How a PEO Can Help Protect You From Lawsuits

PEOs Help Avoid LawsuitsThere are many problems that a professional employer organization, or PEO, can solve for your business.  One issue that any company dreads having to deal with is employee lawsuits.

If you do not have anyone on your staff who is an expert in government compliance for small business, you are probably exposing your company to unnecessary risk.

PEOs can provide you with expert advice pertaining to employee legal rights and workers’ compensation laws.  With the assistance of a PEO, you can avoid many legal hassles outright.  And if a legal problem does arise, a PEO can reduce your liability and even provide you with an in-house legal adviser.

Employee Discrimination Lawsuits

Employee discrimination lawsuits can happen to any company that doesn’t conform to the government’s legal codes concerning age, disability, and other factors.  This can be an issue during the hiring process or afterward during the job.  Oftentimes, employers who find themselves on the losing end of a legal dispute over workplace discrimination had no ill intentions.  However, no amount of protesting or saying “But I didn’t know” to a judge is going to spare you the cost of a lost case.  The settlements awarded to victims in discrimination cases can total to hundreds of thousands of dollars.

Did you know it is illegal to refuse to hire a candidate on the basis of bad credit or a criminal record even though you are allowed to run a credit check and a background check?  Did you know that you are not allowed to post a job advertisement that states that you will not consider unemployed workers?  How familiar are you with ADA guidelines for disabled workers?  What about age-based discrimination laws?  Have you ever refused to hire a worker because he or she was over 40?  These are common mistakes but they are also illegal.

Workers’ Compensation Lawsuits

How does workers’ compensation work?  Many companies are unclear on workers’ compensation laws, and may not even know what to do if an employee makes a claim.  When an employee makes a workers’ compensation claim, that worker becomes protected under a set of government laws.  Any decisions your human resources department makes concerning that employee will be subject to scrutiny.

Before workers’ compensation laws were created, employees actually had to sue their employers outright in order to recover lost wages and pay for their medical treatments.  In general the employees lost these cases, but eventually the government stepped in and provided for employees in these situations.  Ultimately workers’ compensation has had a positive net effect for everyone involved, including employers.  Litigation is a costly process for businesses as well as employees, and workers’ compensation should, in theory, spare your company from having to go to court over workplace injuries or illnesses.

The workers’ compensation system actually protects your company, just as it provides protection for your employees.  In theory, you cannot be sued by an employee over a workplace injury.  That doesn’t always stop it from happening though.  If an employee believes you maliciously acted against him or her, that employee may be able to take you to court.  Furthermore, if you fail to fund your workers’ compensation program or commit some related violation, you could be guilty of a misdemeanor or even a felony.

Other Employee Lawsuits

Workers’ compensation and discrimination lawsuits are two common scenarios which can cost a company money, but they certainly are not the only ones.  There are many other situations where you could potentially find yourself in the middle of a legal dispute.  Some of these include:

  • Sexual harassment disputes.
  • Unlawful termination.
  • Breach of employee contract.
  • Defamation.
  • Invasion of privacy.
  • Violations relating to employee benefit plans or pensions.

Sometimes employees sue companies for seemingly nebulous reasons—and win.  Did you know you can even be sued for failure to promote or for “inflicting emotional stress”?  If an employee can come up with a reason relating to discrimination or make a case for some kind of malicious intent, you can end up losing the lawsuit.  Even if your actions weren’t harmful at all, you can find yourself paying a hefty settlement.  Your reputation also takes a knock, which can result in bad publicity and lost business.  This collateral damage ends up costing above and beyond the price of the litigation and the settlement.

Employee Lawsuit Insurance

Lawsuits and legal issues surroundings workers’ compensation, discrimination, and other issues are so widespread and so costly that many businesses opt to purchase employee lawsuit insurance.  When you buy employee lawsuit insurance, you pay a monthly premium for protection against these types of lawsuits.  The insurance cannot actually stop your company from being sued, of course, but it can cover the cost of your defense and settlements, up to a specified policy limit.

