The Professional Employer Organization (PEO) Solution

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The

Professional Employer

Organization (PEO) Solution

Presented by:

Doug Weinbach

Area Sales Executive, ADP TotalSource

Constantin Ritzmann

Senior District Manager, ADP TotalSource

Kathleen Sullivan

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Agenda

Welcome and Introduction

Professional Employer Organization Overview

Key PEO Value Propositions

The Human Resources Value Chain Strategic Benefits of PEO Services Financial Review

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PEO Overview

“PEO” stands for Professional Employer

Organization

PEOs deliver services in a unique arrangement

known as “co-employment.”

A PEO enables companies to cost-effectively

outsource the management of HR, employee

benefits, payroll and workers’ comp.

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PEO Overview

Professional Employer Organization

Began in the early 1980s

Manages variable costs for consistent forecasting

and budgeting

Currently 700 PEOs with 5 publicly traded

1 5% annual growth rate

Approximately 2-3 million employees

currently with PEOs

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“Co-employment” is the legal arrangement in which a

PEO delivers its services and shares employment

liability with its clients.

The PEO contractually assumes substantial employer

responsibilities and risks as the “employer of record”:



Benefits Plans



Statutory Payroll Tax Compliance



Many additional aspects of compliance with

HR

laws and regulations



Workers’ Comp & workplace safety

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Current Employer Business Model

 Significant Exposure to Liability

 Diverts resources from core activities

 Employer manages multiple vendor relationships

 Time & Labor Intensive for the Employer

LTD STD Taxes Audits 5500 Filings Testing 5500 Filings Compliance Vision Dental Life OSHA Recruiting & Training EEOC Safety Client Company

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Business Model with a PEO

New business model:

The client gains greater control over the day to day activities of their business while the PEO becomes the Employer of Record for purposes of employee

administration and liabilities

Client – Focuses on revenue generating business

activities and maintains “direct and control” worksite employees

Single source provider for comprehensive HR and benefits

Streamline administration, improve efficiency and increase profitability Share liability in critical employment areas with an expert, reducing overall labor costs and mitigating risk

Business Impact

Client Company

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We Help Companies…….



Save Time

so they can get back to business.



Win

the battle for top talent.



Motivate

Their workforce to greater levels of performance and productivity.



Stabilize

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 The compliance burden on

employers has increased sharply

since 2008, with significant

additional legislation forecast for

2012 and beyond.

 Compliance is costly, complex

and time-consuming.

 Violations can overwhelm

– even

destroy

_{– a business.}

COMMON LAW LMRA FLSA

IRS

FICA NLRA EEO COMMON LAW

Why It Matters

ADEA FUTA

EPA

EEO LMRA FLSA

IRS

FICA NLRA COMMON LAW LMRA FLSA

IRS

FICA NLRA COMMON LAW NLRA COMMON LAW COMMON LAW 1900 2009 ERISA

HMO

OSHA ADEA FUTA

EPA

EEO LMRA FLSA

IRS

FICA NLRA COMMON LAW MSHA ADA WARN FMLA IRCA EPPA COBRA ERISA

HMO

OSHA ADEA FUTA

EPA

EEO LMRA FLSA

IRS

FICA NLRA COMMON LAW MSHA COBRA HIPAA ARRA LEDBETTER IRCA ADAFMLA IRCA COBRA

HMO

OSHA ADEA FUTA LMRA FLSA

IRS

FICA NLRA HIPAA ARRA LEDBETTER WARN EPPA ERISA MSHA

EPA

EEO COMMON LAW EO 13495 EO 13494 EO 13496 EO 13495 EO 13494 EO 13496 ADAAA FMLA Regs

ADAAA FMLA Regs 2000 WARN EPPA CHIPRA CHIPRA ENDA PAWA AFA ICPCA MFJPA FLIA HFA WFFA CRA FOREWARN ADA HIPAA FMLA Health Reform HIRE HIRE Health Reform

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Criteria for Evaluating a PEO

Provider

According to PricewaterhouseCoopers:



Financial Stability

• Is the company public?



Scope of Operation

• Is there a national service model?



Experience

• How long have they been in business?



Breadth of service

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•Total Recruitment Solutions* •Job descriptions •Background Checks* •Basic Compensation Analysis •Online Candidate Assessment*

Full-Service PEO Solution

* Additional charges may apply

Increase Employee Productivity – Leading to Increased Profitability Focus on Core Competencies

Reduce Administrative Burdens

Help Mitigate Risk/Liability and Protect Assets Become an Employer of Choice

•Web-based Payroll Processing •Management Reports •Payroll & Employment Tax Processing •Wage Garnishments •Paid Time-Off Accruals* •Automated Time & Attendance System* •Comprehensive Benefits Plans •Life/Disability Insurance •Online benefits Enrollment •Section 125 & Flex Plans •Employee Assistance Program •Voluntary Benefits •Employee “perks” •401(k) Plans •COBRA administration •Employee Service Center •Dedicated HR Representative •HR Administration •Employee Leave Administration •Online Self-Service and New Hire Processing •Performance Management* •Total Compensation Statement •TotalSource University

•Safety & Loss Prevention Training •Online training •Supplemental Online Training* •Skills/License Tracking* •Workers’ Compensation Insurance Coverage

•Safety & Loss Prevention Programs •Drug-free Workplace Programs •Employee Practices Liability Insurance •Legal Defense Benefit •Employee-related Investigations and Human Resource Guidance •HR recommendations to help minimize liability •Outplacement Service as requested* •Unemployment Claims Administration

