PEO INDEX REFLECTS UNIQUE ECONOMIC ENVIRONMENT

Looking at this month’s PEO Index, it appears at first glance that gross domestic product (GDP) is taking off and the PEO Index is lagging. However, the unique employment environment of today belies first impressions. 

• SALES & MARKETING

PEO News

Acquisitions, Philanthropy, Anniversaries, Expansions, Awards

WHAT HAVE BEEN THE GREATEST CHALLENGES IN STARTING UP YOUR PEO?

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WHY NOW IS THE TIME FOR PEOS

Scholars, leaders, and researchers often speak about how widespread catastrophes or crises can lead to re-evalutions, new perspectives, and dramatic changes that affect various areas of society. COVID is a prime example that certainly fits into this scenario. For business leaders, it illuminated the importance of a sophisticated human resources department. It drove home the need to focus on people and develop a robust people strategy for business success. 

Employee Retention Tax Credits

The Employee Retention Tax Credit (ERTC) was designed to give relief to employers that retained their employees, whether working or not, by paying them throughout COVID. Initially, employers could get $5,000 total per employee for the whole year of 2020. The parameters changed in 2021, giving employers the opportunity to claim $7,000 per employee, per quarter, for the first three quarters of 2021. While this is a great idea in theory, the mechanics of administering it are very burdensome for PEOs. 

• LEGAL & LEGISLATIVE
• PAYROLL

NAPEO’s 2022 PEO Capitol Summit

Laws and regulations that impact PEOs change every day, and NAPEO’s PEO Capitol Summit is the only event focused specifically and exclusively on compliance and emerging legal issues for PEOs. Attendees will benefit from the opportunity to gather in the nation’s capital with PEO owners, senior managers, legal advisors, and HR professionals for valuable policy discussions, legal analysis, and lobbying opportunities. Highlights of the conference include industry expert discussions of PEO industry hot topics that deliver practical information on applying legal concepts to your management decisions and day-to-day operations, a chance to ask the experts your burning questions, and the opportunity to hear from leading lawmakers and policy gurus. 

NEWS AND STATISTICS

THE IMPACT OF COVID ON HOURLY WORKERS The COVID pandemic has had a big impact on hourly wage workers in America. The United Way of the National Capital Area recently surveyed more than 1,000 American workers about how they felt about working during the pandemic and how they feel about their wages. Some companies have increased their wages, but others have struggled to keep staff. 

Recent Developments in Cybersecurity

As hackers continue to target critical infrastructure sectors, attempt to steal personal data, threaten to release such data, and collect ransom, the need for more regulation and corporate diligence could not be more necessary.

• CYBERSECURITY & TECHNOLOGY

Remember the Alamo

Nearly 200 years ago, a fiercely determined band of Texas soldiers in San Antonio prepared for imminent attack from the Mexican army. As they fortified their defensive positions, urgent calls for reinforcements were dispatched. Unfortunately, their pleas were not heeded in time to stop General Santa Anna’s forces from laying siege to the Alamo and killing all her defenders. The Battle of the Alamo is central to the founding history of Texas, which declared its independence from Mexico on March 2, 1836, a mere four days before Santa Anna’s forces attacked. 

• PEO PROFILES

Sharpening Your Sales Team’s Business Acumen

The PEO sale is a complex sale. To be successful at selling PEO, salespeople should have a real-world understanding of human resources practices, from hiring to retiring and all the drama in between. They should be knowledgeable about: • Employment regulations; • Workers’ compensation and regulations; • Risk management; • Employee benefits, administration, and regulations; • Payroll, payroll forms, payroll taxes, and regulations; • Time and attendance systems; and  • HR technology. 

• SALES & MARKETING

The CSA in a Multi-State Environment

As the industry has grown over the years, PEOs have evolved naturally in the direction of multi-state operations. This has always been true, but the pace or scope of this effect accelerated with the rise of remote work during the pandemic.  The PEO client service agreement (CSA) is a challenging document. The complexities and ambiguities of the PEO arrangement require a lengthy contract to reasonably address the risks and to protect the PEO. These challenges are magnified by the need to address state-by-state issues. 

• LEGAL & LEGISLATIVE
• RISK

The Mysterious WC Carve-Out Arrangement

The term “carve-out” is commonly used in the industry, but how it works may not be quite as clear. For those who are not familiar with the term, it describes an arrangement in which the onsite client secures its own direct workers’ compensation coverage for its workforce. Because that client has contracted to be in a PEO arrangement, the co-employees performing services for that client are covered under the client’s own workers’ compensation insurance policy, not the PEO’s policy. Typically, that coverage is sufficient and no other problems arise. 

