Should You Partner With a Professional Employer Organization?

BY PHIL SHETSEN

Running a chauffeured transportation or chartered bus company comes with unique challenges, especially when managing a growing and diverse workforce of office staff, drivers, and maintenance workers. One solution many companies turn to is partnering with a Professional Employer Organization (PEO) in lieu of having an HR manager on staff. A PEO handles many employment-related tasks like payroll, benefits, and compliance, allowing owners (or other managers) to focus on operations. However, like any business decision, there are pros and cons to consider.

What Is a PEO?
A PEO creates a co-employment relationship where both the business and the PEO share employment responsibilities. You handle day-to-day operations, while the PEO manages administrative tasks like workers’ compensation, employee benefits, ensuring compliance with labor laws, and other HR issues.

Benefits of Partnering With a PEO
1. Lower Workers’ Compensation and Unemployment Costs
PEOs leverage their large insurance pools to negotiate and secure better rates for workers’ compensation and unemployment insurance, which is especially important for smaller operations where every dollar counts. For transportation companies, where accidents and turnover can be costly, this can save significant money.

2. Access to Better Benefits
PEOs offer small businesses access to Fortune 500-level benefits like health insurance and retirement plans, helping you attract and retain top talent. This is especially useful in an industry where high turnover of qualified drivers is common.

3. Compliance Assistance
Staying compliant with regulations, including DOT and OSHA rules, can be overwhelming. State and local rules are changing all the time, and it requires having someone on the team who is in tune with those updates. A PEO ensures your business follows existing and updated federal, state, and local regulations, keeping your team compliant and avoiding costly penalties.

4. Streamlined HR Management
A PEO provides a one-stop solution for HR tasks, from recruiting and the onboarding paperwork to payroll and employee benefits. This simplifies workforce management, especially when balancing office staff and field workers.

Drawbacks of a PEO
1. Dependency
While a PEO handles many tasks for you, it can also make your business dependent on their services. If you decide to leave, you’ll need to rebuild relationships with vendors for payroll, benefits, and insurance, which can be time-consuming and costly.

2. Loss of Control
Partnering with a PEO means handing over some or a great deal of control of HR functions like payroll and benefits, which can feel uncomfortable for some business owners who prefer direct oversight.

3. Fees
While PEOs can save money in areas like insurance, they charge fees—typically a percentage of payroll or a flat rate per employee. These costs can add up, especially if you have a large workforce.

Is a PEO Right for You?
For transportation businesses, a PEO can provide much-needed relief from the complexities of managing a diverse workforce, offering better benefits and lower costs. However, it’s essential to weigh these advantages against the potential (and limited) loss of control and the costs involved.

In the end, a PEO can be a great partner if your priority is focusing on operations while leaving HR and compliance to the experts. Carefully assess your business needs and long-term goals to determine if a PEO is the right fit for your transportation company.   [CD0125]