Staying legally compliant as a SMB is an important part of your business. You didn’t put in all of your blood, sweat, and tear to have everything come crashing down around you because you didn’t pay enough attention to the laws you are required to uphold, right?
Professional Employer Organizations, more commonly referred to as PEOs, are companies that a small business can contract with to handle their human resources functions, including compliance. Quick Sprout outlines all of the things that a PEO can help a business with, but compliance is one that every business can greatly appreciate help with.
When a business is out of its legal compliance, they can be in a whole lot of trouble. If they are lucky, formatting a plan of correction and facing a host of legal fines is all they will have to deal with. Depending on the level of non-compliance, the industry and the business’s track record, they can also be immediately shut down and dissolved. No one has worked to build a business just to have it shut down because of a compliance error.
How do PEO Companies Help?
One of the functions of a PEO is compliance and risk management. They are there to make recommendations to the company on how to get in compliance and stay in compliance. For some companies, there is very little they need to remain in compliance with. For other industries there are many rules and regulations that need to be upheld. For instance, if you are hiring for a retail clerk, the company may require a background check and that all forms are filled out upon hire and they remain in hiring compliance. For a healthcare facility, beyond the background check, it is required that everyone be checked against the OIG registry, the sex offender registry, and their license run on the state registry to ensure they are legally able to be a healthcare worker. Failure to do this can result in serious consequences. The PEO company will ensure all of this comes back clean prior to the employee’s start date so that they are never out of compliance.
Other Areas of Compliance
PEOs handle all different areas of compliance when it comes to human resources. Some notable functions that just about every small business, regardless of industry, requires are:
- New Hire Reporting
- Workers Compensation
- W-2 and 1099 Filing
- Employer’s Liability Insurance
- Unemployment Insurance Cases
Most of these things are behind-the-scenes things that many people don’t automatically think about when they think about business practices. When you think about an employee getting hurt at work, many business owners think they just notify the worker’s compensation company and they handle everything from there. While that is true on the medical end of the claim, what about all of the paperwork that goes into filing the claim and having them pay it. The cost breakdown and then the annual increases when you file claims. The back end of the claim that is mostly paperwork and then there is making sure they pay, and the employee doesn’t get stuck with a large bill that should have been taken care of. A PEO will handle all of the appropriate paperwork and make sure that everything processes quickly and smoothly. They will handle submitting all of the required documentation and will see the process through until the case is closed. That is worth its weight in gold.
There is nothing worse than terminating an employee. Except having the employee file and win an unemployment case that they should have lost, but due to other business demands you forgot or were unable to turn in the requested notice of appeal in the appropriate timeframe. A PEO who is working with you will ensure not only that you are appealing the unemployment timely but also that all of your documentation supports the termination before you enter into an unemployment hearing. The true value of the PEO is not only in the event of unemployment, but they are going to make sure you are compliant in the original termination, following all guidelines and policies and procedures that are in place for the company so when the notice does come, they are already ready to appeal.
Of course, there is unemployment insurance that your business carries for cases of termination, but no one wants to pay out hard-earned money that the business doesn’t feel is necessary.
Contracting with a Professional Employer Organization can help keep your business in compliance with all of the rules and regulations. Since they change so often, having a team on your side that is constantly up-to-date and aware of any changes that your business needs to make to ensure continued compliance can be the difference between smooth sailings and large fines and possible company shut down.
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