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Breadth of Service: Look for Recruitment

and Selection

Business Impact

 Find talent - Online job postings provide cost effective solutions  Qualify and match candidates with the right opportunity

 Reduce time per hire by promptly finding the right applicant  Set clear expectations and get the hiring results you want  Reduce employee turnover and drive profitability

 Online Job Posting Services

 Customized Job Descriptions

 Online Candidate Assessments

 Employee Background Checks and Drug Screening

 Comprehensive Benefit Offerings

 Professional Training and Development

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Breadth of Service: Look for Benefits

Programs and Administration

Business Impact

 Full suite of benefits plans providing flexibility and choice for you and your employees

 Win the battle for top talent, reduce turnover and drive profits  Competitive long-term carrier relationships to effectively

manage cost

 Fortune 500®-quality benefits plans

 HSA Accounts and HDHPs*

 Full benefits administration

 Employee Assistance Program (EAP)

 Flexible Spending Accounts

 No plan and rate negotiation

 Section 125

 Dedicated Employee Service Center (800#)

 Supplemental Employee Benefits

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Breadth of Services: Look for Employee Perks

and Ancillary Benefits

Business Impact

 Additional programs to strengthen retention capabilities  Corporate benefits solutions for your business

 Full suite of Voluntary Benefits

– Term and Universal Life

– Family Income Life Insurance

– Disability Income Insurance

– Accidental Death and Dismemberment

– Critical Care and Cancer insurance

– Personal Accident & Disability

– Legal Service Plan

– Pet Insurance

– Auto Insurance

Employee perks and

discount programs

– Office Supplies

– Entertainment Discounts

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Breadth of Services: Look for a

Comprehensive 401(k) Program

 Turnkey 401(k) Plan with flexible design and plan options

 Online information and assistance

 Low employee fees

 Diverse investment and management options

 Brokerage Window

 Net Asset Value funds

 Daily valuation

Business Impact

 Great tax planning, retention and recruitment tool

 One of the most attractive, cost effective 401(k) plans in the marketplace

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Breadth of Service: Look for Payroll and Tax

Administration

 Web-enabled payroll suite of services

 Automated access to

complete payroll management reports

 Customized reporting

 Direct deposit

 Tax filing services and multi-state reporting (941, 940, W-3 and W-2)

 Tax levies, garnishments and liens administration

 Payroll and wage/hour regulations compliance

Business Impact

 Reduce employment administration burden allowing more time to focus on your core business

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Breadth of Services: Look for a Focus on

Employee Relations

Dedicated Human Resources Team

Assistance and guidance regarding complex Human Resources issues

Assistance with developing an Employee Handbook

Training & assistance with Performance Reviews

 Access to a full library of HR forms and sample reports

 Employee termination assistance

 Progressive Discipline and Conflict Management

 Employee Orientation and Benefits Enrollment

Business Impact

 Establish clear expectations enabling employees to work more efficiently and effectively toward company goals

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Breadth of Services: Look for

Training and Development

 Comprehensive, professional classroom training for

managers and associates

 Online training

 Seminars structured around the five main elements of the employee life cycle

 Pre-Employment & Hiring

 Employment Law Essentials

 Sensitivity Skills

 Workplace Violence

 Customer Satisfaction

 Professional Development

Business Impact

 Motivate your workforce to greater levels of performance and productivity

 Employees value professional growth and development  Reduce turnover

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Breadth of Service: Look for Focus on

Risk Management and Safety

Fully insured Workers’

Compensation coverage

Dedicated Loss Prevention Specialist

No deposits/no audits

Fraudulent claims investigation

OSHA compliance and training

Complete claims administration

Assist in implementing a proactive approach to loss prevention and safety

Aggressive return-to-work programs

Assist in implementing drug-free workplace program

Safety consultation and customized safety manuals

Business Impact

 Eliminate administrative hassles of processing claims and seeking coverage

 Experienced risk management specialist to assist in stabilizing cost and meeting your business objectives

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Breadth of Services: Look for a Focus on

Legislative & Regulatory Compliance

$1,000,000 EPLI coverage

 Legal Defense Benefit

 Expert human resources consultation

 Compliance guidance with state and federal employment laws

 Handle employee complaints

 Investigate discrimination and/or wrongful employment complaints filed by employees or government agencies

 Unemployment claims management

Business Impact

 A comprehensive program of compliance management that minimizes liability and reduces compliance costs

 Panel of experts to manage through complex employment related issues helping your business to remain in compliance

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Breadth of Services: Look for Assistance with

Terminations

 Dedicated Human Resources Professional to assist with termination process  Recommendations to help minimize liability  Guidance regarding progressive discipline  Termination administration  Provide Outplacement Service  Administer unemployment claims

Business Impact

 Minimize employment-related risk

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Gross Payroll FICA Federal Unemployment State Unemployment Workers’ Compensation Human Resources Administration Opportunity Cost % % % % % % Service Fee

Typical Employer Expenses With a PEO

Federal Unemployment

Gross Payroll

FICA

Federal Unemployment Recruitment and Selection

Employee Relations Training & Development

Regulatory Compliance Payroll Management Tax Management Benefits Offering Benefits Administration 401(k) Administration Risk Management Workers’ Compensation State Unemployment % % .90 .90 7.65 7.65 % Pass-through costs