Approximately 2.8 million people sustained injuries and illnesses in 2018 in the private industry sector.
You need to protect your business from the backlash that can occur from an employee injured on the job. Workers’ compensation insurance protects you. Plus, all states except Texas require it, so having it means you’re complying with the law.
A PEO makes workers’ compensation claim a breeze. Keep reading to learn five reasons why you should consider buying workers’ comp insurance from PEO providers.
What’s a PEO?
Before understanding the benefits of buying workers’ comp insurance from a PEO, you need to understand what a PEO is. A PEO is a professional employer organization.
So, how does a PEO work?
Think about it like this: you have a small or midsize business. You’re growing but cannot afford to hire staff for all of your human resource support and administrative services like payroll and benefits.
Yet you know that you need someone else to do this job so you can focus on producing whatever it is that you’re currently producing.
A PEO will increase your productivity and make your business more profitable because it will take care of these important tasks so you can focus more on growing your business.
PEO outsourcing is not a new idea. PEOs provide services to thousands of small and mid-sized businesses. Furthermore, businesses that use PEOs have seen 7 to 9 percent faster growth and 10 to 14 percent lower employee turnover than other businesses.
PEOs will provide you services like workers’ compensation insurance. So instead of you calculating workers’ compensation, your PEO will take care of the job.
1. PEOs Give You Choices
With a PEO, you have some choices for a workers’ compensation policy. In particular, you have a multiple coordinate policy choice and a master policy choice.
Multiple Coordinate Policy
A PEO structure has multiple clients. A multiple coordinate policy agreement or MCP agreement offers each client its policy that covers the workers.
Your company’s premium will depend on the class codes, rates, payroll, and rating programs. The PEO assigns all policies to the same carrier whenever possible.
With a master policy agreement, the PEO has a single policy. It carries all of the PEO’s leased workers for each client.
So the clients all have the same premium. The PEO can carry each company on the same policy because it adds each one using an endorsement.
An endorsement is an amendment to the current policy that allows the policy to cover your company’s workers.
2. PEOs Protect Your Legal Interests
A PEO gives your company added legal protection, especially in the case of workers’ compensation. Because a PEO is on the line just as much as your company, they’ll offer maximum support with legal issues.
So if your employee attempts to sue you for wrongful termination or because they believe they were in an unsafe work environment, you have extra help. Many PEOs have specialists because of the nature of their business.
These specialists will have a greater understanding of employment laws and can advise you on any legal trouble you may find yourself in.
PEOs are, in no way, a replacement for legal counsel. They can, however, help you understand your rights with their experts.
3. PEOs Provide More than Workers’ Comp
PEOs provide you with more than just workers’ compensation insurance. They give you a full package for all of your compliance needs from employee tax forms to payroll tax forms.
Often a PEO will file your W-2 and 1099 for you, file unemployment insurance, provide you with workers’ compensation insurance, and provide you with employment practices liability insurance.
4. PEOs Protect You From Mistakes
When you use a PEO for workers’ compensation insurance, you’re receiving protection from small errors that could cost you your business.
A handful of small businesses must pay fines every year for making payroll mistakes. Staying compliant takes experience and lots of paperwork. You can certainly try to stay compliant on your own, but unless you have experience with small businesses, you need to hire an expert.
PEOs specialize in compliance. They know exactly which paperwork you need to file. Most PEOs will even file it for you.
So if you’re not sure how to file the proper paperwork for workers’ compensation insurance, get your insurance from a PEO provider.
5. You Need Workers’ Compensation Insurance
Legally, you need workers’ compensation insurance. Not having workers’ comp leaves you open to a host of legal problems that your business may never recover from.
Yet unless you have a degree in business with a specialty in insurance, you probably don’t know much about workers’ compensation insurance. So when you leave the specialty up to a specialist like a PEO, you will end up much better than if you attempted to tackle the job yourself.
As a review, workers’ compensation insurance provides your family with essential benefits that make your company a desirable place to work. Workers’ comp reimburses employees for lost wages and provides disability benefits.
Plus, if you do not have workers’ compensation, your employees can sue you if they’re hurt on the job and you do not have proper compensation for their losses.
Good workers’ comp policies even provide death benefits for families.
Manage Your Workers’ Comp Rates
You have some control over your workers’ compensation insurance rates. If you put the proper safety and training measures in safe, you can negotiate a lower rate.
So train your employees in safety protocol to keep them as safe as possible. Provide them with proper safety equipment and training.
Teach your employees to report injuries and accidents immediately to make them look less suspicious.
Pioneer a return-to-work employee plan. You can have modified tasks ready for employees so they can return to work quickly.
If an employee is injured on the job, investigate that injury discreetly and respectfully.
Consider a PEO for Workers’ Comp
As you look at all of your human resource needs, consider outsourcing your workers’ compensation needs to a PEO provider. A PEO will have a good feel for what your small business will need.
If you’re interested in a PEO or PEO provided workers’ compensation insurance, contact us.