Frequently Asked Questions

What is Co-Employment?
Do you provide temporary Staffing?
Do you provide Health Insurance?
Do you process payroll?
How are payroll taxes handled?
What Benefits are available for my employees?
What Benefits must I offer under a PEO arrangement?
Must we participate in the 401(k)?
May I offer a SIMPLE Plan instead of a 401(k) Plan?
Can I receive these benefits without becoming part of the PEO?
Why do small businesses use PEOs?
Who is responsible for employment law regulatory compliance?
What benefits are there for workers under the PEO arrangement?
How can I get a proposal for these services?

What is Co-Employment?
The PEO relationship involves a contractual allocation and sharing of employer responsibilities between the PEO and the client. This shared employment relationship is called co-employment. Each party will be responsible for certain obligations of employment, while both parties will share responsibility for other obligations. When the PEO arrangement is examined, both the PEO and the client will be found to be an employer for some purposes, but neither party will be found to be "the" employer for all purposes.

The client company provides worksite employees with the training and tools to perform their job, in addition to the actual place of work. The PEO provides human resources services to worksite employees, such as workers' compensation insurance, unemployment insurance and a broad range of employee benefits programs, and is responsible for collecting and remitting payroll taxes.

Do you provide temporary Staffing?
No. Temporary staffing agencies recruit employees and assign them to clients to support their client’s workforce in special circumstances, such as filling in for absent employees, providing workers for project work or seasonal workloads. The Employer Group (TEG) contractually assumes responsibility for all employees of a client employer so they may benefit from our employee benefit package, and the client employer is substantially relieved of human resource responsibilities.

Do you provide Health Insurance?
Yes. In fact, many small employers come to a TEG because their health care costs have gotten out of hand. Small employers are subject to widely fluctuating insurance costs. TEG’s large employee pool tends to moderate insurance costs. However, providing insurance is only one aspect of the total PEO relationship. Companies just searching for health insurance who do not want the broader benefits of a PEO are advised to search the many insurance companies for their own coverage.

Do you process payroll?
Yes. As part of its responsibility as an employer, TEG processes payroll. This includes handling all governmental payroll tax deposits and reports, as well as annual W-2 reporting. Again, this is just one aspect of the PEO relationship. PEOs, as a rule, do not process payroll as a separate function for non-PEO clients.

How are payroll taxes handled?
TEG assumes responsibility and liability for reporting and payment of federal and state payroll taxes, including state unemployment taxes. For most states, TEG reports these numbers under its own account number. Some states still require the PEO to report unemployment taxes under the client’s account number, although the PEO handles the processing.

What Benefits are available for my employees?
Benefit packages vary by PEO provider. At The Employer Group, we offer health insurance, a 401(k) plan, a flexible spending account, group life insurance, short and long term disability insurance, vision insurance, dental insurance, a section 529 college savings program, an employee assistance program, and more. Eligibility for these benefits is determined by hours worked.

What Benefits must I offer under a PEO arrangement?
Each PEO may offer a different package of benefits. Aside from health insurance and payroll processing, most benefits offered through TEG are optional. Clients may be required to pay for a portion of the health insurance, life insurance and long term disability. Beyond that, most benefits are chosen at the discretion of each employee, with any client participation strictly voluntary.

Must we participate in the 401(k)?
No. Because the Internal Revenue Service views the client as the employer for its staff, it is highly recommended that each client adopt this plan for its staff. However, participation can be waived by the client. Again, it should be noted that 401(k) coverage may vary by PEO client.

May I offer a SIMPLE Plan instead of a 401(k) Plan?
Yes, a client may adopt a SIMPLE Plan for its own business and include the PEO employees working for the client on it. The plan is the client’s plan and the Internal Revenue Service indicates the employees belong to the client for this purpose.

Can I receive these benefits without becoming part of the PEO?
On a limited basis, yes. Some PEOs have a separate line of business and can work with you on a Human Resource Outsource, or HRO, basis. In this arrangement, you do not become part of the PEO. Instead, the HRO company will act as your administrator, acquiring and administering benefits on your behalf. It is important to note that each benefit offered is your benefit, not the HRO provider’s. For example, you continue to provide the health insurance, workers’ compensation and 401(k) plan. The HRO simply does the processing. You continue to be liable for regulatory compliance under this arrangement and the HRO company does not become a co-employer. Payroll is processed using your tax identification number.

Why do small businesses use PEOs?
Small business owners need to focus on "the business of their business.” Most business owners don’t have the human resource training, payroll and accounting skills and knowledge of regulatory compliance or background in insurance and employee benefits required in the "business of managing employees.” TEG brings this expertise to its clients and frees business owners to focus on their core business.

Who is responsible for employment law regulatory compliance?
PEOs share responsibility for and assist in managing the entire spectrum of employment regulations, including federal, state and local discrimination laws. These regulations include, but are not limited to, Title VII, ADA, ADEA, FMLA, HIPAA, Equal Pay Act, and COBRA. However, the client, as a worksite employer, must also comply with these laws.

What benefits are there for workers under the PEO arrangement?
Most employees look for the security of a solid benefit package beyond their basic compensation. The Employer Group offers an employee of a small business the benefits of a Fortune 500 company, while enjoying the flexibility of a small company. And, because of our size, many employees receive mandated government protections not required under small businesses.

How can I get a proposal for these services?
The PEO relationship is something both the employer and TEG must carefully consider. We’d be happy to provide you with a proposal so you can determine if this is the right route for your company. Click here to email us for more information, and we’ll get back to you with further information on how to begin enjoying the benefits of a PEO. Or, Click here for basic contact information and you can contact us at your convenience.