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PEO Insider Issue

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New Frontiers

The landscape for PEOs is getting interesting. A brand-new type of business is emerging, HR industry disruptors are revealing lessons and opportunities for PEOs, the possibility of serving international clients is opening up, and changes in the workforce are leading to new ways to reach employees. All of these developments present new frontiers for PEOs.

The gig economy has gotten a lot of attention. This new business model has taken off, well ahead of the legal and regulatory framework’s ability to answer questions about the employee rights, data security and privacy, and independent contractor issues that have already arisen. A serious issue, worker misclassification, poses risks to the gig companies themselves and the PEOs that work with them. Flexibility, adaptability, and proper administration of gig workers, however, can mitigate these risks.

The initial apprehension felt when online-only HR providers—Software as a Service—came on the scene has subsided somewhat, at least for now. It’s clear now that PEOs have advantages over these companies—PEOs are strategic partners with customized, hands-on service, with the emphasis on service. Furthermore, the “disruption” allowed PEOs to reexamine the quality and effectiveness of their own marketing efforts and revitalize their service delivery and user experience.

Global opportunities are opening up for PEOs, too. One particular PEO has developed a global market strategy by working with a local economic development organization, which opened the door to international companies interested in expanding to the U.S.

Now that most everyone has a smart phone, Millennials populate the workforce, and people expect around-the-clock service and access, PEOs are shifting to mobile-first design. This allows access to employee self-service for people in industries that don’t necessarily use computers in their work, caters to the way Millennials work, and makes services and information available 24/7.

While technology has played a big part in these developments, PEOs will always be people-centric, setting them up for success in these new frontiers.

Know More

Departments

Healthcare

What Lies Ahead on the Healthcare Front for 2017

Americans awoke the morning of November 9, 2016, to news (surprising to many) that Donald Trump had been elected president, and that the 115th Congress would be comprised of a Republican-controlled House and Senate. No matter one’s personal views on Obamacare (aka the Affordable Care Act, or ACA), the fact is that many employers and PEOs had spent the last six years adapting to its many regulations. Now, will “Trumpcare” ease the regulatory load, or will we all be subjected to learning a different set of rules?

Legal Currents

Not-for-Profit Organizations and PEOs, Part II

In the December 2016/January 2017 issue of PEO Insider,® I covered several unique issues for PEOs serving clients that are exempt from tax under Section 501(c) of the Internal Revenue Code of 1986, as amended (code), particularly Code Section 501(c)(3) organizations. These issues included the effect upon tax-exempt status, obtaining tax-exempt status, loss of tax-exempt status, FICA, FUTA, and private foundations. This article continues with issues related to special controlled group rules, Code Section 409A, and Code Section 4980H, the play or pay mandate.

Sales

The Role of HR Technology in the Sale

Technology has never really been my strongest knowledge base. In reflecting on writing about the role of HR technology in the PEO sale, however, I realized that it has played a major role in some of my largest sales: 850 worksite employees, 600 worksite employees, 450 worksite employees. Nice deals! This article is not about using technology for fancy presentations or using wireless devices to track and measure sales activity. It is meant to provide some insight into the vital role of HR technology in the PEO sales process.

Start-up Guide

A Lawyer’s Letter to the New PEO Salesperson

Dear New PEO Salesperson: Welcome to the PEO industry! Selling PEO is very rewarding, but also challenging. You must learn the business inside and out to succeed. In your education, you will find that there are certain “landmines” to avoid in your dealings with prospective customers. I am writing this letter to you because I want you to know about these landmines up front rather than discovering them the hard way through trial and error. In particular, I want to discuss some statements I have occasionally heard you make to prospective customers that may be problematic from a legal perspective.


Columns

The Inside Word

The Challenge of Industry Identity

With the start of a new year and new clients experiencing the value of PEO services for the first time, it seems appropriate to talk about industry challenges. One of the issues the Board of Directors, committee chairs, and Leadership Council chairs are teeing up for discussing at our annual leadership retreat in early April is: “Who and what are we?” No one seems particularly fond of our current label, professional employer organizations, or PEO. We use HR outsourcing (HRO), full-service HR, strategic HR, business process outsourcing (BPO), HR solutions, and many other descriptions and tag lines for what we do. It seems like the only organizations consistently using PEO terminology are NAPEO and the IRS.

