TOP 10 REASONS WHY BUSINESSES SHOULD GET OUT OF THEIR PEO ARRANGEMENT
Number 1 - Group Benefits - PEO's were originally formed to have the power of numbers to negotiate better deals for group insurance benefits for small businesses and pass those savings on to the clients. It worked for a while. In Florida, that advantage has all but disappeared as most companies in a PEO we come across have carved out their benefits, but continued the PEO relationship.
McKenzieHR saved a client with about 60 employees over $100,000 in reduced premiums in one year. In many cases, the group insurance premiums are higher than the employer can get in the open market.
Number 2 - Unemployment Taxes - PEO's have been hit hard and have passed this higher cost to their clients. Most PEO's are charging over 5% in Florida when they could pay 2.7% if they were independent.
By reducing your unemployment taxes from 5.0% to 2.7%, the company will save over $160 per employee per year. A company with 25 employees will save over $4,000 per year.
Additionally, in a PEO arrangement, the client company has no control over the unemployment as all of the client companies are grouped under the umbrella of the PEO. If there are many layoffs with the other client companies, the total unemployment rate will rise even if your company had no layoffs.
McKenzieHR will advise you on proper termination procedures and represent you during unemployment hearings to control your unemployment tax liability.
Number 3 - Workers Comp - In Florida, an employer can qualify for a 5% drug free workplace discount and a 2% discount for a safety program. Additionally, if they have a year with few accidents, they may also qualify for a premium dividend.
PEO's do not offer these discounts for its client employers. Also, in looking at the billing from a number of PEO's over the years, we have rarely seen a mod rate of less than 1.0. So the client with a good safety record does not get the reduction in premiums it deserves.
McKenzieHR will put the policies, procedures and safety program in place so you have the upper hand in controlling your workers compensation costs.
Number 4 - Payroll and Administration Fees. The administration fees for payroll and HR have gone down the last few years, but are still at about 3% of payroll. A company with a 25 employees and a $1,000,000 payroll will pay $30,000 a year.
With McKenzieHR, you can use any payroll service workers compensation carrier of benefits provider you wish. It does not matter to us. We don’t sell these services and never will. This was a conscious decision to ensure that our loyalties lie with you – THE CLIENT. We are there to protect you.
Number 5 – Employment Practices Liability Coverage (EPLI). Most PEO's espouse the fact that they include an EPLI insurance policy for their clients. They make a point of selling this as a great thing. The fact is that these policies have a $25,000 deductible. Also, most EPLI policies offered by PEO’s cover only Equal Employment Opportunity (EEO) claims and lawsuits. They do not cover any other type of potential employer violations such as wage and hour, FMLA or other violations. The problem with this coverage is that about 99% of the EEO charges are settled for less than $25,000 making the insurance virtually useless.
With the money saved when moving from the PEO arrangement, the client can obtain coverage with a much lower deductible that covers a number of different potential employer violations. Of course, the people from McKenzieHR will be working with you to ensure that your employment practices are in compliance with Federal, State and local employment regulations, but it is always good to have the peace of mind with a relatively inexpensive insurance plan just in case.
Number 6 – Human Resources Knowledge – You would be hard pressed to find anyone who has a better overall knowledge of Human Resources than Bob McKenzie and his staff. Bob facilitates a human resources certification class with an 80% success rate for first time test takers. The national average for all test takers is 55%.
Bob has also been invited to facilitate national audio conferences and webinars on a number of topics. This level of knowledge is hard to find.
Number 7 - Industry Instability - The PEO industry has been experiencing quite a bit of consolidation in the past few years. Many PEO's have been purchased by other companies. In the last two years, four major PEO’s headquartered in Florida have been purchased causing the client companies to go through another transition. Additionally, many have just plain gone out of business with no warning causing chaos with their client companies who now have no paychecks for employees or workers compensation coverage.
Take this risk away by being independent from the co-employment relationship. Once the transition is made, many of the above mentioned risks go away. McKenzieHR professionals will be there through every stage of the transition and will manage the entire process.
Number 9 - Bundled Services - With everything bundled under one umbrella, it is difficult to get out of it if you don't like the payroll or service. If you want to get out, you need to replace your payroll company, workers compensation carrier, benefits provider and human resources consultants. This is a very time consuming and confusing endeavor.
With the bundled services, ask yourself where the loyalty lies. Click on the About Us button to see our Values and Approach to Client Engagements. These are sacred and untouchable. This is the way McKenzieHR does business.
Number 10 - Customized Services – Although some PEO’s will offer customized services, you usually have to pay extra money for them.
With McKenzieHR, all of our services are customized to the clients’ needs.