminates firing from bosses who dislike the employee because of personal reasons, rather than work quality. When working with a PEO, quality of work is the basis for hiring and firing, not people’s personal opinions. This serves to protect the employee of a PEO.

If you are an employee considering working through a PEO, there are some things you want to consider before signing on. First, know that not all employee leasing companies are the same. Some are more professional than others. Also, some work in specialized industries, such as manufacturing or secretarial work, while others work in all industries. Find out if there are an employee leasing company in your area that specializes in what you are trained to do. This might be the easiest way to get a job in the field you know best.

Once you have looked into specialized companies, you need to find out about benefits offered. Benefits are one of the biggest reasons to choose an employee leasing company for your employment needs. Because of this, you want to find out all you can about the benefits offered. Insurance is a necessary part of your daily life, and you want to make sure you are hired by a PEO with good benefits.

Find out the policies for vacation time and sick time. Some PEO companies have strict policies about time off. If you are the mom of a small child looking for work, you may need a PEO with flexible rules about sick time, because when your child is sick, you will need to stay home to tend the child.

Finally, find out about termination procedures. If you are terminated from a job, or if you should wish to be taken from a job, how is the process handled? This is important because you need to know going into your employment what to expect. If you hate the placement, can you get out of it? If someone in your placement dislikes you, can they have the PEO remove you? These considerations are important for any employee, especially those looking at becoming involved with employee leasing.

If you are a business owner considering using a PEO for staff leasing, there are a few considerations you need to make as well. First, find out about the insurance coverage offered by the firm you are considering. Remember, a good insurance policy will draw the highest quality employees. A poor insurance policy is going to drive quality people away.

Next, find out about the laws of your state. Twelve states currently require that PEOs are licensed. If you are not in one of these states, you may still want to work with an employee leasing company that is licensed. Some companies are national, while others are regionally based. The national companies likely hold a license in the states that require it, so they are a good choice.

Call those who have used the PEO before. Make sure you ask for contacts that are not on the provided reference list. Find out exactly what these companies liked or disliked about employees leasing through this company. Were they professional? Were employees happy with the employee leasing arrangements? Did they send quality reports about accounts? Were the fees reasonable? The answers to these questions will help you determine if you have found the right employee leasing company for your business.

Perhaps you are wondering how employees are paid when working with a PEO. Employee leasing is very similar to leasing any other type of item for your business. The business owner pays a fee to the leasing company each month for the equipment, or in this case the employees. In return, the company provides the agreed upon assets to the business.

In an employee leasing situation, the company pays a predetermined fee to the PEO. Out of that fee, the PEO takes its payment and also pays the employee. The employee reports hours worked to the PEO, not the company they are working with. The PEO makes out the paychecks, handles benefits, and pays the employee.

Sometimes, employees may not like this arrangement. They may feel like the PEO is being paid for their work. But the truth is, the PEO is being paid for finding them the job and providing them benefits. Most employees find that the money they are paid by the PEO is competitive to what they would have been paid if they had found a similar job on their own. Employee leasing companies have large bargaining power, so they are able to land good pay rates for their employees.

Both employees and employers benefit when PEO services are employed to staff companies. This option is generally much more affordable for the business, and provides the employee with better pay and better benefits. As such, employee leasing is becoming a popular way to staff companies. Many are finding great employment through employee leasing companies.

Using a PEO puts a third party into the hiring mix. This is beneficial to both parties, because it creates a buffer between the supervisor and the employee. The employee can go to the PEO if there is a problem with the employer, and visa versa. This frees the employer to focus on running a successful business, rather than dealing with employee complaints and frustrations.

Employee leasing frees accounting and bookkeeping employees from the drudgery of payroll responsibilities, allowing them to focus their energies on managing inventory, paying clients and suppliers, and making sure the business is running successfully. This increases the bottom line for employers, leading to a happier work environment over all. With these benefits, it is no wonder PEO and employee leasing are on the rise.