Professional Employer Organizations (PEO) are “co-employment” arrangements, or in some cases you hire a company’s employees to work for your business by leasing them back. When you decide to work with a PEO you simply enter into a co-employment agreement. Thus, a PEO essentially becomes the employer of record (EOR) for tax purposes, running payroll under the PEO’s tax ID numbers. They also provide a general range of insurance benefit plans that are an all-purpose fit, dividing up the elements to all their customers equally.
You must use their selected vendor benefit carriers and you do not get to choose those relationships. Most PEO contracts state clearly; they can charge additional mark-up fees to all product, taxes and services rendered. Many times, a PEO will charge a percent of payroll as their fee structure. This can be costly to the company. A PEO’s typical HR support is from a one- or two-year HR experienced person and claims to offer HR advice, with assistance usually being on a reactive basis and not very proactive.
Shortcomings of a PEO
Flex HR experts typically take over when a PEO is not supporting that company to its maximum means. This usually happens when the company reaches around ten employees. We then successfully guide that growth increasing their headcount to 500-750 employees (depending on the situation) prior to them reaching their targeted exit; whether it is a IPO, getting acquired or receiving a large round of infused capital that usually ends up being rolled into an equity partner portfolio.
PEO Alternatives – HRAO is an extension of your HR backroom
Flex HR is what’s called a HRAO, or “Human Resources Administrative Organization”. We act as an extension of your company, principally the HR Backroom, or a virtual backroom. We built our HR backroom support model using our 850+ years of Human Resources Operations knowledge. In this arrangement employees are authentic employees of their respected companies, paying the actual cost of all the benefits, workers’ compensation and taxes. There is no mark-up of costs like there are in a PEO. Flex HR charges a monthly fee per employee per month. We support you every day with exceptional level of human resources experience, with our consultants averaging over 25 years of knowledgeable familiarity. We provide extraordinary HR strategic support, which includes assigning a VP level to your organization to grow your human capital to meet the challenges of an evolving company.