There are a lot of limitations to lawsuit insurance.  There’s the monthly cost to factor in for starters, plus the amount of any damages that exceed the coverage cap.  And then there’s the fact that employee lawsuit insurance cannot spare your company from collateral damage.  Your reputation will still be harmed by an employee lawsuit, and you can still lose business as a result.  You also may have a more difficult time finding new hires in the future.  Word of the lawsuit may get around, and qualified candidates may choose to work for your competitors instead of for you when it comes time for hiring.

A PEO Offers an Ideal Solution

A professional employer organization can do much more for you than employee lawsuit insurance.  A PEO can either replace or augment your existing human resources department, depending on the company you choose to contract with and the setup you choose.  Your PEO can establish a framework for employee hires, handbooks, training programs, and more.  The PEO can also help you to set up benefits and pensions and manage your workers’ compensation fund.  All of these preventative measures make it far less likely you will ever have to face an employee lawsuit, or that you will ever have to pay fees for failing to conform to government compliance rules and regulations.

Your PEO can also protect you in a situation where something does go wrong.  Professional employer organizations employ staff attorneys.  These legal experts can provide you with guidance during a legal dispute, and can help you win a court case or settle out of court.  If you do not have a PEO on your side during a lawsuit, you will have to pay for an outside attorney, which is very expensive.  You also will be faced with the task of selection, which in itself can be a challenge without guidance.

Employee lawsuits are pervasive, and the possibility of litigation is very real, even in situations where no harm was intended.  Many HR departments struggle with government compliance, workers’ compensation, and the complex nuances of discrimination laws. But with the help of a PEO, your company can avoid litigation altogether, or come out on top if an employee does choose to sue.  Along with providing legal guidance, PEOs can also help your company with many other aspects of business, including tax preparation, employee recruiting and onboarding, payroll, and conflict resolution.  You’ll enjoy greater peace of mind; all while saving time and money on common human resources assignments.

How a PEO Can Help You Recruit the Best Talent

PEOs Recruit TalentWhether you run a large business or a small one, a professional employer organization (or PEO), can help your business to conduct a number of different HR tasks. HR outsourcing companies and PEOs are a bit different from one another; a PEO is more comprehensive, so be sure to figure out which would be best for your company before you choose a partner. Either a PEO or an outsourced HR department can help you to boost the productivity of your entire company however by recruiting the best talent on your behalf. Out of the many solutions professional employer organizations can present to their clients, this is perhaps one of the most overlooked. But it can also make the biggest difference for your company overall.

Outsourced recruitment solutions not only free up the time and energy of your own employees, but also give you access to top industry headhunters. While your employees know your company well, they may have other job duties distracting them, and may not be experts when it comes to staffing. This problem is particularly common with small businesses, which may not even have a full time employee dedicated to staffing and HR.

Staffing is a specialty for some, though not all, PEOs so interview any potential PEO about their recruiting and hiring capabilities in advance. Some HR outsourcing services specialize in specifics like tax preparation or benefits and do not offer recruiting. You are less likely to find this to be the case with a professional employer organization however, since PEOs usually include a broader array of services.

