A professional employer organization (PEO) is an entity that partners with a client company to reduce tax burdens and maximize the efficiency of employments structures with regard to taxes and benefits. PEO insurance can be desirable to protect both entities and co-employed workers from gaps in coverage – especially when it comes to workers’ compensation.
Understand the Role of PEOs
A PEO may handle employee benefits and taxes in ways that might benefit a client company. The PEO could also act as a staffing firm and undertake pre-employment screening and hiring. In these situations, the PEO may be the primary employer while the client company oversees co-employed workers. Once a solid contract is in place, a PEO may help to reduce a client company’s legal liabilities.
Minimize the Risks of PEOs
PEO insurance policies may help to further reduce exposures to risk for the PEO, client company, and co-employed workers. Client companies may also want to seek out PEOs enrolled in the Internal Revenue Service’s Voluntary Certification Program. This program could offer additional protection against errors on the part of the PEO or an organization’s failure to fulfill obligations to employees. There are a number of plans and endorsements available for companies interested in entering into strategic partnerships with these organizations.