Workers’ Compensation and PEOs

On a state-by-state basis, small- and medium-sized employers are required to have some level of workers’ compensation insurance. But getting that coverage can be challenging or confusing. That’s why outsourcing all workers’ compensation to a professional employer organization, or PEO, is touted as a comprehensive, problem-solving solution that also mixes in human resources services, payroll, risk management, and employee benefits.

The PEO takes on all the responsibilities related to workers’ compensation and employee relations and well-being so that the employer can focus on the operations of their business.

Here’s a better look at workers’ compensation and PEO’s, and how they could be a better solution for smaller companies who may be spread too thin to prioritize workers’ compensation insurance duties.

PEO and Leasing Employees
The PEO becomes the co-employer and leases the employees to the employer when it starts to provide its services and resources. A PEO may sound like a staffing agency, but in reality it differs in that the employer retains the responsibility for hiring, firing, and disciplining employees and must still provide the PEO with the initial employee benefits information for each employee along with any changes in benefits.

As the PEO continues to provide benefits for numerous employers, it can obtain volume discounts by combining all of the employers in the PEO. This allows the PEO to provide better insurance coverage, 401K plans, disability coverage, and other benefits that smaller employers usually cannot afford.

Obtaining Workers’ Compensation
Most PEO’s will have workers’ compensation with larger, more national insurance companies. PEO’s that restrict certain services and resources to one part of the country may end up working with smaller insurers in other parts. Some larger PEO’s will have their own workers’ comp claims handling as well.

Mandating Workers’ Compensation Cost Containment
As the PEO’s cost for insurance starts to impact its relationship with employers, they end up mandating that each client employer has a return to work program that can help put employees back to work on a modified duty schedule as soon as they are allowed.

PEO’s will also mandate that the employer have a safety program installed and can perform safety inspections. If the PEO finds the employer is not acquiescing to the safety program’s standards, the PEO has the right to end its relationship with that business, illustrating the importance of compliance and safety responsibility.

Choosing a PEO
For businesses looking to work with a PEO instead of a regular workers’ compensation program, they should be ready to verify certain details to make sure everything lines up with their goals as a business.

Here’s what to look for:
The cost of the coverage
The PEO requires a return-to-work program
The risk management assistance provided by the PEO
The name of the third-party administrator and their performance history
The cost of the payroll, human resources, and other services
The name of the workers’ compensation carrier

About Monarch Partners Group, LLC
For more than 30 years, Monarch Partners Group (MPG) and affiliate Nationwide Employer Services LLC have focused on providing Workers’ Compensation insurance solutions for distressed risks and industries. Our long-term history and expertise in the space and market sources enable us to find solutions for business owners and brokers that they may otherwise not have access to. We write Workers’ Compensation coverage for all types of risks in all states with solutions that Employer Organization (PEO), Employer Of Record (EOR) and Captive Insurance programs. To learn more about our products and services, contact us today at (855) 435-5153.