How to Create a Paid Time Off Policy for Your Company

by NPEO Media NPEO Media No Comments

Among the benefits that employees want from their employers, paid time off (PTO) is often at the top of the list. Everyone needs time off to regroup and recharge their batteries — or take care of things in their personal lives — and the availability of PTO allows them to do that without a significant financial impact.

However, despite the fact that a majority of American companies — including 73 percent of small businesses — offer PTO, there is no one-size-fits-all policy for this benefit. Not only do companies need to determine the most fiscally responsible way to pay employees for hours they aren’t at work, but they also need to consider productivity and staffing levels, how PTO is earned, how it can be used, and a host of other issues. In short, a paid time off policy is a bit more complex than simply offering two weeks of paid vacation per year.

So, how do you develop a paid time off policy? Follow this guide to create a policy that is both attractive to employees and supportive of your bottom line.

The First Question: How Much Time — And Who Gets It?

There are several types of PTO, which generally fall into two categories. In the first category is the time off that you are required to offer by law, including jury duty, disability, parental leave, and bereavement leave. In the second category, is vacation, holidays, personal time, and sick leave. The latter are the types of PTO that you will need a policy for.

Some companies break their paid time off policy into multiple categories, providing paid time off for specific holidays, as well as a set number of sick days and vacation days. If you opt for this route, you need to specify exactly which holidays are covered, and how many sick and vacation days each employee receives. One option is to use a formula, in which you calculate the number of billable hours required to cover overhead and reach your profit goals multiplied by an employee’s average billing rate. Given that most employees are able to bill (or are productive) for about 75 percent to 80 percent of the time, an offer of 20 percent to 25 percent of the calculated overhead is usually a fair amount of vacation.

Many companies take a simpler route, and offer vacation time based on seniority. The longer you work for the company, the more time you earn. A typical tier breakdown is 10 days for one year or less; 15 days for years two to five; 20 days for up to 10 years, and so on. Another option is to allow employees to accrue time off based on hours worked, with the amount of PTO earned increasing each year. For instance, an employee might earn 10 minutes of PTO per hour worked in the first year, with an additional minute of PTO earned for each year of service. Employees can then deduct hours from their PTO “bank” when they wish to take time off. In some cases, this pool of hours covers all time off, including holidays and sick days.

Typically, a paid time off policy is a benefit for full-time employees, although some small businesses do offer less PTO to part-time employees. Your first order of business, then, is to determine who is eligible for PTO, and when. Some companies will only allow employees paid vacation time after they have worked for at least 90 days; others require a longer period of employment, up to six months or longer.  When developing your policy, specify a time period for the PTO, usually either a calendar year or employment anniversary. In other words, when does the “two weeks per year” begin and end?

In summary, then, your PTO policy must:

  1. Outline what types of PTO your company offers.
  2. Specify who qualifies for PTO.
  3. Specify when employees can begin earning PTO.
  4. Specify how much PTO an employee receives, and how it is earned.
  5. Specify any holidays that employees are paid for.
  6. Specify the number of sick and personal days an employee is allowed, if applicable.
  7. Specify the time period for PTO accrual and use.

Dispersing PTO

Once you determine who qualifies for PTO and how much they get, you need to outline the process for using the time. Among the points to include:

  1. How do employees request time off?
  2. How much notice is required?
  3. Which employees get priority for popular dates? If two employees request the same time off, what is the procedure?
  4. How many days or weeks can be taken off consecutively?
  5. Any requirements in terms of minimum amount of time taken.

Your paid time off policy also needs to address what happens to unused PTO. Some companies have a use-it-or-lose-it-policy (which is illegal in California), which could mean that any unused vacation time is forfeited at the end of the year. Others allow employees to roll over all or some of their unused time to the next year. Although California does not allow use-it-or-lose-it policies when it comes to PTO, they do allow companies to cap the amount of PTO an employee has earned.

This often comes into play when an employee leaves the company. In some states and jurisdictions, employers are required to pay out all PTO that an employee has earned when he or she leaves the company. This isn’t required in all states, but if your company is located where this law is in effect, an employee with an excessive amount of PTO saved up could be costly. Therefore, your policy needs to address how earned time is rolled over (if at all) but also what happens when one’s employment ends.

Mandating Time Off

Some companies have adopted use-it-or-lose it policies to encourage employees to actually take time off from work. Americans take the least amount of vacation days in the world, but research shows that taking time off is vital to productivity, creativity, and overall work-life balance.

Therefore, your paid time off policy should address requirements for using PTO. Consider requiring employees to take at least one week of vacation per year, and limiting the amount of time that can be rolled over to the next year to ensure that the PTO is used.

