How Do PEOs Provide Risk Management Services

Every company faces risks. A key difference between successful and failed businesses is how that risk is managed. 

That’s why so many have chosen to outsource risk management services to a Professional Employer Organization (PEO). PEO risk management starts with obtaining workers' comp from a PEO, usually at better rates than you could get on your own. 

What is a Professional Employer Organization? 

A PEO is the most comprehensive form of HR outsourcing available today. A PEO compliments your internal HR team by taking on the mundane and complex HR tasks, freeing up your in-house employees to focus on growing a thriving company culture that attracts and retains top talent in your industry.  

A PEO also enables cost savings on employee benefits and mandatory insurance coverage, like workers' comp. When you join a PEO, you join their workers' compensation insurance coverage and, if the PEO's experience modifier rate is low, it could lower your premiums if you have a history of claims against your company.  

PEO Risk Management Services 

Because a PEO is the most comprehensive form of HR outsourcing, they are also the most comprehensive form of outsourcing risk management services. Here are the top ways a PEO manages your company's risk. 

Payroll Tax Compliance 

Small business payroll can be ripe for errors and mistakes. Too often, employees who don't specialize in payroll are the ones dealing with payroll and tax remittance. This creates opportunity for multiple errors and even quicker fines. 

With a PEO, they will not only process payroll on your behalf, they'll also calculate and remit your taxes for you. You are not at risk for filing employment taxes or for late fees or fines associated with a missed filing. That burden is solely on your PEO. 

Obtaining Workers' Compensation Insurance 

Small businesses often find it difficult to get affordable workers' compensation insurance, especially in certain industries or if the company has had several claims. That's why partnering with a PEO can be just the solution you need. 

A PEO gives you access to their workers' comp plan at their experience modifier rate. The PEO has already paid the deposit for the plan, so you simply pay-as-you-go on a monthly basis, most likely at a rate much lower than you would have been able to get on your own.  

Workplace Safety 

Especially in certain industries, workplace safety is regulated and violations can be costly. A PEO will conduct a safety audit, looking at your company's injury record, your policies, and work with you to create and update an improved safety manual. 

A PEO staffs industry experts who can identify risks early on. They will take swift action to keep your workplace as safe as possible and can even administer drug-testing services, if necessary. 

Workers' Comp Claims Management 

Workers' compensation claims can come unexpectedly and can overwhelm small business HR teams. Too many inexperienced HR workers don't know how to review or challenge a claim that may not be valid. 

A PEO does. PEOs staff workers' comp claims experts who will review every claim on behalf of your company. They will challenge invalid claims and work to allow only valid claims through. 

Unemployment Tax Rate Management 

A PEO can minimize chances of invalid unemployment claims by reviewing each claim and responding to every single one with documentation. Your PEO will also represent you at any disputed claim hearings. 

Beyond that, your PEO will help you build and maintain accurate and compliant job descriptions. They'll also make sure you properly document the termination process to avoid, as best as possible, unemployment claims. This can minimize the impact of valid unemployment claims on your unemployment insurance rates. 

Retirement Plans Administration 

Retirement plans are wonderful to help attract top talent, but they are a headache to administer. There are many regulations that must be followed, and even innocent mistakes can lead to costly fines and employee lawsuits. 

Your PEO handles the retirement plan administration for you. They will also handle the annual audits and discrimination testing to ensure retirement plans are fairly distributed. 

Prevent Employee Lawsuits 

Employee lawsuits can quickly derail your organization. They can come from wrongful termination, discrimination claims, and a host of other reasons.  

Your PEO will train your managers to minimize the chances of a discrimination lawsuit. They will also help you avoid wrongful termination lawsuits through proper documentation procedures. 

Compliance Risk Management 

Employment laws and regulations are constantly changing. Keeping up with these laws is truly a full-time job. 

Your PEO will staff compliance experts who do just that. They will monitor changes in employment laws at the federal, state, and local levels, managing any changes your company may need to make as a result of any legal changes. 

Why Outsource Risk Management? 

You need to focus on your business. Your HR team needs to focus on creating an engaging and attractive company culture. Outsourcing your HR needs to a PEO lets you do all that plus gives you peace of mind that your business is properly managing risk and not facing any unnecessary legal or financial burdens.