The Four Questions to Ask when Exiting a PEO

Papers About Peo Professional Employer Organization And Folder.

It is very common for businesses to start off with a PEO (Professional Employment Organization) when establishing employees. Also common is for a small business to look at a PEO as an attractive alternative to bundling many employee management functions under one platform. The PEO pitch of outsourcing the employee management process and providing large employer benefits at a low cost sounds like an offer too good to pass on. However, when a company is left feeling like they have outgrown their PEO, have seen substantial rate increases, or lack the services promised, they become paralyzed with the notion of exiting and replacing their PEO.

The thought of reviewing multiple vendors, technologies, and benefits can seem daunting. Beyond the fear of where to start is the concerns around how this will affect employees and the time it will take to implement. Lastly, PEO invoices are designed to create confusion, so businesses do not know how to compare replacements for cost analysis.

This leads to the following questions centering around how to exit a PEO:

  • Have we outgrown our PEO?
  • How do we analyze the value of our PEO?
  • What functions need to be replaced by leaving a PEO?
  • Is there a universal recommended solution for a PEO replacement?

 

Have we outgrown our PEO?

The costs are adding up. PEO costs tend to range between 20% – 30% higher than comparable non-PEO packages. PEO’s charge using a flat PEPM (Per Employee Per Month) admin fee, a percentage of payroll fee, or a combination of the two. With a small handful of employees, these fees seem palatable given the perceived value in return. However, when employee counts start to rise or salaries rise, these reasonable admin fees start to add up compoundingly. Although palatable to start most established businesses with 10 or more employees or higher salaries, begin to feel the pain of these higher costs.

The other concern for outgrowing a PEO is when the employee service inquiries become more rapid or more complex. Small businesses tend to have less employee questions or challenges. As the organization sees growth, a once small tight-knit population becomes a larger pool of personalities and life events. Most PEO’s are not designed to be able to answer employee inquiries or challenges on demand, nor are they designed to put in proactive procedures. Many utilize general helpdesk inquiries which can take several days to receive responses from. Typically these responses are more canned and less personalized than an internal resource 

Ultimately, the triggers for outgrowing a PEO center around inflating costs or not being able to scale around a canned service.

 

How do we analyze the value of our PEO?

Analyzing the value of your PEO can be one of the most frustrating challenges. How can any business put a value to a service in which they cannot understand or quantify? Most PEO invoices are oversimplified into a single line item cost. If a detailed breakdown is requested most PEO’s provide an excel sheet that seems like a riddle more than a breakdown.

The best way to start a PEO analysis is to get rid of any items relating to actual employee pay. Whether you go with a PEO or a Payroll company, the costs associated with paying your employees do not change. Removing items around: wages, 401(k) contributions, taxes, or withholdings, allow for you to eliminate costs that are not able to be changed. A lot of detailed PEO breakdowns also have a litany of employee information that would not be needed when analyzing value. The more columns you can eliminate, the more readable the invoice becomes.

The goal is to be left with the following columns:

  • Employee Benefit Costs (Medical, Dental, Vision, etc.)
  • Workers Comp Costs
  • PEO Administrative Fees

With this information you will have a clearer understanding of your costs you are looking to compare and replace.

 

What functions need to be replaced by leaving a PEO?

Most PEO’s handle the following functions which will need to be replaced:

While this seems like a daunting list of functions to replace, it is more simple than it may appear. The key is sourcing a solution that can easily install, consolidate and replicate these functions. Most businesses upon finding replacement see much better value and service.

 

Is there a universal recommended solution for a PEO replacement?

Every business has their own specific needs based on size, business type, and complexity. As such there is no universal company that can be used as a PEO replacement. The point of exiting a PEO is to get a service tailored to your business at the best available value. While there is not a universal solution, the best recommended starting point is to talk to an expert, like EVCO, in PEO replacements. These experts allow for a consultative approach to provide unbiased feedback to allow for the best options. By tapping into an expert in PEO replacements you can avoid pitfalls and be introduced to the relevant qualified replacement vendors based on your specific needs.

An expert consultant will often provide a review at no cost or contract, they also will provide only the best recommendations for your business. In the end those working with a qualified consultant find the PEO exit to be less challenging and end up with services that are significantly better and less costly than a PEO.

 

Conclusion

There is never a reason to settle for lesser technology or service, nor settle for higher costs. PEO’s can be a fine place to start, but the right consultant can guide your business to a better seamless process that is designed for you at a lower price point.

Should you wish to reach out to an expert consultant in exiting a PEO, you can reach out to Brian Allen of EVCO Insurance Services for a complementary analysis.

 

Brian Allen

brian@evcoinsurance.com

(925) 478-2223

Managing Partner

EVCO Insurance Services, Inc. 

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How New Sexual Harassment Laws Effect Small Businesses

Why are there Laws Centered Around Workplace Sexual Harassment?

