The construction industry is one of the most stable foundations of today’s economy. In recent years, construction companies have been growing faster and tackling more jobs. As construction companies work hard to grow their business, they may find that their resources and finances are stretched thin.
Professional Employer Organizations (PEOs) are a perfect solution for construction companies looking to save money and time.
What is a PEO?
PEO stands for Professional Employer Organization. PEOs are a type of outsourcing option for a full array of HR services including payroll, employment taxes, employee benefits, risk management, workers’ comp, and other employer administrative functions. When a business partners with a PEO, they enter into a co-employment agreement. The PEO becomes the professional employer of your workforce whereas you maintain control of all organizational decision making, your employees’ job functions and day to day tasks. A client service agreement (CSA) will be reached to determine which functions get outsourced.
How Can a PEO Benefit my Construction Company?
Workers Comp Insurance
If you operate in the construction industry, you are federally mandated to supply your employees with workers’ compensation coverage. Aside from that, most businesses want to keep their workers safe and free from injury. With such a labor-intensive industry like construction, acquiring comprehensive and affordable workers’ comp insurance should be a top priority.
Traditionally, individual policies have high upfront premiums and annual audits. However, when partnering with a PEO, you join a large group policy with other PEO clients. By leveraging the vast number of businesses in the PEO’s network, workers’ comp coverage can be purchased at a significant discount. This means by joining a PEO, construction companies get access to lower workers’ comp rates, a flexible payment schedule, and the removal of annual audits.
PEOs also help companies lower their experience modifier. An experience modifier determines how much premium for workers’ compensation coverage costs dependent on the number of claims. PEOs help lower experience modifiers a number of ways. When you first join a PEO, your experience modifier is likely to drop. This is because the PEO takes the aggregate amount of all their client’s experience modifiers to reduce risk. On top of that, the PEO also provides safety trainings and materials to help limit claims.
Safety & Risk Management
As stated above, PEOs have a vested interest in making your workplace safer and limiting claims. PEOs help by implementing safety trainings and procedures, while offering guidance to ensure compliance with regulations. Many small business owners don’t have time to keep up with every new rule and regulation. It also becomes increasing difficult to maintain compliance while doing jobs across state lines without the help from a third party. However, if a claim does occur, business owners are covered by the PEO’s Employment Practices Liability Insurance (EPLI) master plan.
A PEO is a great resource for maintaining compliance and avoiding lawsuits. Even more nuanced topics such as FMLA, ADA, FLSA, immigration compliance, working with independent contractors, and more are covered under the PEOs expertise.
One major disadvantage between a small business and a large corporation is the kind of benefits one can offer. By using a PEO, small business owners can offer the same employee benefits packages as a Fortune 500 corporation.
Similarly, to workers’ comp, companies under a PEO group together to buy benefits at an overall cheaper price. This allows companies with a handful of employees to still offer a robust benefits package. Offering outstanding benefits not only attracts the right talent, but it lowers employee turnover.
By utilizing a PEO, you save hours of time every week. The PEO essentially becomes your own HR department. HR management is a very important aspect of running a successful construction business but can eat up a serious chunk of time every day. Administrative tasks such as payroll processing, state and local taxes, employee benefits, unemployment claims and wage garnishments are time consuming and confusing. You did not go into the construction business to do paperwork and clerical work. A PEO can help save time and allow you to focus on actually running your business.
The Cornerstone Advantage
It’s clear that PEOs are a great option for companies in the construction industry. Not only do PEOs help your bottom line, but they also save you a lot of time. A PEO is also the easiest option when considering outsourcing. Why would you want to deal with multiple organizations for payroll, benefits, insurance, etc. when it is much simpler to use one organization who can provide all those services?
Like other PEOs, Cornerstone will help you save significantly on employee benefits, automate your payroll, lower your experience modifier, and help with certain employee related compliance. However, unlike other PEOs, our focus is on excellent customer service.
Other PEOs will just add you to their system and send you an invoice. At Cornerstone we assign a professional customer service rep to work with your account. This not only adds more of a human touch, but it also allows us to create custom solutions unique to your business. Got questions? We have a rep to help you answer them. A problem occurred? You have a rep who understands your business and can create an effective solution.
Contact us here for a FREE consultation.