PEO's: Frequently Asked Questions...
If you have a general question about "PEO's" that is not answered here, please submit it to us and we will gladly get back to you with an answer.
What is a PEO?
Professional Employer Organizations are firms that provide human resources, employee benefits, payroll/tax processing and workers' compensation for businesses that desire to pay for such services rather than address them directly within their organization.
Since PEO's provide Workers' Compensation, are they licensed as insurance agents?
No. They are not. While they provide a service to employers that desire to outsource their human resources/employee benefits/payroll functions, they are at the core of things an employer as well. They are consumers of insurance and as such, purchase these benefits from licensed insurance agents and authorized insurers. PEO's representatives can describe the benefits that an employer will gain access to if they choose to "join" the co-employment proposal, but they are not licensed as insurance professionals.
Do they use the same class codes and rates as a traditional insurance company?
Yes, they are under the jurisdiction of NCCI rules and guidelines as any other insurer.
Is purchasing Workers' Compensation through a PEO cheaper than buying it as a stand-alone product?
For an employer that has favorable loss history and a credit experience modification, the answer is normally that the workers' compensation costs will be higher with a PEO.
For an employer that has unfavorable loss history and a debit experience modification, the answer could be yes. By having your employees co-employed by the PEO, an employer gains the experience modification of the PEO. Their experience modification could be lower than the employer and thus lower the cost of their workers' compensation.