Following the Law

Finally, before communicating your PTO policy to employees, confirm that it complies with all local and state laws. Again, rules may vary, and you may be required to offer certain types of PTO or adhere to other guidelines. Keep in mind that remote workers are typically governed by the jurisdiction in which they are working, so you may need to adjust your policies according to other rules.

Some companies have taken their PTO policies to the extreme, offering unlimited vacation and sick time, paid sabbaticals, and even stipends to help cover the costs of vacations. If your company is in a position to offer these perks, don’t hesitate to include them in your policy. However, even if you just offer the standard two weeks and major holidays off with pay, you need a clear, detailed policy to ensure it is fair and effective.

If you need help developing and implementing a paid time off policy for your business, contact National PEO today.

Monthly HR News Roundup: October 2017

by NPEO Media NPEO Media No Comments


From holiday hiring trends to new interpretations of federal employment law, October was a busy month in HR news. Check out some of the stories that National PEO is followed last month.

1. Department of Justice Changes Stance on Transgender Protections

In a controversial move, Attorney General Jeff Sessions announced that transgender individuals will no longer be protected by federal law from workplace discrimination based on sex. The move marks a reversal of a policy that has been in place since 2014. Under the previous administration, former Attorney General Eric Holder interpreted Title VII of the Civil Rights Act to prohibit discrimination based on gender identity, including transgender individuals. AG Sessions based his memo on a legal interpretation of Title VII that does not extend those protections, as the statute does not prohibit the discrimination of individuals based on gender identity per se.

However, Sessions noted in the memo that the re-interpretation of Title VII guidelines does not give employers the right to discriminate against transgender individuals, or remove or replace protections against discrimination based on sex as outlined in Title VII. Sessions pointed to several other federal laws, including the Matthew Shepard and James Byrd Jr.  Hate Crimes Prevention Act and the Violence Against Women Reauthorization Act.

Still, the new interpretation conflicts with EEOC’s stance regarding transgender individuals, and multiple state laws specifically prohibit discrimination against transgender individuals. Many advocates and employment law experts are advising that HR departments should take a “wait-and-see” approach to this new guidance, as it is likely to be challenged.

2. Changes to EEOC Wellness Program Requirements Delayed

In 2017, the EEOC issued new regulations requiring workplace wellness programs to comply with the Americans with Disabilities Act and the Genetic Information Nondiscrimination Act. Among the changes were limits on financial and tobacco-cessation incentives, requirements for reasonable accommodations for disabilities, and new requirements to protect confidentiality. Many of the rules contradicted requirements of the ACA, and AARP challenged the EEOC on the definition of “voluntary” as it related to the limits on financial incentives. A Washington, D.C., court ruled that the EEOC must revise the guidelines.

What this means for employers is that the 2016 EEOC guidelines remain in place, and any substantially different regulations will not take effect until 2021 at the earliest. Stay up-to-date on all HR, payroll, and benefits news with National PEO.

3. Holiday Hiring Trends

We might still be putting the finishing touches on our costumes, but retailers are gearing up for the 2017 holiday season by hiring temporary and seasonal help. Despite the bankruptcies and closures of a number of major bricks and mortar retailers this year, holiday hiring is expected to be on par with previous years. Experts predict that just over 600,000 jobs will be added this holiday season — but these jobs will be different than in previous years. With more consumers opting to skip the mall and shop online, the number of warehousing, transportation, and call center jobs is expected to be much higher than the number of retail jobs. In fact, many call center jobs can even be done from home, creating new opportunities for jobseekers who might otherwise be shut out of the seasonal employment market.

There is concern that despite the availability of jobs, there may not be enough people to fill them. The improving economy has vastly reduced the unemployment rate, and fewer individuals will be looking for work. Therefore, it’s important to begin hiring early, set fair wages for seasonal jobs, provide adequate training and support for seasonal workers, and allow employees to fill multiple roles within the company to ensure that staffing meets demand.

4. Concerns About Algorithms

Anyone who has looked for a job in the last five to 10 years knows that the “old way” of searching for a job is no longer valid. The days of scouring newspaper classified and sending printed resumes are over, as nearly all employers use some type of electronic system to collect and evaluate applicants.

While using technology has made things easier for employers, it’s beginning to cause concern for many jobseekers. According to a new report from the Pew Research Center, 67 percent of survey respondents expressed concern about algorithms being used to select and hire job candidates. Simply put, most people don’t trust machines to make the right decisions, as an algorithm may not be able to accurately evaluate one’s skills, talents, and suitability for a job. As AI and computer-based evaluations become more prevalent, HR needs to consider how it will balance the benefits of an objective evaluation with a human evaluation of applicant skills.

