Selecting A PEO

Guidelines for selecting a PEO

• Assess your workplace to determine your human resource and risk management needs.
• Make sure the PEO is capable of meeting your goals. Meet the people who will be serving you.
• Check the firm’s financial background. Ask for banking and credit reference. Ask the PEO to demonstrate that payroll taxes and insurance premiums have been paid.
• Ask for client and professional references.
• Check to see if the company is a member of NAPEO, the national trade association of the PEO industry. NAPEO members share a commitment to continuing education, professional development, and the Association’s Code of Ethics.
• Investigate the company’s administrative and risk management service competence. Evaluate the depth and level of experience of their internal staff.
• Understand how the employee benefits are funded. Are they fully insured or partially self-funded? Who is the third party administrator or carrier? If required in your state, is their TPA or carrier licensed?
• Understand how the employee benefits are tailored. Determine if they fit the needs of your employees.
• Review the service agreement carefully. Are the respective parties’ responsibilities and liabilities clearly laid out? What guarantees are provided? What provisions permit you or the PEO to cancel the terms of the contract?
• If your state requires a PEO to be licensed or registered, make sure the company you are considering meets all such requirements. For a current list of states requiring licensing, please contact NAPEO at (703) 836-0466.