Sexual harassment in the workplace has been a concern for many years. The first recorded case of workplace sexual harassment was in 1974 which guided the way Equal Employment Opportunity Commission (EEOC) to issue regulations against workplace sexual harassment in 1980. The Civil Rights Act of 1991 then expanded the protections of victims to sue and collect punitive damages as it relates to sexual harassment or discrimination. Although many laws have been in place to protect those who are victims of sexual harassment in the workplace, the #MeToo Movement has sparked greater attention & awareness to workplace sexual harassment. This has created an outcry to not only punish those in violation but to seek ways to prevent workplace sexual harassment from happening.

Sexual harassment in the workplace can be unwelcome sexual advances, physical or verbal conduct of a sexual nature or request of sexual favors. Types of sexual harassment are often referred to as quid por quo sexual harassment or hostile work sexual harassment. Quid pro quo sexual harassment is generally a promise of benefits in the workplace as a means of sexual bribery or coercion. Hostile environment sexual harassment is more subjective and consists generally of often frequent unwanted physical touching, sexual comments, or suggestive material. It is worth noting that a recent poll found that over 30% of people in the United States have claimed to experience sexual harassment in the workplace. Over 50% of reported incidents are from a direct supervisor, and over 20% of reported incidents are from men. These staggering numbers have led to a significant expansion of the recent law in the workplace.

What was the Old California Law that was Replaced?
In January 2005 Governor Jerry Brown enacted AB 1825. This law was dedicated to Harassment Training for supervisors in the workplace. The focus was on general legal compliance and how supervisors should handle workplace harassment issues. The law itself had an on 4 million individuals that needed this supervisor training. This manager based training law gives 2 hours of mandatory training for supervisors every 2 years. Only companies with 50 or more employees needed to comply with this law which alleviated smaller businesses from this training. In August of 2007, the California Fair Employment & Housing Commission issued required content standards and produced training materials and “E-Learning” computer-based programs for the training.

What is the new California Law?
Established in October of 2018, Governor Jerry Brown enacted Senate Bill (SB) 1343. This law then took full effect as of January 1st, 2019. This more in-depth compliance training focuses in on identification, prevention, and intervention. The law will affect around 34 million individuals and 300,000 employers which is a tremendous amount more than the prior bill. The main changes between bills are outlined below:

  • Mandated for companies with 5 or more employees (previously was 50 or more employees).
  • Training is needed for all employees (previously just for supervisors).
  • Supervisor training still is 2 hours every 2 years, but employee training is now 1 hour every 2 years.
  • All employees must be trained within 6 months of hire with the exception of seasonal or temporary employees who must be trained within 30 days of hire.
  • All training must be interactive, time tracked, and records must be kept.
  • Updated DEFH posters including ones on transgender rights must be posted in the workplace.
  • DEFH information sheets must be distributed to each employee.

Are any other States affected, or is this just California?
California, New York, Connecticut, Maine, and Delaware have all re-developed similar laws as outlined above. In light of the growing awareness of sexual harassment and discrimination in the workplace, it is likely more states are soon to follow in implementing similar laws and regulations. At this point, many employers in other states have begun implementing some form of sexual harassment prevention guidelines in order to stay ahead of a possible problem occurring.

What are the Solutions and Timelines?
In California, all businesses must roll out this training and have current employees complete it by January 1st, 2020. This does not, however, mean that most employers can wait until the last day to roll out training since all employees hired after January 1st, 2019 must go through training within 6 months of hire. Furthermore, employers that hire temporary or seasonal employees still must comply with this law within 30 days of hiring such an employee after January 1st, 2019. This really means that all businesses should have a plan in place now for their training.

There are many available solutions with an assortment of correlated costs. These solutions can include:

  • Web-based via a Learning Management System (LMS)
  • Webinar based training
  • Recorded workshop training
  • In-person training

The key is finding training that is an approved training based on being administered by someone authorized to do such training; and that the training is interactive, time tracked and records kept. Given the wide range of options, pricing, and administration types, it can be best to reach out to a Compliance Broker to review the options best for a particular business. To learn more about sexual harassment training and learn about different administration options, please visit EVCO Insurance to connect with an expert broker.

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HR – A New Way!

Not every company has a qualified HR department or person that can answer your employee’s questions accurately and quickly. Sure you can hire a lawyer, but do you have the time and money? If the answer is no, then take a look at EVCO HR.


With EVCO HR you will be able to answer any question at a moments notice. You will have the ability to pick up the phone and speak to qualified HR specialists relating to your specific company! You can access forms and paperwork for new hires as well as terminating employees. These forms change each year and it’s difficult to run a business and keep this info accurate. It is as easy as 1, 2!

  • Step 1: Choose EVCO as your broker.
  • Step 2: You now have instant access to this portal.

Email us for more info and/or to get started. Want one more added benefit? You will also have access to EVCO Enroll, which allows you to leave the paperwork behind and have employees make benefits selections online!

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