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Have you ever wondered how pricing within the PEO and employee leasing world works? The cost of a PEO can be easy to understand if you're aware that there are only 3 variable parts of your monthly fee:
These can either be written at the "manual" state/NCCI-determined rate, at a discount if you have had good claims history or at a surcharge to the manual rate if you have had poor claims history.
This rate will vary based on the amount of payroll you run. The more payroll you run, the lower your administration costs should be.
But, beware overestimating how much payroll you will have since you may have a minimum set based on your projected levels. Estimate too high and you may end up paying even more with a lower administration rate because your minimum rate is higher then what you would normally be charged.
The starting rate in Florida is 2.7% for new companies. Some PEO's will offer lower or higher SUTA rates, but the max rate in Florida is 5.4%.
After each employee makes a specified amount of money per year (different for each state), the employer is no longer required to pay State and Federal taxes. Some PEO's will continue to charge this tax as a fee even after the government is no longer collecting the money.
Other than the three variable costs listed above, your only other cost considerations should be:
This charge is incurred to offset the cost of paperwork and efforts involved with enrolling a client. Set up fees normally range from $200 - $15,000 depending on the complexity of the company being enrolled.
This is a charge that is only incurred if you have a workers' compensation claim. They typically work in a manner very similar to that of a health insurance deductible. The client company is responsible for the cost of the claim up to the cost of the deductible before the PEO or carrier assumes responsibility for the remainder of the cost.
Some PEO's will charge collateral when you first sign up with them. This is to ensure claims are paid and that the PEO is not left with unpaid charges if/when the client leaves at the end of their contract.
There will be other small charges such as direct deposit start/stop, new employee set up fees, delivery fees for paper checks, etc., and they should be reviewed carefully prior to entering into any PEO arrangement. Typically, however, these fees are not as significant as the previously mentioned costs above.
Siracusa Staffing & Leasing can help you to determine if you are getting the best possible value. Call our team for a free quote and/or evaluation of your current plan at 844-377-2635 or use our Contact Us page.
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