Working with a Professional Employer Organization

We’ve all heard the saying that few things are certain in life. For business owners in the construction sector, though, one thing is predictable: it’s not getting any easier to run your business and manage employee issues. First, you must attract and hire quality employees, and then you have to deal with all the issues that go along with being an employer. Of the hundreds of construction business owners I’ve met and advised over the years, I’ve never heard one of them say, “I started my company because I love dealing with all the employment problems involved in running a business.”

Construction business owners typically have more demands on their time, higher employment liability, greater financial risks and more concerns with cash flow than others in the business world. So, how can owners make sure they are spending their time on revenue-generating tasks? One way is by hiring a professional employer organization (PEO), a type of company that specializes in helping business owners reduce time spent on transactional human resources activities, sharing employment liability, reducing labor costs and, therefore, increasing profitability. Here are a few of the benefits of working with a PEO:

– Time can be considered a construction business owner’s most precious commodity. You may be able to make another dollar, but you’ll never get back the hours wasted on “pushing paper” and performing tasks that don’t generate revenue. Activities such as processing payroll, researching labor law changes, fighting unemployment claims and dealing with benefits administration are very time consuming. All of them are important and necessary, but, unfortunately, they don’t make your company any money.

Becoming bogged down with and not having the time to properly handle these tasks is understandable, as owners are usually focused on getting more bids out the door, meeting with clients and vendors and completing existing projects. Companies who partner with a PEO spend minimal time on administrative activities and more time on their core competencies and bottom-line initiatives.

– Most construction owners would probably admit that they don’t know each of the nearly 200 federal labor laws currently enforced by the Department of Labor, and they aren’t always familiar with the changes that are made every year. Researching the intricacies of employment laws like the Fair Labor Standards Act (FLSA), Family Medical Leave Act (FMLA) or Immigration and Nationality Act (INA) can be mind-numbing at best. How many owners truly know if they are 100-percent compliant with all the employment laws to which they are expected to conform?

Unfortunately, many owners don’t have a degreed human resources professional on staff to rely on for help, nor can they afford one. Without that resource, an employer might make one misstep that could negatively and significantly impact the course of the company’s financial future. PEOs help by giving continuous HR support, developing employee handbooks and working with business owners to solve problems when they arise.

– One way that PEOs help owners manage cash-flow problems is by allowing them to “pay as they go” for their workers’ compensation insurance. Businesses who partner with PEOs are no longer forced to hand over large down payments or go through a time-consuming and sometimes expensive annual audit. There is also no more guessing your annual payroll to determine workers’ compensation premiums, a practice that can result in audit fees for underpayment. For larger contractors and those who must carry higher-risk (more expensive) workers’ compensation coverage, using a PEO can allow them to keep cash on hand to grow the company throughout the year.

– We all know that by law you must pay your employees correctly, withhold the proper amount of taxes, garnishments, etc. and, most importantly, pay them on time. Recently, I spoke with a CPA firm that has more than 300 employees and outsources their payroll. When I asked them why they choose to outsource payroll, given the fact that they had close to one hundred certified public accounts and scores of paraprofessionals on staff who handle payroll and tax compliance by profession, their answer was simple: “Doing weekly payroll is not a revenue generator for our firm.” Their philosophy is that they would rather have their employees work on things that add to the bottom line than perform transactional activities such as weekly payroll. 

Is your construction company this laser-focused on the activities that make you profitable? PEOs allow owners to remain focused on bottom-line initiatives by handling weekly payroll administration and tax compliance, filing 940s and 941s and handling W-2s and other forms at the end of the year.

– We’d probably all agree that one of the secrets to maintaining a successful construction company is attracting and keeping highly skilled employees. Benefits such as healthcare, dental insurance and 401k plans are essential in attracting top talent. PEOs allow you to provide such benefits by administering a full suite of employee benefit options for your company. Furthermore, whether you have 25 or 125 employees, healthcare delivery in our country is going to change in the near future. Any employer can benefit from having a team of professionals advising and assisting them through new rules and regulations.

– Employee safety is one of your most important responsibilities as an owner. Partnering with a PEO allows you to have additional support with OSHA compliance assistance, weekly safety meetings and tailored safety manuals.

PEOs offer services to help you follow proper employment practices, streamline cash flow, “push less paper,” comply with labor laws, provide great benefits for employees and, ultimately, reduce labor costs. There are indeed few things in life that are certain. PEOs, however, can provide a degree of assurance to protect you as an owner and safeguard the future of your company.