Long gone are the days when the obvious or the only apparent choice was ADP for your company’s HR outsourcing needs.
Now that we have access to more than 700 PEOs across the US and many more Non-PEO solutions, things are not so simple anymore.
The good news is that there are more players in this space giving you access to lower pricing and better choices.
The bad news with so many options is the increasing difficulty it creates to figure out where to start and how to make sure you are selecting the right provider.
Narrowing down your choices is the best route to take to figure out which PEO or non-PEO will handle your Payroll, Worker’s Compensation, Employee Benefits, and HR Administration.
The best place to start is to try and determine whether your needs are best met within a PEO structure or outside of it.
If you are tech-savvy and like to do things yourself perhaps a Non-PEO solution is perfectly adequate for you.
We found many young technology-oriented firms like this approach.
Companies that have always done everything internally can also benefit from a non-PEO solution especially if they are not willing to initially allocate financial resources to an outside provider.
If you are less interested in dealing with HR issues, increasing regulation, benefits, and payroll and want a provider to co-share the responsibility then a Professional Employer Organization (PEO) is more appropriate.
Non-PEO solutions have increased in attractiveness recently in part due to their technological innovation and the pouring of investment money into companies providing this type of service.
The top two service providers in this space are Zenefits and Namely.
These companies’ strengths lie in their HR Technology platforms. They do not co-share any legal responsibility of keeping you compliant with federal, state, or local labor laws or other regulations.
They provide the technology and support for it so that you can then use it internally. With this technology you can tie payroll, worker’s compensation, and employee benefits to it.
Zenefits backed by venture capital got a lot of notoriety recently.
Their business model is to share their cutting-edge technology with all their client companies who want to use their platform for free as long as they are willing to get the various insurance solutions they would get anyway through them; primarily health insurance. This is how they get compensated; by gaining a commission from those carriers.
Zenefits’ compensation does not affect your business financially in one way or another so there is no downside to making them your broker of record.
The main advantage we see is the gained access to a nice technology platform that is heavily financed and where upgrades can be made regularly.
On the other side of this, we find Zenefits experience lies primarily in its technology and less so in insurance and other components. The majority of issues we found were in dealings with health insurance and some payroll related.
The onboarding process with Zenefits seems to be smooth enough in most cases. You are assigned an implementation manager to help you through the onboarding process. Most people have nice things to say about them.
Another company heavily advertised and very well financed is Namely.
They have a similar model as Zenefits, except they do charge for their technology and the cost depends on which modules you require.
Clients, on average pay between $10 and $20 per employee per month to use their technology.
We hear favorable reviews regarding their HR platform and like Zenefits we find tech companies are more drawn to them than others.
A Top Contestant Adapts
If payroll was all you needed, then ZenPayroll was the equivalent sexy tech solution out there.
Zenpayroll has rebranded to their new name “Gusto”, which has been a great move to keep up with the Zenefits and the Namelys and adapt to their successful model.
Their Pricing is very affordable falling right in between the two while enhancing their services from just payroll to now offering compliance and benefits administration.
If you are like most employers and prefer to spend the least amount of time dealing with payroll, worker’s compensation, employee benefits, and HR administration, perhaps a PEO suits your needs best.
For a list of PEO benefits read our article Top 5 Reasons to use a PEOs.
The main key difference between Non-PEO HR solutions such as Zenefits, Namely, and Gusto and PEO alternatives is Co-employment.
When partnering with a PEO, a co-employment relationship is created. This means that your company then operates under the federal tax ID of the PEO as opposed to retaining your own during the relationship.
This is important because through this relationship you gain access to the employee benefits of the PEO and other lines of insurance as well as the PEO’s worker’s compensation coverage.
Many if not most of our clients cover all PEO fees with the savings generated in these two areas and have in turn lowered their bottom line costs by choosing to partner with one.
PEOs when co-employed with your company will then assume the co-shared responsibility of keeping you compliant with all federal, state, and local labor laws.
Non-PEO solutions do not offer this level of protection, handholding, or access to their master health insurance plans or worker’s compensation policy.
Selecting a Provider
The job of picking one of the above solutions has gotten exponentially more complex than ever and making the wrong choice can be costly.
When the “mud” hits the fan, who do you want next to you in the trenches?
It is highly recommended you seek expert advice when evaluating your next HR partner.
The Huldisch Group is here to help. Contact us today for a free consultation.