PEO / HRO Pricing Information

Example of Traditional Employer related Labor Costs

Workers Compensation Codes 8810
Clerical/Office		 3632
Machine Shop or
Light Industrial		 5645
Construction
Social Security and
Medicare Taxes		 7.65% 7.65% 7.65%
Federal Unemployment Tax .80% .80% .80%
State Unemployment Tax 3.00% 3.00% 3.00%
Workers' Compensation Insurance .65% 5.00% 14.00%
Administrative Overhead 4.00% 4.00% 4.00%
Total Traditional % Cost 16.10% 20.45% 29.45%

Note, State Unemployment Tax rates vary significantly by state and by employer experience, in addition, total costs are estimated and vary by employer. The US Chamber of Commerce, US Dept of Labor and Small Business Administration estimates that administrative overhead for business with less than 100 employees ranges from 4% - 12%. Check out our Administration Costs Calculator to establish an estimate of your own.

Examples of Pricing Structures by PEO

Workers Compensation Codes 8810
Clerical/Office		 3632
Machine Shop or
Light Industrial		 5645
Construction
Total PEO % Cost 14.30% 17.55% 24.65%

Please note, the factor stays constant throughout the year.

Unbundled Factor Example

Workers Compensation Codes 8810
Clerical/Office		 3632
Machine Shop or
Light Industrial		 5645
Construction
PEO Cost- pre cut-off
(SUTA/FUTA TAX)		 15.95% 19.60% 26.75%
PEO Cost- post cut-off
(no SUTA/FUTA TAX)		 11.95% 15.60% 22.75%

Please note, the factor shifts with Federal and State Unemployment Tax savings

As you can see it is approximately two percent cheaper as a factor of gross labor costs to employ the services of PEO as compared to the company’s current related labor costs.

Example Savings

Workers Compensation Codes 8810
Clerical/Office		 3632
Machine Shop or
Light Industrial		 5645
Construction
Annual Gross Payroll $100,000 $200,000 $150,000
% PEO Savings 2.00% 2.35% 3.60%
Actual Savings $2,000 $4,700 $5,400

 

Total Savings - $12,100


Keep in mind that the PEO’s fees are included in the rates listed in the examples above. In addition, the client company is assigned an entire HR department including an hr manager, risk manager, benefits administrator, payroll specialist and labor law counsel.

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