How Can a PEO Partner Benefit Your Small to Mid-Sized Business
Research, based on employee surveys of 132 PEO clients and 44 non-PEO clients, has shown that the average PEO client receives an annual return on investment (cost savings alone) of 27.2%.
What does an ROI of 27.2% mean?
For a business using a PEO, the savings is calculated after the cost of being a client is deducted. Dividing that savings by the cost of doing business yields the return on investment. Savings is calculated based on five categories of HR related expenditures such as:
HR personnel costs
Health benefits
Workers’ compensation
Unemployment insurance (UI)
Other external expenditures in areas related directly to HR services (payroll services, benefits, etc.)
An ROI of 27.2 percent means that for every $1,000 spent on PEO services, an average client would save $1,272, yielding a net (cost savings) benefit of $272 for every $1,000 spent. These are averages, which means that half of those businesses surveyed would be expected to have an ROI greater than 27.2 percent, while half would be expected to have an ROI lower than that. This is an ROI based solely on cost savings and does not take into account the important benefit derived from improving client’s ability to attract, motivate, and retain employees and enable them to focus on their core businesses.
What are the advantages of partnering with a PEO, as a Small and Mid-sized Business?
If you expect your headcount to remain steady at 50 employees or more, you’ll need to monitor your headcount closely. Once you satisfy the 50 employees over 20 or more calendar work weeks, you’ll need to implement an FMLA policy and begin offering the benefit to your workforce. It’s recommended you draft the policy ahead of time and be ready to implement it once it becomes a requirement.
2. The Affordable Care Act (ACA):
The Affordable Care Act (sometimes known as ACA, PPACA, or “Obamacare”), is a comprehensive health care reform law enacted in March 2010. The law has 3 primary goals:
Make affordable health insurance available to more Americans.
Expand the Medicaid program to cover all adults with income below 138% of the federal poverty level. (note: Not all states have expanded their Medicaid programs.)
Support medical innovations to lower the costs of healthcare.
Employers with 50 or more full-time and/or full-time equivalent (FTE) employees must comply with the Employer Shared Responsibility Provision. Employers with 50 or more full-time employees and/or FTEs that don’t offer affordable health insurance to qualified employees may be subject to penalties.
What to do:
First, determine if you’re an “Applicable Large Employer” (ALE) under the ACA which equates to 50 or more full-time employees and full-time equivalent employees (FT/FTE). The ACA classifies “full time” employment as 30 hours a week of work or more. So, when you’re calculating your total number of employees, you’ve got to include both full-time employees as well as those who work the equivalent of full-time hours.
Secondly, review your health plans to determine if they meet ACA requirements. Providing access to “affordable” health insurance of “minimum value” is one of the core purposes of the ACA. Review ACA requirements against your current benefit plans and work with your human resources professional or insurance broker to identify what changes (if any) need to be made in order to be in compliance.
3. ACA Reporting:
Once you have 50 or more full-time employees and/or FTE employees, you also have new reporting responsibilities.
What to do:
The IRS details the pertinent information about your potential reporting requirements.
4. Federal Contractor Requirements:
If you’re an employer who works on federal contracts, there are additional Federal requirements once you reach 50 employees or more:
Affirmative Action Plans (AAPs) outline an organization’s policies and procedures for proactively recruiting, hiring, training, and promoting women, minority women, minorities, people with disabilities, and veterans to ensure that all individuals have equal opportunities in employment. Employers with 50 employees or more and $50,000 in government contracts must have an Affirmative Action Plan.
EEO-1 Reporting – The Equal Employment Opportunity Commission (EEOC) requires all federal contractors who have 50 employees or more to fill out and submit the EEO-1 Report. The report requires employers to provide a count of employees by job and then by race, ethnicity, and gender.
Are you concerned that you are not in compliance with US labor laws? Contact us to learn how Regis HRG can help your business.