NAPEO’s Regulatory Database (RDB) is at the very core of the NAPEO value proposition and is positioned to become even more so with the increased prevalence of remote work. Since the pandemic accelerated the disruption of traditional office life, NAPEO has begun receiving panicked questions from regional PEOs facing a common, recurring issue: a client employer has a remote-work employee in a state where the PEO is not licensed. If your PEO faces a similar issue, your first stop should likely be the RDB, followed closely by a frank conversation with your compliance advisor.
Multi-state expansion for most PEOs can be planned or unplanned. This article will provide insight for small and middle market PEOs that are dealing with the operational aspects of multi-state expansion due to one-off employee hirings by clients in states where they are not currently licensed or registered.
The success of any organization lies in its ability to adapt and grow profitably. Without being able to shift focus and direction, a company can lose its edge, then its market share. Ultimately, it will no longer be viable in the marketplace. Sears, Kmart, and Blockbuster will forever be remembered—not for their greatness for decades, but for their unwillingness to see the changes in the marketplace and adapt.
Last year, a brand-new client learned a difficult but important lesson about the value of the PEO partnership. The client was a tech start-up in an aggressive growth mode. The owners were hiring remote workers in multiple states, including employee-friendly states, without anyone with HR expertise to guide them. The PEO model was attractive to them because they knew they were not able to grow quickly while keeping up with HR and payroll compliance. However, right after the client signed the PEO agreement, it terminated an employee based in California without reaching out to us. It turns out that the terminated employee was more versed in California law than the client. Eight days later, the client called us in a panic.
Many regional PEOs are strategically modeled to be local providers, offering high-touch service to clients they can visit in person and really get to know. Depending on location, sometimes that might include a couple of surrounding states, but most clients have traditionally been in the same home state as the PEO.
I know you’re reading this well after the fact, but as I sit here, it’s January 17, 2022: Martin Luther King, Jr. Day. I was born in the early ‘60s and came of age in the ‘70s, so to say Dr. King had an impact on the formative years of my life would be an understatement. Growing up in the deep South, it wasn’t always as clear as it is to me now, but I know my life is far better because he lived. Yours is too.
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Headquartered in Chicago, Illinois, Tandem HR is a long-time NAPEO member with a strong history of involvement in the association and industry. Tandem employees regularly lead panels and discussions at NAPEO conferences, contribute to PEO Insider,® and participate in committees. Tara Conger, chief operating officer of Tandem HR, was elected in September 2021 to serve on NAPEO’s Board of Directors.
Despite being described as more deeply divided than ever, Congress found a way to pass the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFASASHA). President Biden has said he will will sign the bill into law, and may have already done so by the time this article goes to press. This means all employees subject to arbitration agreements will have the right to choose whether to bring covered claims in arbitration or in court, even if they previously signed a PEO’s mandatory arbitration agreement. This development significantly impacts PEOs from both an operational standpoint and a liability standpoint.
2021 was filled with many story lines and trends that impacted PEO worksite employers. One of those story lines that will continue in 2022 is The Great Resignation. According to the Department of Labor (DOL), 47 million American voluntarily quit their jobs in 2021. In November and December of 2021, 4.5 and 4.3 million Americans quit their jobs, accelerating the quit rate to 3 percent. It has also been recently reported that the unemployment rate dropped below 4 percent, but there are still 10 million open positions across the country.
All PEOs start somewhere and create systems that work for them. Eventually, if the goal is to grow, scalable systems and operations need to be in place to sustain the PEO’s growth, along with the right people who can manage and execute these operations. Scaling can create many benefits for the PEO: ongoing client satisfaction, a great employee experience for team members, hitting growth targets, and ensuring profitability over the long-term. This is hard work, and it’s not for the faint of heart. Therefore, I hope to put together a practical guide to give you a roadmap for scalability.
Back in the late fall of 2008, when we started Premier Employer Services, Inc. here in Denver, Colorado, my partner at the time and I went back and forth trying to find the perfect name, with little luck. We finally settled on the name, but I must be honest with you—I never liked the name; it was too bland and way too long. We had nothing else, so we opened the doors and away we went. The name was never so bad that it rose to the top of the “important things to address” list. Every once in a while, someone would mention it and I would remark that I wanted to change it, but it was never an emergency. I continued to struggle with coming up with anything better.
Steady growth continued for PEOs in the fourth quarter of 2021, despite the dominance of the Omicron variant in the U.S., as shown in the Q4 2021 NAPEO PEO Pulse survey results.
As I write this month’s column, you are finishing up your busy time (renewals), and so are we. I’m happy to report that our renewals are not only strong, but as of this moment, we’re seeing an average 18 percent increase in 941s. We’ll see what the final number is, but it’s heartening to see a vibrant industry that continues to grow. We here at NAPEO have plunged headlong into 2022, planning for our upcoming conferences and taking on the array of issues that PEOs face on the state and federal levels.