NAPEO Notebook

Concerns with Form 8973 Patrick J. Cleary

They say that those who enjoy good sausage or legislation should never watch either one being made. The same is true of regulations and various other forms of government guidance, such as revenue procedures (“rev procs” in tax parlance) that emanate from the Treasury Department and the IRS. It is by now well known that the Small Business Efficiency Act (SBEA) passed in December of 2014 after almost two decades of concerted effort by NAPEO and our members. It was a historic moment for the industry in that we—at last—were recognized in the IRS code—Section 3511. It was at once a stroke of recognition and of legitimacy. Rules that were supposed to lay out the program beginning in 2015 were pushed back a year to 2016.


Up Front

New National Survey Tracks PEO Awareness Kerry Carruthers

As you know, NAPEO’s strategic planning process guides all of our marketing and communications efforts. That’s what drove one of our most recent undertakings: A nationwide online survey of small business owners and executives to determine the level of PEO awareness and positive sentiment among this important market segment. The results will serve as the baseline measurement for one of the key goals of NAPEO’s most recent strategic plan: Doubling public awareness of and positive sentiment toward the PEO industry.

Statehouse Update

PEOs and State-Run Retirement Plans Daniel Harris

In recent years, both media and policymakers have focused on the fact that a large percentage of workers are not saving enough for retirement. According to AARP, Inc., (formerly the American Association of Retired Persons) more than 50 million private sector workers in the United States do not even have access to retirement savings plan options. It is largely due to this belief that many state policymakers have considered legislation that would implement state-run individual retirement account-type (IRA-type) retirement plans designed to make retirement savings options available to workers at small and medium-sized companies, directly competing with existing private-market programs and those sponsored by PEOs.


Capitol Comment

Key Federal Issues This Year Thom Stohler

By the time this article is published, the new Congress will already have been in session for almost a month, and Donald Trump will be almost two weeks into his administration. By February 1, I expect that most (if not all) of the Trump administration cabinet nominees will be confirmed, Congress will have passed (and President Trump will have signed) Congressional Review Act repeals of several Obama administration regulations, and Congress will have likely passed and President Trump signed a reconciliation bill that would repeal significant parts of the Affordable Care Act (ACA).

NAPEO Advisor

Additional Guidance for Certified PEOs Farrah L. Fielder, Esq.

Q. Has the Internal Revenue Service provided any additional guidance for PEOs that have been certified? My PEO is curious about ongoing requirements. A. Yes. On December 29, 2016, the IRS released Revenue Procedure 2017-14, which provides detailed procedures for certified PEOs (CPEOs) to maintain their certification. In addition, the revenue procedure describes procedures relating to the suspension and revocation of certification, and it also provides certain limited transition relief for CPEOs with a January 1, 2017 effective date of certification that do not receive notice of such effective date from the IRS until after January 1, 2017.


PEOs in the Community

Helping Kids Go to a Special Camp Matt Pepin

As anyone working in the industry understands, running a PEO can be all-consuming. So consuming, in fact, we tend to overlook many important causes in the community around us. While CountryWide HR’s stated goal is to help our clients grow their businesses, we also recognize that through charity and volunteering, we can help grow our community, and (hopefully) make the world a better place.

PEO Spotlight

SourcePointe: Robby Pierce Chris Chaney

“I learned a lot about business from him,” said Robby Pierce, president and CEO of Birmingham, Alabama-based SourcePointe. The “him” Robby credits with motivating him to launch his first business, which would eventually lead Robby to the PEO industry, is Donald Trump. Now the leader of a growing and thriving PEO, Robby did not begin his career in the PEO world. His professional journey would take him up and down the East Coast working for several different companies, two of which he owned.


The Big Picture

A Growth Agenda to Unite All Americans Thomas J. Donohue

In this time of transition for our country, the business community is optimistic about the year ahead—and realistic about the hard work required to make that optimism a reality. We’re optimistic because we see a once-in-a-generation opportunity to enact major reforms that could transition America from a low-growth to a high-growth economy, creating millions of new jobs and benefiting every American. The U.S. Chamber of Commerce’s priority for 2017 is to advance the policies and reforms required to foster this dynamic economic growth.

 

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