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Common PEO Myths Debunked

Lyons HR manages personnel for you

The professional employer organization (PEO) industry was born in the 1980s. Since then, it has provided a steadily increasing number of small to mid-sized companies the same level of HR expertise and employee benefits as much larger corporations, at affordable prices. In doing so, it has helped level the playing field when it comes to competing for top talent. 

At the same time, myths surrounding whether or not companies should partner with a PEO also have grown.  Rest assured that they are just that: myths. Here are five of the most common ones debunked: 

Myth #1: If I work with a PEO, I’ll lose control of my business. 

Rather than relinquish any control over your company, you gain a strategic business partner in a PEO. You can hand off many time-consuming HR admin tasks to them, so you can concentrate more fully on your core management functions. 

Myth #2: A PEO would take over all hiring, firing and other HR decisions. 

In a PEO relationship, all final talent management decisions remain with you and your other senior leaders.  Your PEO specialists can advise, consult, and lend their expertise to help guide those decisions, but you retain all authority when it comes to the last word.  

Myth #3: It’s just too expensive! If I contract with a PEO, the costs will be too high. 

NAPEO recently reported that PEOs help save their clients up to 35 percent on HR administrative costs. They also help you economize on employee benefits, while at the same time increasing the quantity and quality of your current offerings. This is made possible by their group purchasing strength, as they combine all their employees into a much larger pool. 

Myth #4: I don’t need a PEO, I already have an HR staff. 

Your current HR team will have more time to work on strategic projects and initiatives when they leave various administrative tasks to your PEO. Plus, they gain access to team of HR specialists in areas ranging from workers’ compensation, payroll and benefits to compliance, risk management and more. 

Myth #5: Even if I do decide to work with a PEO, it doesn’t matter if it’s ESAC accredited or IRS certified. 

Two of the most important credentials to look for when exploring PEO partnerships are ESAC accreditation and IRS certification.  

  • The Employer Services Assurance Corporation (ESAC) was formed to become the official accrediting agency of the PEO industry. PEOs that are ESAC accredited meet the gold standards for best practices and financial reliability.  
  • In 2017, the Internal Revenue Service (IRS) began designating select PEOs as certified. This established another benchmark for employers to assure they were partnering with a best-in-class PEO. 

Interested in learning more?

Founded in 1995, Lyons HR is an ESAC accredited and IRS certified PEO working with hundreds of employers across the U.S. We offer customizable solutions to meet even your toughest talent-related challenges and positively impact your bottom line. Read our related posts or contact us today to learn more.