Simply put, if you are with a PEO, chances are you are paying too much! PEOs will provide your payroll services as part of their "bundle". This bundle includes an "administration fee". This fee is expressed as a percentage. The % (ranging from approximately 2 - 5%) is calculated on the total payroll processed. Therefore, if you have 10 employees making 12.00 / hr, the PEO will communicate that your payroll is only 3.5%. However, a closer look will illustrate that this 3.5% equals $8736.00 annually (or $168.00 weekly). Almost $10,000 a year to process your payroll. Consider that a standard payroll company (see Florida Commercial Payroll) can process the same payroll for $2912.00 annually (or $56.00 weekly). That is over $5,000 a year back in your pocket. In addition to the savings, you get the same (or more) benefits. The "standard" option provides you with payroll (checks or direct deposit), processing and filing of all state and federal taxes, weekly workers comp payments (with little or no down payment on a self auditing basis) just like the PEO. The benefit is that you have YOUR own policy and YOUR own tax and unemployment account numbers (not a master number in the PEO's name). Ask us to send you a quick and easy calculator to see how much you can save.
A simple test to be sure. Notify your PEO that you are "shopping" your coverage and request a copy of your loss run report. Commonly, a PEO will promptly provide you with a reduced rate. Many PEOs don't apply discounts as your company grows. The question... how much have I been overcharged through the years? Through modern "pay as you go" options, standard carriers can provide broader coverage with the same convenience (at a fraction of the cost). Ask us to provide you with a calculator that will show the annual and weekly savings.
Ask your PEO regarding the co-employment relationship and claim denial. If you become liable for an injury for someone not currently enrolled or running payroll or even an uninsured sub contractor on the jobsite, the PEO will commonly deny the claim. This leaves you completely exposed personally and corporately to workers compensation claims. Additionally, pull a copy of your insurance policy. PEOs do not provide you with a copy of your coverage primarily because "it is not your coverage". The coverage is in the name of the PEO. Wouldn't you be more comfortable paying premiums for a coverage written in your name?
PEOs often "bundle" your rate (including taxes) in order to utilize costs as they see fit. Evaluate your statements to ensure that you are not being charged taxes beyond the period in which the Government statutorily allows you stop. Additionally, many insurance companies provide safety dividend returns for companies generating premiums as low as $5,000. Safety dividends return a percentage of paid premiums for companies with positive claims experience. Many PEOs do not provide these dividends. Evaluate your paid premiums and claim history. Now ask why didn't I receive 5 - 25% of my premium back for claim free years.
Many PEOs claim that you are no longer responsible for your payroll and taxes. This is simply untrue. The PEO is processing your payroll and taxes on your behalf (under their master accounts). You may still be liable for any under payments or taxes that are not properly filed on your behalf (as well as other employment laws). Standard payroll companies file taxes under YOUR tax account (in your name).
Many PEOs justify their large administrative costs by citing the many additional resources provided to their clients. These include EPLI, HR support, and legal protection. First, many standard insurance companies are providing these resources at a small cost. Additionally, many of the PEOs additional resources are in place to protect the PEO (not your corporation).
Simply go to: https://licenseesearch.fldfs.com/ and put in the name of your PEO rep. If he or she is not listed with a General Lines 2-20 license, they are NOT licensed. They do not meet Florida license or education requirements needed to provide workers compensation (or any other) insurance. Most importantly, they do not have professional liability to protect you in the case of errors, omissions, or misrepresentations (required by appointed and licensed agents).
Florida Statute 626 requires that the general lines insurance license be utilized by the holder to actively (and in good faith) engage in providing insurance products to consumers. This regulates the agent through education and disciplinary requirements. However, many PEO representatives have not obtained this valuable consumer protection. Ask your PEO representative about his or her insurance qualifications or research yourself.
Florida requires companies to provide workers compensation benefits for its employees. Therefore, some industries have a difficult time finding coverage outside of the FWCJUA (which is extremely cost prohibitive). Sometimes, the PEO is the best option. Be sure to solicit a licensed insurance professional to ensure that you have all available options regarding the broadest coverage at the most affordable premium.
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