SE Day 2: PEO and Co-employment

Question 1

What is co-employment?

Answer 1

A contractual agreement between a company and a PEO that allocates and divides employer responsibilities between the two. This agreement is called a client service agreement (CSA)

Question 2

In a PEO relationship, the business owner maintains control of:

Answer 2

All business decisions, operations, employees’ daily duties and core job functions

Question 3

In a PEO relationship. the PEO manages which responsibilities?

Answer 3

Processing payroll, admin payroll deductions, issuing paychecks, preparing and filing payroll taxes, providing benefits to worksite employees, worker’s compensation coverage and claims management, providing HR advice to the client

Question 4

What are the benefits of a co-employment relationship?

Answer 4

Access to big-business benefits, simplified payroll, workers’ compensation coverage and claim management, strategic HR support and planning

Question 5

What are some misconceptions about co-employment relationships?

Answer 5

Losing control of the business, employees will revolt, co-employment is a way to replace existing HR professionals

Question 6

What is a CPEO?

Answer 6

A PEO that has applied to the IRS to be certified and has received the CPEO designation. a CPEO takes on added responsibility related to payroll administration and federal employment tax reporting and payments

Question 7

What is the Small Business Efficiency Act (SBEA)?

Answer 7

An act in 2014 that shows federal recognition of the PEO industry

Question 8

What is the company’s role in a CPEO relationship?

Answer 8

The company remains an employer, maintains control of employees’ daily core job functions and leadership focuses on fulfilling their primary roles.

Question 9

What is the CPEO’s role in a CPEO relationship?

Answer 9

The CPEO takes over employer obligations and provides benefits and handles functions such as payroll, tax remittance, and government filings and can take on more responsibility than a standard payroll company

Question 10

What are some requirements to qualify as a CPEO?

Answer 10

Require an audit of financial statements, CPA documentation that employment taxes are paid in a timely manner, documentation of positive working capital, background reports of individuals responsible for employment tax payments

Question 11

Why was the Small Business Efficiency Act important?

Answer 11

It gave structure to who is responsible for what and how eligibility for certain tax credits is defined.

Question 12

What was the traditional IRS view on payroll tax liability?

Answer 12

The IRS traditionally took the view that both are separately liable for federal employment taxes. With a CPEO relationship, the CPEO is solely liable for payment of federal employment taxes

Question 13

Name a few tax credits that the CPEO relationship allows

Answer 13

Credit for increasing research activity, credit for health insurance expenses, work opportunity credit, empowerment zone employment credit

Question 14

What was the original problem with federal employment taxes before a CPEO was created?

Answer 14

If a company joined a PEO mid-year, their federal employment taxes would reset and they would pay double their taxes

Question 15

What is it important to be with a PEO with financial strength?

Answer 15

Several PEO licensing laws require it and are recommended by the National Associaton of Professional Employer Organizations (NAPEO)

Question 16

What is a PEO’s staff support ratio?

Answer 16

The number of corporate staff members employed compared to the number of worksite employees

Question 17

What is the purpose of the Employer Services Assurance Corporation (ESAC)?

Answer 17

They review the ethical, financial, and operational practices of PEOs

Question 18

How does a fully-insured health plan compare to a self-insured?

Answer 18

In fully-insured plans, the carrier charges a fixed premium and takes on all risk and is responsible for claims. In a self-insured plan, the employer takes on all the claims and therefore, all the risk

Question 19

How does a PEO save a client on benefits?

Answer 19

The PEO handles administrative tasks with benefits (negotiating with carriers, enrolling employees, legal notices) and also helps better understand the benefits offered (such as having a contact center)

Question 20

How does a PEO save a client on payroll?

Answer 20

The PEO reduces payroll processing and related accounting costs

Question 21

How does a PEO benefit a client on retirement plans?

Answer 21

A PEO can offer a retirement plan such as a 401(k) and can manage the administrative responsibilities and regulatory requirements (such as compliance testing, distribution processing and required notices)

Question 22

How does a PEO benefit a client on HR compliance?

Answer 22

A PEO can keep a business up to speed on several laws and regulations (such as paid sick time policies) for employees all over the country. Some other examples are preventing asking about criminal backgrounds and salary history.

Question 23

How does a PEO benefit a client on workers’ compensation?

Answer 23

A PEO takes on both the WC coverage as well as the compliance, audits, paperwork, and certifications associated. In addition, they can offer safety consultants to mitigate risk and reduce claims

Question 24

How does a PEO benefit in case of a business lawsuit?

Answer 24

PEOs typically have equal employment opportunity specialists who are well-versed in discrimination laws and can mitigate a costly settlement. They serve as a second set of eyes rather than legal counsel

Question 25

How does a PEO benefit in recruiting?

Answer 25

The PEO grants access to experienced recruiters who can analyze tone and voice, the candidate’s attitude and emotional intelligence and their capacity to perform in a real-world job setting

Question 26

What are some key factors of an employee benefits program?

Answer 26

Clear goals, financially realistic, competitive rates, differentiate between required and optional employee benefits, articulate additional perks, and how it fits into the total compensation picture

Question 27

Why is reviewing the budget for benefits important?

Answer 27

It’s important to stay focused and realistic for the company size which can allow the business to stand out in the labor market and even offer perks that big businesses cannot

Question 28

Why should a business know the required employee benefits?

Answer 28

This is important as the business can include these costs in the budget and for communicating to employees total compensation package

Question 29

What are some required benefits for an employer?

Answer 29

Social Security, Unemployment Insurance, Workers’ compensation, Disability insurance, leaves of absence

Question 30

What are some optional benefits for an employer?

Answer 30

Health insurance, Life Insurance, Disability Insurance, Retirement Savings plans, PTO

Question 31

What are some special perks that can be highlighted by a company?

Answer 31

Work schedule flexibility (flex hours, telecommuting, etc..) or even collaboration with the executive team

Question 32

Why is having a total compensation picture for employees important?

Answer 32

This acts as a “hidden paycheck” and shows all of their wages and other benefits translated into a dollar amount. This includes health insurance amount, leave amount, disability insurance amount, life insurance amount, and retirement contribution amounts.

Question 33

What are the steps to establishing a solid company culture?

Answer 33

Assess values and experiences that shaped current culture, define the company mission in a way that is authentic and memorable, use the company’s strengths to foster a positive, thriving environment

Question 34

How does a business attract talent?

Answer 34

Develop incentives to encourage performance and engage and energize the workforce

Question 35

How does a business develop leadership?

Answer 35

Identify and equip leaders to succeed and pivot with change and where there can be smooth transitions for minimal disruption

Question 36

How does a business keep employees engaged?

Answer 36

Create a vision and strategy to measure and reward performance, determine how you can measure accountability, and develop employee training and development programs

Question 37

How can a business improve their compensation and incentives?

Answer 37

Learn what motivates employees, develop a compensation plan, reduce employee complaints of overwork and underpayment

Question 38

How can a business improve their administrative infrastructure?

Answer 38

Develop and maintain a comprehensive employee handbook, streamline admin functions with HCM solutions, keep pace with legislative changes