For Dan Jesse building a successful construction business requires his full attention - meeting with developers and property owners, securing materials and equipment, visiting and inspecting current projects, and bidding new jobs. It doesn't leave him time to tackle the additional responsibility of handling the everyday employee-related matters that can take up so much of a small business owner's time. That's why Jesse decided long ago to outsource those tasks to a professional employer organization (PEO).
"I'm a good builder," said the owner of Dan Jesse Construction, Inc., of Gearhart. "I'm not a good secretary or bookkeeper."
Soon after starting his company in 1996, Jesse signed on with what today is Seaside Temps, Inc., to handle all of the human resources services for his company.
"I write them a check once a week and don't have to worry about payroll, taxes or workers compensation," he told Coast River Business Journal. "I make more money by doing my job, and let them do what they are good at. I think it's been very beneficial."
PEOs handle all the client's human resources responsibilities
PEOs offer businesses an alternative way to manage the administrative functions of their work force through employee leasing. The PEO contracts to become the legal employer of its client's workers and leases them back to the company. In most cases, the workers are already established with the employer. The PEO is legally responsible for payroll, employment taxes, and worker benefit fund assessments. The PEO also may offer such additional benefits as medical benefits and retirement options as part of the contract with its business client.
And while workers receive their wages and benefits from the PEO, the company retains the same supervision over the employees, as any traditional employer-worker business. (By law, the workers are considered co-employees of the individual company and the PEO.)
Although PEOs have been around for a number of years, primarily operating on the East Coast, there has been a recent surge of interest in the service on the West Coast, according to Jason Rodriguez, manager of Seaside Temps' main office in Seaside. He attributes the increased popularity in PEOs to the growth in the number of small to mid-sized businesses.
"For mid- and small-sized companies, it's a perfect fit," Rodriguez said. "We take care of so many little headaches companies don't want to deal with or don't have the time to do."
Seaside Temps serves as a PEO to nearly 40 businesses, with most of the companies averaging three to four employees, he said.
PEOs offer numerous services
With seven permanent employees and as many as nine or more during peak construction periods, Dan Jesse Construction is one of Seaside Temps' larger PEO accounts, Rodriguez said.
"I wish every one of our clients went to employee leasing," he said. "But few companies realize the benefits that are available" through a PEO.
In addition to handling its clients' payroll functions, the PEO can provide group benefit packages that are less expensive than if each company signed up for its own plan. The PEO also handles filing of worker compensation and unemployment claims and ensures that clients are complying with ever-changing federal and state employment laws.
Vernae Christophersen of the St. Helens branch office of Cardinal Services, Inc., noted other advantages of PEOs.
"We can advertise job placements, perform background checks and help the employer find workers," Christophersen said. "We also provide safety training and many other services employers would have to provide themselves."
Coos Bay, Ore.-based Cardinal Services provides employee leasing services to about 200 clients at its eight other branches located throughout Oregon. The company recently started offering the program to clients in the St. Helens area, she said.
Astoria PEO formed to serve non-profits
Richard Hurley, owner of Paragon Tax Services in Astoria, said he saw the benefits of employee leasing for small non-profit organizations that generally have only a handful of employees and do not have large enough budgets to offer employees such benefits as health care.
In November 2006, Hurley formed Community Staffing, LLC as a PEO and currently has two non-profit clients, Clatsop Court Appointed Special Advocates (CASA) and Clatsop County Child Abuse Assessment Center LLC ("The Lighthouse").
Hurley said that his service is limited to providing full payroll services to his clients. As a PEO, his company also is able to provide less costly workers compensation rates to his clients and to offer health insurance to employees that the two non-profit organizations were unable to do by themselves.
"If they can offer benefits, it strengthens the ability of non-profits to retain employees," Hurley explained.
State license required for PEOs
By law, PEOs must be licensed by the Oregon Department of Consumer and Business Services.
"Businesses have to be very careful when they hire an employee licensing company," said Alice Barghini, manager of the Consumer and Business Service's workers licensing company program compliance section. "They are entrusting their payroll, tax withholding and workers compensation" premium payments to another firm. Barghini said companies should ensure the PEO is licensed and in good standing with the state, and should check the PEO's references.
Seaside Temps, Community Staffing LLC and Cardinal Services are licensed in Oregon as PEOs. In addition, Seaside Temps is a member of the American Staffing Association. Cardinal Services is a member of the National Association of Professional Employer Associations.
For more information on Oregon's licensing program for PEOs contact Alice Barghini at the Oregon Department of Consumer and Business Services at (503) 947-7544.
Also visit the Web site of the National Association of Professional Employer Organizations at NAPEO.org.