5. OSHA 2017 Safety Violation Report

At the 2017 National Safety Congress & Expo, OSHA revealed its top 10 list of safety violations for fiscal year 2017. The violations changed very little from 2016, but there was a new addition to the list: Fall Protection Training Requirements, coming in at No. 9 with just over 1,500 violations.

The complete list of top violations includes: 1. Fall Protection (6,072) 2. Hazard Communication (4,176) 3. Scaffolding (3,288) 4. Respiratory Protection (3.097) 5. Lockout/Tagout (2,877 6. Ladders (2,241) 7. Powered Industrial Trucks (2,162) 8. Machine Guarding (1,933) and Electrical – Wiring Methods (1,405). OSHA officials believe that by listing the top violations, companies can better understand which hazards to avoid, and identify better ways of avoiding common hazards.

Why HR Management Distracts You From Growing Your Business

by NPEO Media NPEO Media No Comments

Small to mid-sized business owners find themselves consumed by HR-related tasks, like payroll and workers comp, on a daily basis. Trying to wear all the hats in the business, these owners are unable to sit down and truly grow their brand as they worry about housekeeping chores that keep their attention and focus elsewhere. It’s a common side effect of founding and running a business today.

But, what if you didn’t have to worry about the HR headaches when you woke up each morning?

Here are the top 3 things you’d be able to do without HR nightmares on a daily basis:

  1. Organic Marketing 

A 2015 Nielson report found that consumers are 90 percent more likely to trust a brand that was recommended to them by a friend. You need to focus on building local buzz for your brand, creating a successful grassroots movement that will get exposure and clients.

One great way to do that is to strike up local partnerships with other brands that are popular in your community. Build on their success and expand your name recognition with their patrons. Not everything is about digital marketing today, though organic marketing can nicely complement your digital strategy.

     2. Modernize Tactics

Do you accept electronic payments yet? Have you incorporated some kind of virtual reality service or product that will pander to younger generations? It’s time to step back and modernize your business to the best of your ability so sales don’t slip through your fingertips.

A few great ways to do this is to have a mobile app developed with an electronic payment portal. That way, consumers can buy from you at their convenience, right from their phone. Plus, the app will store their payment information, so they don’t have to whip out their credit cards every time they do it.

     3. Modernize Tactics

We all need a mentor, even if we’ve been in business for over 30-years. Sales tactics and trends are constantly changing, which means you need to be constantly learning, even if you are the expert. There are awesome resources out there today, like, which will help you make mentor connections and strike up educational conversation.

Also, don’t underestimate the power of subscribing to magazines in your industry and learning about what competitors are doing. Competition is healthy, and the sooner you tune into it, the better off your organization will be.

Business Development

As you can see, there are multiple things you can do to grow and fortify your business today. Instead of waking up and opening up the business books, spending the majority of your day sifting through numbers, you can pay attention to growth tactics that will really get your business moving into 2018.

Consider dropping your HR oversight and handing it over to us here at National PEO

Monthly News Roundup: New Forms, Laws, and Standards for HR

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September was a busy month for human resources, between new laws taking effect and a number of major court decisions and major weather events affecting employers and the way they do business. Keep reading to learn more about these changes and how they may affect you.

New I-9 Forms in Effect

As of September 18, all employers are required to use the updated version of form I-9, dated 7/17/17 for new employees. The new forms are only to be used with new hires; there is no need to complete new forms for existing employees, and rules regarding storage and retention of I-9s have not changed.

The new forms make some subtle but important changes to the instructions, as well as adds to the list of documents that the U.S. Citizenship and Immigration Services will accept as proof of citizenship. In the instruction section, the new form removes the “by the end of the day” from the deadline for completing the form. The new instructions now read that the form must be completed the “first day of employment.” Essentially, the re-wording is designed to ensure that employees complete the I-9 before they begin working for pay.

The other major change to the I-9 is the renumbering of the acceptable documents listed under Schedule C, with the exception of the Social Security card. The new list also reflects the most recent versions of the report of birth or certification issued by the U.S. State Department. For those employees completing the I-9 electronically, the new forms also allow them to select form FS-240, a form issued to certain U.S. citizens who were born abroad. This should clear up confusion and streamline the certification of foreign nationals, as many HR departments are under the impression that the FS-240 is not acceptable documentation.

The changes to the I-9 are not especially significant, but the fines for failing to use it are. Outsourcing HR to a PEO can help ensure you remain in compliance and that all managers are aware of the new form and requirements.

Court Overturns Overtime Rules

The Obama-era rule guaranteeing overtime pay for anyone earning less than $47,476 annually has been killed in a Texas federal court. A number of chamber of commerce groups and 21 states filed several lawsuits charging that the Department of Labor had overstepped its authority by enacting the law, which not only nearly doubled the salary threshold for overtime, but also called for increases every three years. Not only would such a rule strain state and business budgets, but the high threshold essentially made employee’s duties, tasks, and functions irrelevant when it came to determining overtime pay.

