• Businesses that use PEOs grow 7 to 9 percent faster, have employee turnover that is 10 to 14 percent lower, and are 50 percent less likely to go out of business than companies that do not use PEOs.

• PEOs enable small businesses to offer their employees access to Fortune 500-level benefits such as: 401(k) plans; health, dental, life, and other insurance; dependent care; and other benefits they might not typically receive as employees of a small company.

• Most small companies cannot afford to hire a human resources professional. In contrast, almost all PEOs provide access to human resource professionals as a part of their services to small businesses and their employees. Through this service, PEOs help small businesses comply with myriad federal, state, and local employment laws, and they provide access to HR expertise to small business employees.

• Among businesses with fewer than 10 employees, those using a PEO have more than 3 times greater participation in a retirement plan than employees of businesses that do not use a PEO. For businesses with 10 to 49 employees, 52 percent of PEO client employees have a retirement plan, versus 23 percent in those companies that do not use a PEO.

About the PEO Industry

• There are more than 500 PEOs in the U.S. that provide human resource services to small and mid-size businesses—issuing wages and remitting taxes, offering workers’ comp and risk consulting services, and providing compliance assistance with employment-related rules and regulations. In addition, many PEOs offer HR technology systems and access to 401(k) plans, health, dental, and life insurance, dependent care, and other benefits.

• PEOs help businesses take care of employees by enabling them to offer Fortune 500-level benefits at an affordable cost and providing access to experienced HR professionals. And they help business owners and executives save time by taking administrative and HR-related tasks off their plates, allowing them to focus on the success of their businesses.

• More than 200,000 small and mid-size businesses employing 4.5 million people partner with a PEO.

• About 17 percent of all employers with 10 to 100 employees are PEO clients.

• Over the last 12 years, the PEO industry has quadrupled in size as the regulatory landscape gets increasingly complicated and more and more businesses turn to PEOs for back-office assistance.

Here is the text of her address:

COMMEMORATING NATIONAL PEO WEEK

HON. ERIN HOUCHIN
of Indiana in the U.S. House of Representatives – Monday, April 17, 2023

Mrs. HOUCHIN.

Mr. Speaker, I rise today to commemorate National PEO Week, which starts May 21 and ends May 27, 2023. National PEO Week will celebrate the important contributions of the professional employer organization (PEO) industry, which provides payroll, employee benefits, compliance assistance, and HR services to hundreds of thousands of small and mid-sized businesses that employmore than 4 million people.

PEOs play a critical role in helping businesses survive and thrive, particularly during challenging times. In the dark days of the COVID pandemic, PEOs ensured that that their clients stay afloat by securing PPP loans and loan forgiveness, managing employee leave, and applying for available tax credits. In fact, businesses that partner with a PEO were nearly 60 percent less likely to have permanently closed than those that did not use a PEO during the pandemic.

PEOs help small businesses improve productivity and profitability, focus on their core mission, and grow. Through a PEO, the employees of small businesses gain access to important employee benefits such as: 401(k) plans; health, dental, life, and other insurance; dependent care; other benefits they might not typically receive as employees of a small company.

I can attest to the value of PEOs. Before coming to Congress, I worked for a PEO and saw firsthand the positive impact they had on small businesses in Indiana.

Mr. Speaker, I would like to congratulate the PEO industry for all they do to help our Nation’s small businesses and their employees prosper.

Congressional Record link is here.

Qualified Employer-Sponsored Plans

The CalSavers website states that a qualified retirement plan includes any plan that is qualified under Internal Revenue Code sections 401(a) (including a 401(k) plan), a qualified annuity plan under section 403(a), a tax-sheltered annuity plan under section 403(b), a Simplified Employee Pension (SEP) plan under section 408(k), a Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) IRA plan under section 408(p) or a payroll deducted IRA with an automatic enrollment feature.

If your company has five or more employees in California and already offers a qualified employer-sponsored retirement plan, you are exempt from having to participate in the state program. However, employers need to certify their exemption by going to CalSavers.com or by contacting CalSavers Client Services at 855.650.6916.

Employers who are utilizing the services of a Professional Employer Organization and are obtaining employee access to a 401K plan should also contact their PEO to confirm the process for obtaining the exemption. Employers with five or more employees in California considering joining a PEO to obtain access to employee benefits like retirement plans should contact StaffMarket to streamline their search for the right California Professional Employer Organization for their company.

Company size not considered in the report

The Society of Human Resources Management (SHRM) has a membership comprised of companies with employees who are full time Human Resources Professionals. This is the audience they surveyed for their report. Since only fairly large companies have one or more full time HR professionals, (who potentially be a member of SHRM) it seems this study is by definition skewed to reflect the situation at mostly large employers. By the SHRM’s own definition, 96% of all companies in the United States have less than 50 employees. How many of those sized companies responded and were included in this survey? That was not explained in the report. Nevertheless the study does reveal some interesting information for employers:

Changes due to ACA

“Aside from determining the various effects of federal health care reform, as well as its impact on the types of plans provided to employees, HR professionals are at the center of their organizations’ regulatory compliance with the ACA. Starting in 2016, for example, small businesses with 50 to 99 full-time employees will need to start insuring those workers or be subject to penalties. Although businesses with fewer than 50 employees are not affected by this rule—and they represent 96% of all companies in the United States, HR professionals in the “50-to-99” category will need to weigh the costs of providing coverage and what types of plans to offer, or decide whether to forgo coverage and pay the federal penalties. SHRM research has shown that for many HR professionals, the complexity of the ACA is a major barrier to its implementation, and as a result, many have consulted their organizations’ legal counsel and sent HR staff to classes/training on the law.”

Based on this information, companies with less than 100 employees need to supplement the expertise of their HR staff.  Joining a Professional Employer Organization engages HR experts who can assist a company navigate these complexities.

Go here to review the full 2015 SHRM Employee Benefits Report.