Benefits of Using a Recruiter

  • Industry specialization. Some PEOs do specialize in particular industries. If you find a PEO that shares your niche, you have located a recruiting service which can source the best candidates for your industry. These recruiters have an inside understanding of the needs of a company like yours, and even though they are not actually a part of your company, they will understand how a potential employee will fit into the structure of your business. Not only that, but PEOs also have a lot of perspective from working with other companies in your industry, and may have suggestions for changes to employee benefits and other structuring to attract better job candidates.
  • Increase your candidate reach. You may receive plenty of responses if you place a job ad online, but you will not necessarily reach the best candidates. PEO recruiters on the other hand have access to a wide pool of candidates who would likely not even see your ad. These candidates may be far better suited for the work, and will be contacted directly by the PEO. Just as the best jobs are often unadvertised, so are the best candidates.
  • Save time. Searching for a candidate to fill a position, reviewing resumes and cover letters, and interviewing candidates can itself turn into a full-time job. If you do not have someone on your staff with that kind of time on his or her hands, it can really hamper productivity to conduct a candidate search yourself. When you outsource recruiting services, you free up the time and resources of your own employees and allow them to resume their regular tasks. You are already trying to function without one employee (the role you are trying to fill). There is no reason to try and function without your other employees fulfilling their regular duties when you can get an expert to take care of the recruitment process.
  • Save money. Screening candidates is expensive, and so is operating with an unfilled position. The faster your recruiting process, the more quickly your company can return to operating at its full capacity and the less money you spend on the candidate search process. Furthermore, you save money by hiring the best talent. Your company is only as effective as its employees, which means that the people who you hire have a direct impact on your bottom line. Better recruiting ultimately leads to higher revenue and makes you more competitive in your industry.
  • Negotiation. PEOs can handle salary negotiations, and establish both company and employee expectations to ensure that all parties will be satisfied with the new hire. Since the PEO will be familiar with your budget, payroll, and benefits packages, they are in the perfect position to take care of all of these details. Later down the line, your PEO may be able to help you negotiate raises and even assist you with selecting employees for promotion within the ranks.
  • Regulatory compliance. Hiring carries a number of regulatory ramifications and it is important to make sure that you are conforming to those regulations at all times. There are regulations governing the salary and benefits packages you offer, and even the questions you ask during a job candidate interview. It can be a challenge to navigate the legal code governing hiring procedures today, but staffing experts know exactly how to ensure that your company is compliant. This reduces your liability during the candidate screening process.
  • Onboarding and training. Since PEOs are comprehensive services, they can not only handle the search process, but also the onboarding process. This is yet another key step in hiring, and it is one where a lot of companies fall short. The PEO can provide your newest recruits with the company handbook containing all the policies of your workplace, help them to select the best benefits and retirement packages, and even begin the new employee training process. Effective employee onboarding procedures result in more efficient and happier workers and fewer misunderstandings.

Ongoing Support

Perhaps the best thing about having a PEO handle your company’s staffing needs is that the PEO stays involved over the long term. This is a benefit you would not necessarily find with a standard recruiting agency. If your PEO is handling your payroll and tax administration, training, and other aspects of employment administration as well, then your employees will be regularly interacting with the PEO. The professional employer organization will be there to provide clarifications, arbitrate disputes, and resolve conflicts—as well as prevent them. They will regularly be able to follow up with your company executives and your new recruits to ensure that everyone is settling into your company routines comfortably and effectively.

It is common for small to mid-sized businesses to struggle to balance human resources responsibilities with other tasks—especially without a dedicated HR department. Even larger businesses can benefit from contracting with a professional employer organization however, and many PEOs offer a wide range of plans for different company sizes and budgets.

Outsourcing human resources responsibilities to a Professional Employer Organization allows your company to be more productive, and also to enjoy all the benefits of allowing experts to handle HR tasks. Recruitment is among the most important of all of those tasks, and a PEO which is capable of handling every aspect of your human resources requirements is best equipped to handle your staffing needs as well. Broaden your candidate reach, save time and money, benefit from industry specialization, and allow the experts to negotiate the best employee contracts for you. By doing all of this you will find yourself with better employees, a more productive workplace, and a more profitable company.

How Health Care Reform is Forcing Small Business to Seriously Think About a PEO

Small Business PEOThe Patient Protection and Affordable Care Act (PPACA), sometimes known simply as the ACA or Obamacare, is set to go into full gear at the start of 2014.  That’s really just around the corner.  How does your human resources department currently handle all the responsibilities associated with providing your employees with healthcare benefits? Is your staff ready to handle the massive changes which are going to come about when the Affordable Care Act goes into full effect?  Trying to understand how the ACA applies to individuals is challenging enough for most taxpayers; trying to figure out how it impacts your business is even more complicated.

Changes Going Into Effect Next Year

Starting on January 1st of next year, a provision called Play or Pay goes into effect, a healthcare reform employer mandate which is sometimes known as the “under 50 employees” rule.  If you have at least 50 full-time workers, you must offer affordable minimal insurance to 95% or more of your full-time employees.  Any employee who works 30 or more hours per week qualifies as “full time.”  If you do not, you will have to pay a $2,000-3,000 penalty on each of your employees every year.  “Affordable” healthcare is also strictly defined.  The employee’s contribution to his or her own healthcare plan cannot exceed 9.5% of his or her wages.  That means that your human resources department is tasked with keeping very careful tabs not only on your number of full-time employees, but also on how much money each of them makes.

