How to Find the Best PEO Service: Questions to Ask PEO Firms

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Aside from cost, which, though important, is not the only deciding factor in choosing a professional employer organization, how do you know which PEO provider is the best one for you and your employees?

The reality is, most of the services these organizations provide are fairly similar. The difference is in the details. Do your comparison shopping and, when you've narrowed down your choices, take the time to actually talk to each one. Write down a list of questions, and record the PEO rep's responses. This helps when you're comparing providers later.

Not sure what questions to ask? We'll get you started.

What am I Paying For?

PEOs typically use one of two pricing methods: a flat fee per employee, per month or a percentage of your payroll. Even with only two rate plans, you see enormous price ranges based on the services you choose, the number of employees you have, and much more. The key to comparing the price quotes from different providers is knowing what exactly you're paying for. So, ask. What you want is a line item breakdown. Not only is this the only way to compare plans between providers, it's also the only way to know whether you could get the same services at a lower cost without a PEO. Some providers allow you to pick and choose which features you want instead of going with a predetermined plan. This may be a more cost-effective option. Or, you may find a provider who offers a plan that just happens to have the features you've determined are less expensive through a PEO than buying on your own. Take your time reviewing proposals and plan offerings against your cost estimates.

Are You Accredited?

The Employer Services Assurance Corporation (ESAC) offers accreditation services for PEOs. Their accreditation process confirms the PEO's adherence to a variety of standards, including:

Client assurance program: The ESAC assures the payment of taxes, insurance premiums, and retirement plan contributions through surety bonding.
Compliance: The ESAC verifies the PEO's compliance with industry best practices, licensing, and state and federal regulations.
Financial reliability: The ESAC verifies the PEO's financial stability via review of its quarterly financial statements; payment of wages, payroll taxes, retirement plan contributions, and insurance premiums; and an independent audit by a CPA.

Knowledge that the PEO is accredited by the ESAC means you know that, at the very least, the provider fulfills these three items.

What Level of Support Can I Expect?

A professional employer organization functions as both your business partner and co-employer to your staff; having reliable access to support is vital. The PEO needs to be available to both you and your employees to answer questions and offer guidance, so you need to know what that looks like in practice. What sort of live support do they offer? Do you get a dedicated account rep? Is there a single point of contact, or a clearly delineated escalation process? What about an HR advisor, or a benefits specialist? Who should employees call or email if they have HR-related questions? Does the PEO offer online resources, such as an FAQ page, regularly updated blog, or webinars? Ideally, the PEO offers a combination of live support and online resources.

What Are My Liabilities?

When you partner with a PEO, you each assume responsibilities as co-employers, some shared and some not. The contract should clearly define the responsibilities and liabilities of each party. In addition, the contract should outline provisions for termination and guarantees offered by the PEO. Though you maintain responsibility over the day-to-day operation of your business, the PEO shoulders most of the responsibility surrounding your employees, such as payroll and compliance.

What Employee Benefit Packages do You Offer?

If you're looking to attract the best talent to your organization, you know that you need to offer a stellar benefits package. At a minimum, this means health, dental, and vision insurance. However, today's top employees also expect retirement plans, life insurance, flexible spending accounts, and more. You need to know what carriers the PEO offers and how comprehensive their packages are.

Is our Technology Compatible?

These days, there's an app for everything, and that includes "human capital" management, i.e. your employees. HR tech solutions include employee onboarding, tracking applicants, attendance systems, benefits enrollment, and payroll. Ask the PEO which technologies and systems they use to determine whether they're compatible with any systems you have.

How Experienced Is Your Staff?

In the same way you try to hire the best people for your team, you want your PEO partner to hire experienced, knowledgeable people capable of handling you and your employees' needs. Do they work with any other companies in your industry? What about companies around the same size as yours? What kind of training or certification do they require employees have? How does the PEO ensure that its remains up-to-date with the complex, often-changing employment laws, particularly if they service multiple states?

Look at the PEO's Overall Value

When selecting your PEO partner, the value it brings to your organization goes beyond the price tag of its service offerings. An effective PEO helps you increase productivity, which in turn increases your profitability. Compare proposals, look carefully at the services and their relevant pricing, and determine the cost of not using a PEO to help develop a true picture of the potential savings.