For now, then, payroll administrators can continue to follow the 2003 FLSA guidelines relating to overtime pay, and rest easy knowing that they are not facing a major influx of newly overtime eligible employees. There are new proposals under discussion, with a new threshold of $33,000 repeatedly appearing, but new proposals are still in the early stages.

ACA Compliance Penalties Becoming More Likely

Under the provisions of the Affordable Care Act, businesses that do not comply with the reporting provisions are subject to fines. However, in the two years that these rules have been in effect, the IRS has not been aggressive in collecting those fines, leading some to wonder if they actually need to comply with the mandates.

Well, wonder no more. The IRS has issued several letters outlining exactly what employers need to do to remain in ACA compliance, as well as a report indicating that it is ready to begin collecting noncompliance penalties. The agency has a new, far-reaching system, designed to detect non-compliant employers and send them notices for any year in which they were required to report. In total, the IRS expects to collect upwards of $228 billion in ACA penalties.

If you have complied with ACA reporting requirements, you have nothing to worry about. However, legal experts recommend that those companies that have not complied with the ACA reporting requirements do so right away, as the sooner you file after the deadline, the lower the penalty will be.

HR Response to Natural Disasters

In the span of just one month, Hurricanes Harvey, Irma, Jose, and Maria have wreaked havoc across the Caribbean and southern U.S., costing billions of dollars in damage and several dozen lives. The disruption and damage caused by these storms have many companies scrambling to not only get their businesses back up and running, but also provide support to employees who had to evacuate and/or faced significant damage to their homes and property.

These natural disasters underscore the importance of having a disaster recovery plan in place that takes into consideration human resources issues including staffing, payroll, managing time off, and providing support and services to affected employees. Expect to see a great deal more about developing fair and reasonable policies for natural disasters in the coming months as these communities recover from the storms.

Managing Small-Business Recruiting & Talent: What the Experts Say

by NPEO Media NPEO Media No Comments

One of the primary functions of HR is to recruit, manage, and retain top talent. It’s also one of the most challenging functions that HR pros face on a daily basis.

As the world of HR evolves, understanding what employees need and want from your company can make a big difference in your recruiting efforts as well as reducing turnover rates. Thankfully, some of the biggest names in HR have a lot to say about these topics. As you think about your recruiting and management strategies going forward, consider what these experts have to say on the matter.

Stacy Zapar on Using Social Media for Recruiting

Social media has become a major aspect of many recruitment strategies. However, employer branding consultant Stacy Zapar notes that social media is not simply a tool for sending out job listings. She says that social media should be used to spark conversation and build a community around your brand. Content should be focused on sharing your company culture and the experience of working with you, and engaging potential candidates — not on getting as many resumes as possible.

Kathryn Minshew on Hiring During Growth Periods

Kathryn Minshew is the CEO of The Muse, a career advice website. The company, which is devoted to helping people find jobs they love, grew 4X in just one year, while still maintaining a very defined brand and company culture. Minshew acknowledges that such rapid growth could potentially alter the company culture or lead to poor hires, but based on her experience with The Muse, she has some solid guidance for companies that are hiring during growth periods. Most important, she says, is focusing on your company’s core values during the interview process, and hiring based on candidate’s alignment with those values in addition to their ability to match performance standards. Minshew also notes the importance of a great candidate experience, making interviewees feel welcome and giving them to opportunity to ask questions, while still adhering to a structured interview process that evaluated skills sets and culture fit.

Robin Schooling on Onboarding

Twenty-year HR veteran Robin Schooling, SPHR, believes that employee onboarding is vital to getting employees off to a great start and establishing the culture of an organization. Unfortunately, she argues, most companies treat onboarding as an event — where employees fill out paperwork and get the “lay of the land — rather than an ongoing process in which individuals from a number of different departments to provide a comprehensive overview of the company. In short, Schooling says, “ensuring new hires successfully adjust requires the input of more than just the HR staff. It does, indeed, take a village.” HR is undoubtedly important in terms of managing the compliance aspects of onboarding, but to really set employees up for success, the organization’s leaders, managers, and co-workers should also be involved in the process to provide a clear view of life at the company and help the newbies hit the ground running.

