Tag Archives: workers compensation

HR outsourcing versus offshoring

A common misconception is that HR outsourcing will take over jobs and move the offshore.

A search for outsourcing leads to this article:

http://employeeleasing.blogetery.com/2010/01/03/how-to-outsource-their-tasks-most-feared-small-business/

Totally different concept.  What we (HROplus) is talking about is lowering your overall labor costs by more efficiently handling non-revenue generating operations within a small business (payroll, workers compensation, risk management, benefits administration, labor law compliance) and saving client companies thousands in administrative and hard-dollar costs thanks to immediate economies of scale.

Where does my liability start and where does the PEO pick up?

With PEO – Professional Employer Organization, the owner/client is not liable for workers compensation nor unemployment claims.  In some instances, the PEO offers EPLI (employment practice liability insurance) to cover workplace torts such as sexual harassment suits or wrongful termination suits. 

Does HR Outsourcing save Money?

A better question would be, is time = money?
 

If you recognize that time is money, then a company that engages a PEO or ASO or other HR outsourcing solutions will definitely save money.  In particular, there are areas where a company employs staff to handle time consuming hr functions.  This time can be freed up with a PEO or ASO, allowing more time on strategic functions or revenue generating areas of the business.
 

A PEO or ASO will save a company time by writing employment policies and producing employee handbooks, researching medical insurance plans, implementing a loss control program, providing HR and compliance training for managers and supervisors, benefits administration, vacation and sick leave tracking, responding to unemployment claims, records administration, and many other hr functions.
 

In addition, you will possibly see hard dollar savings by consolidating your current hr functions to one provider.  For instance, instead of separate payroll provider, 401(k) administrator, workers’ compensation and unemployment claims management, Section 125 administration, insurance plans, COBRA administration, etc., and paying fees for these services as a small business to multiple vendors, with a PEO or ASO, you are paying one vendor.  Thus, eliminating margins to various vendors and saving money. 

Breaking the PEO “DaVinci Code”

Some PEO’s are astute at hiding their true admin costs to their clientele.  Basically, they often subsidize their health plans with admin charges, then show their clients a bundled rate, that is harder to decipher than the DaVinci Code.

If you receive a quote from a PEO and they refuse to break down your rates for taxes, workers compensation, admin and benefits, then they must be hiding something.  Your sales rep or a PEO broker should be able to help you break the code to see if you are getting shafted.