• RISK

A Scaling Roadmap for Your PEO

All PEOs start somewhere and create systems that work for them. Eventually, if the goal is to grow, scalable systems and operations need to be in place to sustain the PEO’s growth, along with the right people who can manage and execute these operations. Scaling can create many benefits for the PEO: ongoing client satisfaction, a great employee experience for team members, hitting growth targets, and ensuring profitability over the long-term. This is hard work, and it’s not for the faint of heart. Therefore, I hope to put together a practical guide to give you a roadmap for scalability.

• FINANCE & OPERATIONS

Big Changes on the Way for Employee Arbitration Agreements

Despite being described as more deeply divided than ever, Congress found a way to pass the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFASASHA). President Biden has said he will will sign the bill into law, and may have already done so by the time this article goes to press. This means all employees subject to arbitration agreements will have the right to choose whether to bring covered claims in arbitration or in court, even if they previously signed a PEO’s mandatory arbitration agreement. This development significantly impacts PEOs from both an operational standpoint and a liability standpoint. 

• LEGAL & LEGISLATIVE

NEWS, STATISTICS

Member News • Statistics • Industry News

PEOs Make 2022 the Great Rejuvenation

2021 was filled with many story lines and trends that impacted PEO worksite employers. One of those story lines that will continue in 2022 is The Great Resignation. According to the Department of Labor (DOL), 47 million American voluntarily quit their jobs in 2021. In November and December of 2021, 4.5 and 4.3 million Americans quit their jobs, accelerating the quit rate to 3 percent. It has also been recently reported that the unemployment rate dropped below 4 percent, but there are still 10 million open positions across the country. 

PEOS Remained Confident as They Closed 2021 Despite Omicron Dominating the U.S.

Steady growth continued for PEOs in the fourth quarter of 2021, despite the dominance of the Omicron variant in the U.S., as shown in the Q4 2021 NAPEO PEO Pulse survey results.

Stop Copying Me!

Back in the late fall of 2008, when we started Premier Employer Services, Inc. here in Denver, Colorado, my partner at the time and I went back and forth trying to find the perfect name, with little luck. We finally settled on the name, but I must be honest with you—I never liked the name; it was too bland and way too long. We had nothing else, so we opened the doors and away we went. The name was never so bad that it rose to the top of the “important things to address” list. Every once in a while, someone would mention it and I would remark that I wanted to change it, but it was never an emergency. I continued to struggle with coming up with anything better.

• PEO PROFILES
• SALES & MARKETING

Tandem HR

Headquartered in Chicago, Illinois, Tandem HR is a long-time NAPEO member with a strong history of involvement in the association and industry. Tandem employees regularly lead panels and discussions at NAPEO conferences, contribute to PEO Insider,® and participate in committees. Tara Conger, chief operating officer of Tandem HR, was elected in September 2021 to serve on NAPEO’s Board of Directors. 

• PEO PROFILES

BUILDING A SERVICE MODEL AROUND ASO & PEO

As the needs of clients evolve and change over time, it is important for PEOs to offer solutions that meet those needs. Sounds simple, right? We have all seen clients that initially onboarded with 10 employees that now have 200 employees and just hired a new CFO and HR director. Their needs have obviously changed.

• FINANCE & OPERATIONS

DEFINITION OF THE TRUE PEO VALUE PROPOSITION

What is a PEO’s value proposition to its clients? One may be tempted to answer this question by listing a PEO’s service and product offering. However, the service and product offering are not the value proposition of a PEO. The value proposition of a PEO is the material impact the PEO has on its clients. The PEO’s product and service suite serve as the framework to drive the value proposition. The execution of the product and service suite through the PEO’s staff is the delivery method of said value.

• SALES & MARKETING

MORE CHALLENGING ENVIRONMENT TO COME

The PEO Index in general very much aligns with the rapid gross domestic product (GDP) growth of 2021. See Figure 1. As the economy began to accelerate as the various state-mandated shutdowns were lifted, businesses of essentially every type began to recover. The slight flattening of the PEO Index in the last few months perhaps indicates that the persistence of the Delta and Omicron variants may begin to take a toll on businesses that were buoyed by the various relief packages from the federal government, but may struggle now that the money has run out. This combined with the more recent hawkish view of the Federal Reserve may prompt a more challenging environment in the months to come.

News & Trends

Statistics • NAPEO Member News

RETIREMENT UPDATE

At the NAPEO Annual Conference & Marketplace in late September 2021, there was a buzz in the air about national retirement policy. Only a few weeks earlier, on September 9, the House Ways and Means Committee had just approved, on a straight party-line vote, an ambitious plan to remake the national private retirement system as part of the Democrat’s broader Build Back Better Act agenda. This proposal would have required all employers, except the very newest and very smallest, to offer retirement savings vehicles to virtually all employees. NAPEO staff and I were fielding questions non-stop about the opportunities and challenges this bill would create for PEOs. It really felt as if a new retirement plan mandate on employers was on the verge of becoming law.

• LEGAL & LEGISLATIVE