Suzanne Lucas on Reducing Staff Turnover

Suzanne Lucas is a 10-year veteran of corporate human resources, and better known as “Evil HR Lady” for her unflinchingly honest answers to the toughest HR questions. And when it comes to employee retention, she knows what works. Lucas says that the “best way to handle turnover is to reduce it,” and recommends that to do that, businesses need to not only hire the right people, but also train them well and give them a reason to stay. This including providing thorough ongoing training, including cross-training, to give your employees the confidence they need to do their jobs well, as confident employees are more likely to stay with a company. However, treating employees well is also important, Lucas notes. Paying them a fair wage, providing a competitive benefits package, and above all, treating employees will respect will go a long way to ensuring a happy and productive staff.

Marcus Buckingham on Talent Activation

Researcher and thought-leader Marcus Buckingham is well-known for his commitment to helping individuals cultivate their strengths for better performance. Buckingham believes that leaders should be focused on activating their employees’ talent: That is, turning their potential into performance. However, many of the current methods of employee motivation and engagement, most specifically feedback, are not ideal for improving employee performance. As he says, “Feedback is not the solution — team members don’t want feedback; they want attention. Goal alignment is also not the answer — aligning the employee’s goals with the company’s goals is important, but it’s not going to help people perform better week to week.” Instead, Buckingham recommends taking a coaching perspective, and helping employees work to their strengths rather than simply correcting errors.

For more insight and guidance into small-business HR solutions, be sure to check out National PEO and how they can help you manage employees efficiently, leaving you more time to grow your business.

HR Outsourcing 101: How to Outsource HR the Right Way

by NPEO Media NPEO Media No Comments

The benefits to a small business of outsourcing human resources are well established. From improving efficiency to ensuring compliance with employment laws, working with a PEO can save your business time, money, and a lot of headaches.

However, deciding to work with a Professional Employer Organization (PEO) is only the first step. There are a number of important details to consider before you move forward, not the least of which is choosing the right company to work with. If you’ve decided that human resource outsourcing is the right choice for your company, use this guide to help you handle the transition the right way.

Choosing the Right Company

A smooth transition to handling HR outside of the company relies in large part on choosing the right company. Typically, most HR outsourcing is done through a PEO. Depending on the company and your needs, you can outsource all of your employee management functions, including payroll, benefits, employee management, and risk management, or pick and choose between options. For instance, you may wish to keep employee management functions like hiring and firing in-house, while shifting payroll and benefits administration to a PEO.

While pricing for a PEO varies according to the level of service you need, the size of your company, and other factors, you can typically expect to spend anywhere from $20 to $200 per employee per month, or 4 percent to 8 percent of each employee’s annual salary. However, price is not the only consideration. Experience in your field, the availability of competitive benefits, and recommendations and referrals from other companies should also influence your decision.

Communicating to Employees

Once you have chosen a PEO, communicating the changes to your employees is the next important step. In some cases, if the PEO is going to serve as your HR department, then it becomes a “co-employer,” meaning that employees will need to work with the PEO for any questions related to payroll, benefits, or other HR issues.

However, even if your PEO is only handling specific tasks, it’s important to tell your staff about the arrangement and what it means to them. When major functions like HR are outsourced, employees may feel uneasy about certain aspects of the arrangement (for instance, they may be concerned about security or who they should talk to if they have questions, or whether they will be able to get answers quickly) and it’s up to you to ease their concerns and explain the benefits of the arrangement. Stressing how working with the PEO will streamline certain functions and allow them access to a wider array of benefits at more affordable rates, and how it will solve problems that have occurred in the past will help to settle employees.

Above all, when discussing human resource outsourcing with your staff, be sure to stress transparency at all stages of the process. Provide reassurance that not only are you still in charge of the day-to-day functions of the company, but also that you and the PEO are committed to maintaining employee privacy and that the service benefits far outweigh any possible drawbacks to working with an outside contractor.

Manage the Transition Carefully

Successfully transitioning to a PEO arrangement requires more than just good communication. It’s important that you understand the contract with the PEO, and meet obligations before rolling out the co-employment agreement. For example, many PEOs require clients to provide an upfront advance of payroll and insurance premiums before the contract begins, meaning that some companies may be required to pay as much as 200 percent of their payroll and benefits expenses in a single period. As this can cause significant cash flow issues for a small business, it’s important to plan and understand the requirements in advance to avoid unpleasant surprises.

Work with your PEO to develop a transition plan to ensure that your employees do not experience disruptions to their pay and benefits once the PEO relationship begins. Have paperwork prepared prior to enrollment dates, offer information sessions and updates on where things are and what is happening when. When choosing a PEO, look for one that offers a comprehensive onboarding process and a team to help ensure the transition is a smooth one.

Maintaining the Relationship

Getting the most from your PEO relationship doesn’t mean simply passing off tasks and going about your day. As with any investment, outsourcing success relies on setting goals and measuring the results. Setting quantitative goals — such as reducing the budget, improving payroll accuracy, or reducing health insurance costs — allows you to measure the actual value of the PEO and creates accountability. Regularly measure and assess your progress, and make changes or adjustment as necessary to ensure you are getting the most value from your PEO relationship, while still maintaining employee morale and satisfaction.

