Selecting a PEO
The National Association of Professional Employer Organizations offers the following guidelines to companies considering a relationship with a PEO:
- Assess your workplace to determine your human resource and risk management needs.
- Make sure the PEO is capable of meeting your goals. Meet the people who will be serving you.
- Ask for client and professional references.
- Does the PEO have a demonstrated history of adherence to the industry's professional performance practices, including responsible financial management of its business? Check to determine if the PEO’s financial statements are independently audited by a CPA, whether their risk management practices have been independently certified by the Certification Institute, or if their operational, financial, and ethical practices have been independently accredited by ESAC.
- Check to see if the company is a member of NAPEO, the national trade association of the PEO industry. Use the search feature in the right column to find a PEO in NAPEO's Directory of PEO Members.
- Investigate the company's administrative and management expertise and competence. What experience and depth does their internal staff have? Does the PEO corporate staffing allocation follow the priorities of the PEO's marketed services? Does their senior staff have professional training or designations?
- Understand how the employee benefits are funded. Is the PEO fully insured or partially self-funded? Who is the third-party administrator (TPA) or carrier? Is their TPA or carrier authorized to do business in your state?
- Understand how the employee benefits are tailored. Determine if they fit the needs of your employees.
- Review the service agreement carefully. Are the respective parties' responsibilities and liabilities clearly laid out? What guarantees are provided? What provisions permit you or the PEO to cancel the terms of the contract?
- Make sure that the company you are considering meets all state requirements.