PEO referrals

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Hi Everyone!

I recall a few threads back in the AHI days that discussed PEO services. A business owner friend asked me for a referral to a PEO. He is looking for payroll, vacation and benefits tracking, etc. TimK, I believe you had been active in this conversation at the time? Does anyone have any recommendations? Company is based in Green Bay, Wisconsin.

I am a bit biased against PEOs personally so this will be more about the negatives than the positives....

(1) How big of an employer is he? I personally would look for someone in his area who will allow him to cherry-pick what he wants outsourced. If the PEO wants to bundle, in the end, he will probably be paying extra for things he doesn't need. And that his employees won't use. There is strength and sometimes lower rates for WC/health, etc. But he might also be now covered under laws that normally he wouldn't have to deal with (Like FMLA if he has less than 50 employees...and the PEO obviously would have more...his company might now fall under it depending on the setup).

(2) And he needs to beware that legally he is responsible for their actions or inactions. So he can't just turn it over and ignore it. I will say I called the EBSA/DOL on a very large well-known PEO and how they were administering a specific benefit plan. And was told that in the end even with any contract/agreement we had with them that we were still ultimately responsible.

(3) Back in the day when we left our PEO and brought everything in-house we saved over $80k a year after we paid for a FT HR/Payroll employee. Who knows how the cost differs 8+ years later though. But be diligent and know your costs inhouse compared to their costs to outsource.

(4) Oh and one other thing we didn't like was the sheer # of contacts at the PEO. Our "client manager" never knew any answers and always passed us off to people if different departments (payroll, 401k, health, etc). My contact list was almost a whole page long! It still is, but now we are direct to the provider without a 3rd/4th party middleman.

I'd recommend spending the extra dollars on an HR/payroll consultant when needed who could do employee training, a yearly review and then any questions/help needed throughout the year.
Thank you for the reply, HRforme. He is a small employer (30 ee's?), however he is growing quickly. You have made some very insightful points. Many of which, I was not aware of. I appreciate your feedback!
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