Outsourcing HR functions involves a lot of moving parts, but the ultimate benefits make the work worthwhile. To learn more about how a PEO can help your organization, check out National PEO.

5 Things That You Might Not Know About PEOs

by NPEO Media NPEO Media No Comments

If you’re a business owner, you have probably heard about Professional Employer Organizations (PEOs). You’ve probably heard that they can help you with managing employee payroll and benefits, or managing human resources.

However, if you’re like many business owners, especially if you have a small business, you haven’t considered signing on with a PEO because you think you don’t need one. You might think that the services are too complex for your needs, or that you can’t justify the costs when you’re handling things on your own already. What you don’t realize is that there is more than meets the eye when it comes to PEOs, and some of the things that you might not know about them could be reason to reconsider.

1. PEOs Are for Small Companies, Too

You might think that only companies with hundreds (or even thousands) of employees need the services that a PEO offers. While larger companies do often use PEO services (Netflix is one of the major corporations that has used a PEO in the past), the majority of these organizations serve companies with anywhere from eight to 100 employees. Even if you have a smaller staff, a PEO can help you stay organized and manage some of the tasks that you don’t have the time or expertise to do on your own. As your business grows, so does the complexity of the rules governing how you operate your company, and even a simple paperwork error can cost your company thousands of dollars. A PEO is experienced in these issues, and can help you avoid the pitfalls that come with growth — and even help you save money in the process. In fact, not only are small business that work with PEO’s 50 percent less likely to go out of business, they tend to grow almost 10 percent faster than other companies.

2. PEOs Can Be IRS Certified

Working with a PEO can help your business be more efficient, but there are some tax implications in doing so. Some companies are hesitant to sign on with a PEO because they fear that they will be held liable for late or missed tax payments, lose out on certain tax credits, and potentially have to double pay wage taxes if they sign on after the start of the calendar year. To help reduce these risks, the Small Business Efficiency Act of 2014 established a voluntary IRS certification program for PEOs. By undergoing a rigorous approval process, a PEO can become IRS certified, which shifts the liability for unpaid payroll taxes to the PEO, not the business. Working with a CPEO also means that you will not lose tax credits or have to pay double taxes if you join a PEO after January 1. Not all PEOs are currently IRS certified, but many are going through the process of certification and it’s likely to become industry standard in the near future.

3. PEOs Lower Employee Turnover

Employee turnover is costly to any business, in terms of both time and money. By working with a PEO you can typically offer a more competitive benefits package that will entice your best people to stay. Not only that, but PEO’s can offer additional services to help increase employee engagement and satisfaction, including access to training programs, meaningful recognition programs, and help with team-building activities. In fact, companies that work with PEOs generally reduce turnover by nearly 15 percent.

4. PEOs Help With OSHA Compliance

If there is one constant with OSHA regulations, it’s change, and keeping up with all of the rules can be a challenge for a busy company. A PEO can help your company remain OSHA compliant by helping to update employee handbooks and other documents, conducting safety audits, and providing additional resources to help ensure your business is safe and following the most up-to-date guidelines. This ensures you avoid both costly fines from OSHA, and more importantly, the safety of your employees.

5. PEOs Increase the Chances of Being Named a ‘Best Place to Work’

Finally, working with a PEO can help your company reach coveted “Best Place to Work” status. Many of companies that have achieved this designation are part of a PEO, and leverage PEO resources to offer great benefits and ample options for training and development. Quite simply, by tapping into the vast well of services a PEO offers, you have a better chance of giving your employees what they need and want from an employer, increasing their satisfaction and boosting your public image.

These are just some of the things that you might not have known about PEOs, but are important to consider when you’re structuring your business. To learn more about PEO services and how they can benefit your company and help you reach your goals, click here to learn more about National PEO.

Common HR Mistakes That Highlight the Need to Delegate

by NPEO Media NPEO Media No Comments

Delegation is often a sticky subject for many small-business owners. You know you should do it; in fact, you probably have to do it in order to get anything done. But when your business is your baby, and you know the ins and outs of how to do certain things, it’s often more comfortable, if not necessarily easier or more productive, to do it yourself.

When it comes to HR, though, the instinct to DIY and keep everything on your desk can prove overwhelming, or in some cases, disastrous. Sure, you might save some money, but as some small-business owners have discovered, the time you’re spending on HR tasks is usually better spent elsewhere, such as on working on actual revenue-producing tasks. Never mind that in today’s complex employment environment, handling HR without expensive knowledge of laws and best practices could end up being a costly mistake.

