Posts from the HR Outsourcing Category
What is the “soft cost” of Human Resources? Can a PEO or HR outsourcing provider quantify?
Posted by Kristian Svindland on May 18th, 2011
Payroll is a commodity.
Benefits will cost what they cost.
Risk management, aka, workers compensation insurance will ultimately be based upon your experience.
So, what is the “soft cost” of human resources? There have been many studies and questionnaires floating around to make a case for HR outsourcing services. What we see is that most companies do not buy into the concept of “soft costs” until they become “hard costs.” Meaning, we do not get a business owners attention until after the fact. And those facts are turnover and non-compliance issues (fines) and workers compensation modifiers that give owners nose bleeds.
Our goal should be to take all aspects of a company’s human resources department into account when proposing a solution. Line-by-line, department-by-department.
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What are SUTA or SUI Cutoff’s and Does My PEO Recognize?
Posted by Kristian Svindland on May 11th, 2011
SUTA (state unemployment tax assessment) or SUI (state unemployment insurance) is charged by every State to businesses to cover unemployment claims. Every business is rated on their claims and given a base rate that they must pay to stay out of legal hot water with their State.
But, what are cutoff’s? Once you have paid a particular employee a certain amount of pay over the course of the year, the SUTA is cutoff. For example, in the State of California, once you have paid an employee $7,000 in one year, you no longer have to pay unemployment taxes on that employee. The cutoff point varies from State to State.
How does a PEO handle this? It varies from PEO to PEO. Some honor cutoffs…some ignore them entirely. Others smooth out your SUTA rate over the year. So you may see a SUTA rate billed at a fraction of what you would normally expect…but it is likely that you will continue to pay that rate for the full year.
You should check with your PEO or HR Outsourcing provider to see how they handle cutoffs.
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What happens when my HR outsourcing provider or PEO gets bought?
Posted by Kristian Svindland on May 10th, 2011
Most likely, the buying provider or PEO will have you conformed to their processes and systems within 18 months. Now would be the best time to re-evaluate that relationship to see if it is truly what you were hoping and to see if there are better options.
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Am I outsourcing my Human Resources already?
Posted by Kristian Svindland on March 29th, 2011
Most likely you are…You just don’t realize it. Here’s a quick test to see if you are hr outsourcing.
If you answer false to any of these questions, then you outsource HR.
1. My company is self-funded for workers compensation
2. I handle all aspects of payroll internally, from collecting the hours to cutting the checks to quarterly and annual tax payments to w-2’s to setting up direct deposit for my employees
3. I do not offer any benefits to my employees
Not as easy as you think, is it?
Let’s start with number 1…workers compensation. The common misconception is that workers compensation insurance is a burdensome tax to business owners and that it is only in place to protect employees…quite the contrary. Workers compensation insurance is in place to protect owners’ businesses in the event of a work-related injury to an employee. A second misconception is that if all of the employees are 1099’ed, sub-contractors, then the business owner is held harmless. That is fine and well until a sub hires a sub and they end up with an injured employee. Who then is going to be the responsible party? Trust me, that stuff flows uphill. Bottom line…workers comp…gotta have it. If you don’t you’ll be paying off the lawyers and injured with the proceeds from the sale of your business.
Which takes us to number two, outsourcing your payroll. Everyone should be using this service. Your time is money and your money is money…don’t waste either by doing this function in-house. Plus, the related fines if you flog it up.
And then you have employee benefits. Who is managing that? Your office manager? That’s great, that’s a money saver, because they work for free, right? Again, you’re wasting their time, plus opening yourself up to labor law infractions as I’m sure your office manager/client service rep/admin assistant is up to speed on all federal and state regulatory labor laws. Here’s a quick test of that employee’s knowledge of human resources. Ask them what C.O.B.R.A. stands for…and how long an employee must be retained on your company’s healthcare plan once they leave your employ. (Answers: Consolidated Omnibus Budget Reconciliation Act…and 18 months.)
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How PEO helps businesses gain control
Posted by Kristian Svindland on March 7th, 2011
We are often perplexed by companies that come to us looking for a solution and seem to be under the misguided perception that PEO (professional employer organization), sometimes referred to as employee leasing, would mean a loss of control.
On the contrary, PEO allows business owners to know exactly, to the penny, how much their total labor burden is or will be.
Currently, their payroll processing, benefits costs and risk management are in differing departments or services. With PEO, it all comes together, neat and tidy. The rates charged, plus benefits, are already pre-negotiated. In addition, the employer risk is shifted entirely to the PEO. Meaning, if there is a workers comp claim or unemployment claim or workplace tort for harrasment or wrongful termination, that responsibility all falls upon the PEO.
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Advantages of Professional Employer Organizations (PEO)
Posted by Kristian Svindland on October 15th, 2010
One of the immediate advantages of PEO or employee leasing is that management’s time that was previously spent on personnel management and accounting can now be directed toward activities that effect earnings and profit.
In addition, a company that arranges with a PEO will find immediate economies of scale in providing benefits, especially healthcare. Other benefits, such as cafeteria plans, life insurance, disability insurance and 401k plans, are not often offered by smaller companies, but through a PEO, they are all available at no additional costs.
Lastly, a PEO or employee leasing firm provides assistance in defining personnel policies and compiling employee handbooks as well as compiling and recording employee files.
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McDonalds to cancel healthcare for its employees?
Posted by Kristian Svindland on September 30th, 2010
Here is the report from the Wall Street Journal. Hmmm…wonder if they would be a good client for PEO?
http://online.wsj.com/video/088AC31E-1087-428F-AD84-62AA9E6D5EA6.html?mod=wsjcrmain
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AON Consulting’s Survey of PEO on going paperless
Posted by Kristian Svindland on August 20th, 2010
Interesting report by AON regarding how PEO’s are going paperless.
http://www.aon.com/attachments/2010_PEO_Survey_Final.pdf
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Department of Labor to step up on misclassifications
Posted by Kristian Svindland on July 12th, 2010
The Department of Labor (DOL) has submitted its fiscal year 2011 budget to Congress. One of its main objectives is to penalize employers who misclassify employees as independent contractors.
Another reason for small businesses to outsource their human resources to a solution like PEO (professional employer organization). Once the DOL finds a company that has classification errors, the liability for back wages and overtime pay, as well as to DOL penalties, will start adding up and potentially put them out of business.
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Entrepreneur Magazine touches on HR outsourcing
Posted by Kristian Svindland on June 28th, 2010
Here is a link to an article in Entrepreneur Magazine that is at the heart of why small and mid-sized businesses should be outsourcing their HR, in particular, PEO is mentioned as a more cost-effective way of doing business.
http://www.entrepreneur.com/magazine/entrepreneur/2010/july/207170.html
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