The basic value proposition of the PEO is simple: PEO clients receive human resources, benefits, risk management, payroll, and all of the associated compliance services, all in one place, the value of which is greater than the sum of its parts. Of course, if the PEO weren’t able to internalize this seemingly paradoxical principle, the value proposition—and the operation that creates it—would not be possible.
So, how do PEOs orchestrate all of the moving parts of their operations to deliver this value? The individual parts are important, and clients and worksite employees certainly benefit from them, but looking at the PEO holistically—as a complete system—allows the synergies that make all the parts work together efficiently.
PEOs are generally highly focused on the details of workers’ compensation insurance, given that it is one of the single largest day-to-day risks they manage. The adoption of state PEO licensing or registration statutes over the years has provided certainty by ensuring that exclusive remedy protection is clearly available to both the PEO and the client company.
Quality control can be an easily defined process for some organizations, such as manufacturers, for example. Organizations can use certifications and schools of thought as guiding principles to ensure their products have met the highest of standards. Recently, because of my 6-year old-son, I have been exposed to the Lego® brand. We have assembled more sets than I care to count, consisting of thousands of Lego parts and have never encountered a set that was missing a piece—ever. If you have ever purchased anything that needed to be assembled, you can appreciate how impressive that is. My research quickly uncovered that Lego uses automation to compile the blocks necessary for a particular set into bags. Humans then package the bags into boxes and double-check the machines’ work. All pieces are made to fit together and each is numbered so that if there is a non-conforming piece, it can be traced back to the mold for correction. Is the process perfect? No. However, the customer service department at Lego also gets rave reviews for their responsiveness to missing or nonconforming pieces.
On April 1, 2014, President Obama signed into law the Protecting Access to Medicare Act. Among other things, this law eliminated a provision of the Affordable Care Act (ACA) that provided for required limits on the maximum allowable annual deductibles for small employer group health plans. This change is effective retroactively to March 23, 2010, which is the date the ACA was enacted. This change in the law is potentially very important for PEOs and their smaller client employers. Below, we try to answer some of the questions you might have about this change and its impact.
Despite a fragile economy, interest in the U.S. Commonwealth of Puerto Rico among U.S. businesses continues to grow, offering opportunities for PEOs that handle human resources, payroll administration, and a myriad of other business needs for businesses of all sizes.
During the first quarter of this year, we have seen an emerging trend: momentum is building for the enactment of mandatory paid sick time legislation. Bills have been introduced in 20 states and five localities.
“Overall first quarter GDP growth is looking pretty slow (under 2 percent) with weather and pessimistic consumers and business owners all taking a toll on spending growth,” said National Federation of Independent Business (NFIB) Chief Economist William C. Dunkelberg.
In 1996, the PEO industry had a lot on its plate. Only 14 states had PEO registration or licensing requirements, and clarification was needed in the IRS’s employment tax and benefits rules to provide for the co-employment relationship.
On March 27, NAPEO member TriNet HR Corporation went public, selling 15 million shares in an initial public offering (IPO), joining a few other NAPEO member companies who are also publicly held. This “extraordinary day” for TriNet (in the words of TriNet Senior Vice President and former NAPEO General Counsel Greg Hammond), was a great day for the PEO industry as well.
Q. What is the status of fee disclosures for 401(k) plans? A. With its rules on disclosures adopted in 2012, many thought that the U.S. Department of Labor (DOL) had put to bed the issue of a pension plan provider’s necessary disclosures about the administration of 401(k) plans. However, few have been satisfied with the result.
Whether you are essentially a founder or, as I was a decade ago, new to the PEO industry, you will probably agree that our business is unique, challenging, exciting, and constantly evolving. Few industries have morphed in as many directions as ours has.
Our nation is confronted with the challenges of a slow economic recovery, persistent joblessness, stagnant incomes, a generation of students at risk of falling behind the world, and the fear that the American Dream is out of reach for too many.
As NAPEO prepares to celebrate 30 years as The Voice of the PEO Industry,TM a retrospective look at our past is helpful if we are to fully appreciate the evolution of the PEO value proposition.