For many businesses, the solution is as simple as contracting with an HR consulting firm to help. If you aren’t sure that you need to delegate tasks yet, consider some of these common mistakes that indicate that you need help — and fast.

Mistake #1: Your Hiring Is Disastrous

Often, small-business owners start building their teams by reaching out to their own networks and through referrals. This is often a great source of talent, but as your company grows, you are likely to find that you need more people with specialized skills — and you don’t have the skills required to really evaluate them.

Other common problems that pop up in hiring?

  • Making hasty hiring decisions because you need someone right away and don’t have time for a long process
  • Taking too long to make a decision and losing out on great talent
  • Receiving too many applications and feeling stymied by the process
  • Unintentionally biased recruiting and hiring
  • Inaccurate or incomplete job descriptions
  • Ineffective interviewing skills

In short, there are any number of ways that hiring can go wrong if you aren’t an expert in recruitment and human resources. By hiring an HR consulting firm to help you through the process, you can avoid most of those pitfalls and have a much higher success rate with new hires.

Mistake #2: Policies? What Policies?

Your business probably has a list of dos and don’ts, along with expectations as to how to handle specific situations and comply with applicable laws. Unless you have everything in writing, you could find yourself in trouble should you reprimand an employee for his or her behavior or actions on the job. At minimum, you need an employee handbook outlining your basic code of conduct, communications policies (especially in a BYOD environment), employment and termination guidelines, compensation plans and policies, and your nondiscrimination policy.

However, complete HR policies go beyond the basics. What happens, for instance, to unused vacation time? How do employees accrue vacation time? Or how do you handle discipline? These issues are important, and you need to have written documentation of where you stand. Otherwise, it’s going to be difficult to remain consistent, not to mention avoid trouble if you need to discipline or terminate an employee. If you don’t have clear, up-to-date policies, a PEO can help you develop them, and get up to speed.

Mistake #3: Training Is Nonexistent

Not providing adequate training for your employees is a fast track to disaster. Not only does a lack of training contribute to higher turnover, but it also can lead to issues with customer service, or even lawsuits when your employees aren’t prepared with even the most basic skills.

The problem is that many small businesses approach training as a “one and done” session when new employees are onboarded without any ongoing attention. And training is usually focused on specific tasks for the job itself, and doesn’t address other issues such as sexual harassment, emergency preparedness, or workplace violence, which are all important issues to address. By working with an HR firm, you can correct these deficiencies, and feel confident that your team is prepared to handle most situations appropriately.

Mistake #4: We’re Compliant… Right?

Compliance with employment laws is complex. Many small businesses don’t even realize they are out of compliance until it’s too late. From misclassifying employees to failing to follow OSHA rules for safety, small oversights can lead to big fines. When you work with an HR consulting firm like National PEO, you can be sure that you’re compliant with all applicable regulations.

These are just some of the mistakes that small businesses make when handling HR that can cost them big time. So, while a DIY approach might work for some things, when it comes to HR, it’s best to work with the professionals at an HR consulting firm. Click here to learn more about how National PEO can be your go-to source for all things human resources, and keep you out of hot water and running smoothly.

Recent State Court Rulings Have Major Implications for HR

by NPEO Media NPEO Media No Comments

Over the last few months, a number of state courts have made rulings that have profound implications for HR professionals. While many of these rulings are state specific, most are bound to eventually be far-reaching and require changes to policies. From scheduling employees to dealing with medical marijuana, these are the issues you need to be paying attention to now.

Medical Marijuana

In 2012, Massachusetts passed the “Massachusetts Medical Marijuana Act,” which banned employers from penalizing employees who use marijuana for medical purposes. This was in accordance with state laws that permit qualified individuals to use the drug for medicinal purposes.

In the case of Barbuto v. Advantage Sales & Marketing, LLC, Cristina Barbuto claims that she was unjustly fired for her use of medical marijuana. Barbuto, who suffers from Crohn’s Disease, uses marijuana to help maintain her weight. She took a job with Advantage Sales & Marketing, but was fired for failing a company drug test, despite showing evidence that she used the drug for medical reasons. She sued the company after her termination, claiming that the company discriminated against her for her disability.

Advantage Sales & Marketing argued that Barbuto never made it clear that she had a disability, and that because the federal government still classifies marijuana as a Class 1 substance (in the same category as cocaine and heroin), they were justified in the firing as it followed federal, not state laws. The Massachusetts Supreme Court disagreed, noting that if an employee can provide evidence from a physician showing that marijuana is the most effective treatment, then the company cannot fire them for failing a drug test. The major exception are those jobs in which marijuana could potentially impair one’s ability to work safety, such as while operating heavy machinery.

