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What Co-Employment is and Why it Matters

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How Outsourcing HR to a PEO Can Get a Small Business Big-Company Benefits

When Voodoo BBQ became a Delta Administrative Services client back in 2005, Joe was working at one of their locations. He managed the store, took out the trash, and went to work, day-in and day-out.

Back then, Joe didn’t really need to understand who Delta was, nor did he need to know the inner workings of a PEO.

He only knew that when he had questions about his benefits, he called Delta, or if something went wrong, Delta would show up and help guide him through issues.

Now, after 15 years, Joe co-owns a Voodoo BBQ and appreciates what a PEO is.

So, what exactly is a PEO?

PEOs are Professional Employer Organizations.

Many of our customers think of Delta Administrative Services and our PEO as stagehands behind the scenes of their Broadway play.

DAS handles all the technical aspects of the play – the scenery, the lighting, the stagehands, the costumes, the makeup, the props.

Meanwhile, our client is the director who orchestrates a brilliant center stage performance and an amazing experience for the audience.

“When it comes to paperwork and human resources, Delta takes a lot of responsibility and worry off of me. I don’t have to send I-9s, federal tax forms, citizenship verification forms—Delta handles all of that. I just send them copies of IDs, and they take care of the rest.

– Franchisee Joe Scardino of Voodoo BBQ

When Voodoo BBQ had a continual problem with cutting accidents in the kitchen, they needed to address it quickly. They contacted us and asked for help.

As their PEO, we sent over our team to analyze their processes and procedures, then help them design new procedures to reduce injuries and stay compliant.

We Show Up Because We’re In It Together.

Not every PEO shows up on site when things go wrong, but we take pride in our relationships with our clients.

Why?

Because to us, a client’s risk is our risk… and actually, it is.

We provide employment practices liability insurance (EPLI), which transfers and shares your risks with us, but we’ll explain how in a moment.

We all Know Bundling Cable and Internet Saves Money, But This New Bundle Can Make a Business Stronger.

Now that you understand how a PEO works directly with a business, it’s beneficial to understand a zoomed-out view. Since many individual companies outsource HR to their PEO, a PEO like DAS can bundle lots of businesses together.

Imagine a PEO as a strong rope.

Strong ropes are made of many cords, right? One cord snaps easily under tension, but, bundled with hundreds of others, those little cords can hold incredible weights.

So, in the same way that intertwined cords create a strong rope, PEOs unify small businesses under one shared tax ID number. This bundle of businesses forms a powerful, co-employment relationship.

Here’s Why Co-Employment Matters: It Creates a Bundle With All the Benefits and Almost None of the Risks

Let’s review.

So far, you know:

  • The PEO provides traditional HR functions to individual businesses like Voodoo.
  • The co-employment model transfers key responsibilities (such as employee-related risks and compliance issues) from individual businesses to the PEO – remember EPLI?
  • The individual businesses maintain complete control of employees and daily operations—without the risks and liabilities.

How Your Business Can Get Big-Company Benefits

Because a co-employment relationship treats all of a PEO’s client employees as a single large pool, you get advantages normally reserved for massive companies, namely:

  • Better health insurance plans and lower rates
  • Lower worker compensation and unemployment insurance rates
  • Better big-company benefits like 401K plans and Health Savings Accounts (HSA)

What Bundling Your Business Could Do For You

According to a 2014 study by noted economists Laurie Bassi and Dan McMurrer, small businesses that rely on PEOs:

  • Grow 7% to 9% faster
  • Have 10% to 14% lower turnover
  • Are 50% less likely to go out of business

That Sounds Great, But Can My Business Really Grow?

Of course, growth isn’t guaranteed, but think about these facts.

Because the PEO becomes the employer of record, it assumes responsibility for:

  • On-time submissions for payroll taxes and reports
  • Safety program training, inspection, and risk management
  • Mandated regulatory reporting and compliance
  • Employee disciplinary actions and terminations
  • Federal Labor Standards Act (FLSA) reporting
  • Wrongful termination and other employee-related lawsuits

If on average, business owners are spending 200 hours a year on just a couple of items from that list (regulations and tax compliance alone)… which they are… then think about what you could do if you got those hours and more back?

If you are a business owner, then take a deep breath and think about everything you could do in 200 hours?

Would you go on an overdue vacation? Maybe you would finally implement your new marketing strategy? Or, perhaps you’d like to spend some time with your kids again.

Whatever you choose, when you rely on a PEO, you hand over these time-wasters and stressors. Typically, our owners do more of what they do best, which leads to business growth and stability.

You Can Give Up All of the Most Time-Consuming Parts of Business, So You Can Do More of What You Love.

Your Next Step

If you want help with HR or want to offload HR frustrations, give us a call.

Delta Administrative Services can reduce the stress of managing employees, offload your human resources and reporting, allow you to offer a great benefits package, and let you get back to what you do best – serving your customers and growing your business.

So, take the next step and call (800) 828-6130, or email us at info@deltapeo.com. Talk to our team and see how Delta can reduce your employee management and human resources workload. You’ll be glad you did.

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