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Case Study: Part 2 | 12 Common PEO Myths Debunked

Myth 5: A PEO Replaces HR Personnel

This myth applies mostly to medium-sized employers who work with PEOs, as many smaller employers don’t have a dedicated HR employee.

Mid-sized employers, though, might even have an HR team. So, if the business partners with a PEO, do these team members lose their jobs?

Not at all! Just because a business brings on a PEO to handle certain HR responsibilities doesn’t mean they have to replace current HR personnel.

As a matter of fact, a PEO can assist HR employees with numerous tasks, especially around compliance issues.

In many cases, HR personnel end up benefiting from a PEO partnership as they gain additional resources that can make their jobs easier!

Myth 6: PEO is the Same as Employee Leasing

Besides the idea of losing control, perhaps the next most popular misconception about PEOs involves the relationship between a client company’s employees and the PEO—called co-employment.

Some believe a PEO relationship to be employee leasing. However, this is not the case. Instead, when a client decides to partner with a PEO, their workers enter into a co-employment arrangement.

There are a few major differences between co-employment and employee leasing, but the biggest is that PEOs do not lease out employees or provide staff to their clients. Instead, the client keeps control over all hiring and other employee-related decisions.

It’s also important to know that in a co-employment relationship, employees have 2 employers—the client company and the PEO (the employer of record).

Yet another PEO myth busted!

Myth 7: A PEO Won’t Save My Business Money

Another barrier for some business owners to explore PEOs is the thought that they are too expensive and won’t save a business money or reduce HR-related costs.

However, this is another myth about PEOs that isn’t true. For example, a report from NAPEO found that PEOs help their clients save up to 35% on HR administration costs.

Additionally, PEOs can help employers save considerable amounts on health insurance and other benefits, all while improving the quantity and quality of current offerings.

Often, small and medium-sized employers stand to save money and become more efficient through a PEO partnership.

Myth 8: Co-Employment will Negatively Impact the Employee Experience

Along with being confused with employee leasing, another myth surrounding co-employment revolves around how it would impact a client’s employees. And while the myth says that co-employment would hurt the employee experience, the opposite is usually true.

By being co-employed by their company and a PEO, employees will be able to choose from enhanced employee benefits that include:

Tailored health insurance

Voluntary benefits (legal assistance programs, identity

theft protection, pet insurance, employee assistance

programs, etc.)

A wide-range of complimentary benefits

And since a PEO can help improve HR practices and strategies, employees stand to gain even further.

Not only is this myth debunked, but a PEO can actually help boost the employee experience for small and medium-sized employers!

Stay tuned for part 3 of our PEO myth case study and follow us on Linkedin for more content on #HCM.

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