This ruling has serious implications across the country, as 29 states and the District of Columbia allow the use of medical marijuana. It also marks a significant shift away from the ruling in similar cases in other states. HR pros need to consider their own company policies in light of the conflicting state and federal laws, and whether those policies need to be clarified or changed.

Accommodation for ADD/ADHD

In another Massachusetts case, the Massachusetts Commission Against Discrimination (MCAD) ruled that employers must follow ADA guidelines for employees with ADD/ADHD, and make suitable accommodations for those employees.

In the case of Joyce v. CSX Transportation, Peter Joyce, Jr. filed suit against his employer, CSX Transportation, arguing that he was unfairly disciplined for working excess overtime. Joyce claimed that the extra hours he worked were due to a computer device that the company uses. Due to his ADD, Joyce had difficulty using the device, and this required more time to complete his work. Joyce’s requests for more training and accommodations to use the device were not granted, and instead he was reprimanded for requesting extra overtime.

The MCAD sided with Joyce in this case, granting him more than $300,000 in lost pay and emotional distress damages. On a larger scale, this case serves as a reminder to HR to use the ADA process for working with employees with ADD/ADHD, and to be willing to make accommodations such as granting overtime when necessary and providing additional assistance.

Fair Scheduling

A growing trend across the country is the introduction of fair scheduling laws to ensure that employees have predictability and consistency in their work hours and pay. Several cities, including Seattle and San Francisco, have already enacted laws that strictly outline how employees can be scheduled for work. While these laws primarily affect the retail and food service industry for now, and are limited to major cities, it’s very likely that these laws will spread nationwide — and most likely to the state level.

While each law is different, most share common provisions. Among the most prevalent include allowing employees to request scheduling accommodations without retaliation, offering more hours to existing employees before hiring new employees, providing ample notice of the schedule, and limiting the number of times an employee has to close and then open on consecutive days. Some employers are balking at these restrictions, citing increased administrative burdens and costs, others believe that fair scheduling will reduce turnover and help keep employees engaged and loyal.

As the government deregulates, most of employment laws and regulations are going to be determined at the state level. Keeping abreast of these landmark cases and trends will ensure that you are following best practices and rules, and reduce the likelihood that your company will be the target of a lawsuit. Be sure to keep following National PEO’s blog to learn the latest updates about employment and HR laws, or contact us to learn more about how our HR services can help your company.

PEO vs ASO or – hot or cold tea?

by NPEO Media NPEO Media No Comments

Whenever I order tea in a restaurant the server inquires, “Hot or cold” What was I actually getting, as a value proposition? Which was the better value, and why?

The same thoughts may be applied to ASO vs PEO as a value proposition analysis. Seemingly, they are the same. Only the temperatures are different. But are they really the same? After many years in the industry and having provided both ASO and PEO to my clients I have come to the following conclusions; Both PEO and ASO effectively enable employers to outsource the administration of payroll, payroll taxes, human resources and benefits to a third party as a means to save money, time and risk. But only a PEO relationship provides true and safer employee outsourcing. An ASO can only administer client payroll, taxes, benefits and insurance programs.

When you order your tea hot, it is pure, while iced tea is mixed with ice. In effect, it is diluted and not strong tea.  A PEO relationship, comparatively, is also undiluted.  It is an outsourcing of risk and responsibility whereas an ASO is diluted upon inspection.  A PEO through a co-employment contract allows its customers to remove much of its liabilities entirely to the PEO such as, IRS 941 filings and audits, 940 audits, W-2 and W-3 filings, State Unemployment filings and Unemployment hearings and audits.  Further, all state and local withholding filings and audits are the responsibility of the PEO. The client will never be subject to any of the expensive, time consuming and nerve-wracking situations because all of the liability is actually shifted to the PEO.  An ASO agreement allows the ASO to process all the same work for its clients but under the client ID numbers which means when the IRS, State Unemployment etc. people come looking for an audit, guess which office door they will knock on. Yes, the clients, because that’s whose ID number is on the tax return, insurance policy, etc.

Both PEOs and ASOs provide HR, payroll, and administrative services for their clients. The main difference between ASOs and PEOs is the question of co-employment. PEOs become a co-employer of their client company’s employees and assume some of the liabilities and responsibilities that come with employing personnel; ASOs do not become a co-employer and file all tax and insurance forms under their client’s company name.

National PEO provides both ASO and PEO to its clients and many times the client because of its situation, demands an ASO service.  The PEO is a much safer and purer relationship, which allows the client to receive true peace of mind. When Iced Tea sits for very long it turns watery and unpalatable. The same can be said for an ASO proposition. A PEO remains “pure” as time passes and beyond. If there is an audit, it stays with the PEO and you get what will serve you best, not a watered down solution.