Will Humphreys explains how PEOs work: they hire your employees and lease them back, shifting legal liability for things like 401(k) lawsuits. They handle HR, recruiting, and insurance, but healthcare marketplace changes have weakened that advantage. His firm offers employees a $150/month stipend toward their own plans instead.
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Let's combine these two into a quick coaching session. This is important information all of you need to know. So a PEO stands for a professional employer organization. And what it is, is an outsourced HR company. So what they do is they the first thing that people go to them for is that they hire your people in their company and then lease them back to you. And so why would you want to do that? In every sense of the word, they're still your employees. Like, you're the one with the relationships and you're talking to them and you work with them. Well, the reason being is because when they're not legally your employees, they can't ever sue you, ever.
So it's a wonderful way to divert liability around employees. And so, for example, a lot of US will provide 401s and we'll set up a relationship with some sort of outside broker, right? A peo will run your 401k for you. And what you guys don't know is that the most common lawsuit from employees to employers is around the 401k management. We outsource that to companies thinking that they're running that and doing that for us. They do not tell us what our legal liabilities are as an involved party. So when you go to peo, it's not just about leasing your employees back. So there's a premium to that, but what they do is that they provide a lot of support in terms of hr. So you'll have people who help you recruit. They're not going to come up with the systems that Rockstar Recruiter does, but they'll help you interview like, hey, I have a problem with my employee, Mary Smith. They would get online with you and legally in your state, walk through your options with you and recommend ways to talk to that person and even be in that room with you virtually. So peos are incredibly valuable. And see, up until recently, they were the best way to get affordable insurance because they would take this. They have a lot of employees. All these different companies contract with them. So they have a massive pool of employees. So they can give a small Kevin relatively to them, a small Kevin major amazing benefits that he couldn't afford on his own. However, with the recent changes in health care and the Biden administration not getting political, but just recently with those changes, I've had PEO brokers tell me that there really isn't a difference in what they can do for you versus what you could help them do on the marketplace. So what I recommend to people to provide healthcare if they don't have a company plan is to provide a financial stipend. So in the black, what we do is we offer $150 a month towards any health insurance plan that you want on the marketplace, and we cover their insurance that way. With today's like acts, that covers most people. Well, historically that didn't, but recently that really has been a thing.
