NFIB

Professional Employer Organizations: Lease an Employee!
03/ 28/ 2002

One of the most difficult activities for many small businesses is handling the ongoing responsibilities that follow the interviewing and hiring of new employees. Taking care of payroll, workers' comp, medical insurance and other financial obligations are only a few aspects. Others include keeping track of all legal issues surrounding employees, as well as taking responsibility for all employee interactions -- many of which may involve potential lawsuits that could severely impact a company's financial future.

Larger companies have entire departments to handle these human resources issues, but small businesses often leave them to chance. Today's workshop, by Jeffrey Moses, discusses professional employer organizations, which handle not only payroll obligations but also HR issues for small businesses.

PMI is one such Professional Employer Organization. Janice Brooks, NFIB member and with her husband co-owner of PMI (jbrooks@pmipeo.com or 850-243-5604) in Ft. Walton Beach, Florida, describes the relationship she has with her company's clients. "When one of our clients wants to add someone to their staff, they send the person to us, and we hire them. We then lease the employee to the client, and from that point on take care of all payroll and human resource details. In effect, we take responsibility for our employees, relieving our clients of this task."

These responsibilities include: paying the employee's salary, handling all tax details (filing of forms, withholding, W-2s), worker's compensation payments, medical and optional dental insurance coverage, optional disability insurance and life insurance coverage, retirement plans and human resource development. In addition, PMI works closely with the client to keep all employee documentation up-to-date, as well as consulting and monitoring any potential activities that could lead to legal difficulties (age or sex discrimination, occupational health and safety administration, unwarranted terminations).

PMI, and other professional employer organizations, are able to take advantage of economies of scale for their services. Small businesses often find it an exorbitantly expensive nuisance to take care of their own payroll and human resource management. PMI, however, has more than 100 in-house employees handling these matters, and leases over 11,000 employees to clients in a wide variety of industries. PMI and other PEOs charge an administrative fee for their services. Most small businesses find that the fee saves them not only time but aggravation when dealing with the increasingly complex world of employee payroll and HR.

The economy of scale offered by PEOs extends to employee training (offering classes and even degrees through continuing education) and discounts both for employees and clients on automobile rental, vacation packages and corporate airfare. These features are beyond the budgets of many small businesses. This allows a small business to function in many ways like a larger corporation.

To locate PEOs that can take care of your payroll and HR, look under "Employee Leasing" in the Yellow Pages. Or simply type in "Employee Leasing" or "Professional Employer Organizations" in your favorite Internet search engine.

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