Frequently Asked Questions
Who uses a PEO?
Any business can find value in a PEO relationship. Increasingly larger businesses are also finding value in a PEO arrangement, because PEOs offer robust web based HR technologies and expertise in HR management. PEOs can partner with companies that have 500 or more employees and work in conjunction with their existing human resources department. PEOs clients include different types of business ranging from accounting firms to high-tech companies and small manufactures. A broad range of professionals, including doctors, retailers, mechanics, engineers and plumbers, also benefit from PEO services.
How does a PEO arrangement work?
Once a client company contracts with a PEO, the PEO will then co-employ the client's worksite employees. In the arrangement among a PEO, a worksite employee and a client company, there exists a co-employment relationship, which involves a contractual allocation and sharing of employer responsibilities between the PEO and the client pursuant to a client service agreement (CSA). The PEO typically remits wages and withholdings of the worksite employees and reports, collects and deposits employment taxes with local, state and federal authorities. The PEO also issues the Form W-2 for the compensation paid by it under its EIN. The client company retains responsibility for and manages product development and production, business operations, marketing, sales, and service. As co-employer, the PEO will often provide a complete human resources and benefit package for worksite employees.
Why would a business use a PEO?
Business owners want to focus their time and energy on the "business of their business" and not on the "business of employment." As businesses grow, most owners do not have the necessary human resource training, payroll and accounting skills, the knowledge of regulatory compliance, or the backgrounds in risk management, insurance and employee benefit programs to meet the demands of being an employer. PEOs give small-group markets access to many benefits and employment amenities they would not have otherwise.
Do Business owners lose control of their business after hiring a PEO?
No. The PEO client/business owner retains ownership of the company and control over its operations. As co-employers, GEX Management and our clients will contractually share or allocate employer responsibilities and liabilities per a client service agreement (CSA). Our clients will continue to have responsibilities for worksite safety and compliance. In general terms, we will focus on employment-related issues, and our clients will be responsible for the actual business operations.
How do PEOs help their clients control their costs and grow their bottom line?
A PEOs economy of scale enables each of our clients to lower employment costs and increase the business's bottom line. Our clients can maintain a simple in-house HR infrastructure or none at all by relying on us. The trained staff at GEX Management can provide critical assistance with employer compliance, which helps protect our clients against liability.
How do employees benefit from a PEO arrangement?
Through GEX Management, the employees of a small business gain access to big-business employee benefits such as: 401(k) plans; health, dental, life, and other insurances; dependent care; and other benefits they might not typically receive as employees of a small company. And, when a company works with a PEO like us, job security is improved as the we implement efficient and lower employee costs. Job satisfaction and productivity increases when employees are provided with professional human resource services and enhanced benefits.