Some employers are already trying to come up with ways to get around this and loopholes to exploit, but many of these loopholes have already been accounted for by lawmakers.  For example, if you were to try and limit the amount of time an employee works during the year, and then replace that person with another employee, you would still be assessed the same penalty on the employee.  Moreover, you would also owe a penalty on the second employee, which would actually double your penalty.

A number of other changes are also going into effect which alter the nature of individual healthcare plans.  For example, annual dollar caps are being eliminated completely, and pre-existing conditions are now excluded from consideration.  Deductible caps will also be set, along with caps for annual premiums.  Children up to age 26 have to be covered (this is already in effect).  Gender will also no longer be a consideration for healthcare premiums.

There are already a number of penalties and compliance requirements for employers which have gone into effect over the past several years, and those requirements will increase substantially in 2014, adding a great deal more complexity to healthcare coverage concerns.  On top of all of the regulatory concerns, though, there is also the matter of trying to stay competitive.  After all, a good benefits package is an attractive incentive to a potential new employee.  Offering quality healthcare coverage which is affordable and thorough can make a difference when it comes to attracting the best talent.

Some employers are asking why they shouldn’t just stop sponsoring healthcare altogether and start sending their employees to public exchanges.  Many employers however are already stating that they will continue to offer employee medical benefits plans in order to stay competitive in the employment market.  Private exchanges are also coming into existence which offer a broad range of health plans, and companies may also go through these exchanges to provide benefits to their employees.  Even small businesses have the option of going this route.

How a PEO Can Help

As a small business, you may be used to having your own staff members handle your human resources operations, but did you know that there are companies which can help you?  A professional employer organization (PEO) is a firm that provides you with human resources outsourcing.  You are able to outsource tasks like payroll management, workers’ compensation, training, recruitment, and employee benefits.  That includes healthcare plans for your workers.  A PEO is a “co-employer” which can submit paperwork and taxes on the behalf of your company.  Each PEO has a different structure when it comes to responsibilities.

Imagine if you didn’t have to put all that effort into researching the massive changes which the Affordable Care Act will put into effect, and instead, you could leave that hard work up to the experts.  PEO specialists are up-to-date on the many changes which have gone into effect over the past few years and which will be going into effect between now and 2016.  As you can see, there are many different options available to you, but how do you wade through all that legalize to understand the best human resources planning for your company?

A PEO can make sure you are meeting regulations and fulfilling all requirements for proper compliance while also offering the most competitive and affordable healthcare plans to your employees.  Since the PEO can analyze your company’s situation and needs against a framework of expert knowledge in the field, the PEO can help your company to avoid penalty fees, find the best plans, and save money.  You’ll also have an easier time retaining your current employees and recruiting new talent when you are able to offer plans which suit everyone.  The PEO will ensure that you’ve met every requirement on the healthcare reform employer checklist.

Choosing a PEO

Selecting a PEO is a big decision for any business, large or small, so you will want to take your time and do some research to ensure that the PEO you are choosing is a good match.  There are many factors to consider when you make your choice.  Some of these include:

  • Who has responsibility and control? Who carries the liabilities when it comes to HR decisions?  Also, who is assuming control of which operations?  Will you be handing a lot of the control over the PEO or retaining it?  There are benefits and drawbacks either way.  Neither is better or worse.  It’s all a question of what works for you and your company.
  • What services does the PEO offer?  Does the company specialize in specific services, like filing taxes, or do they offer a wide range of products?
  • What kind of software solutions does the PEO employ?  Does the software work well with your existing systems, or will you need to upgrade?  How expensive will it be and how long will it take?
  • How much do the PEO services cost?  Are they charged on a monthly basis or is it a fee per employee?  Will hiring the PEO likely save more money than it costs?
  • Does the PEO firm have a strong reputation and great customer service that you can rely on?  Would you feel comfortable referring your employees to the PEO to ask their questions?

The Affordable Care Act will create many improvements in the healthcare system, but not without causing a fair amount of hassle and confusion for employers and employees alike.  A PEO can not only assist your company in avoiding unnecessary fees and costs, but can also help both you and your employees to understand the changing landscape and find your place in the new world of healthcare reform.

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