The PEO Industry
The PEO industry is a complex thing to get your mind around. Many small business owners, bumped and bruised by the insurance industry, can be leary of the promise of greener pastures with a PEO.   The term ‘Employee Leasing’ brings up negative connotations of agencies foisting on their contractors and fly-by-night workers who come and go at a moment’s notice. When the promises and the industry terms collide, many entrepreneurs shake their heads and say, “No thanks,” before they really get their minds around what it is that they are rejecting.   There are 3 common misconceptions that most small business owners have about PEOs and you might be one of them. We thought it fitting to discuss the 3 myths about PEOs that are out there and debunk the belief system in place around the PEO industry.  

What You Likely Believe About The PEO Industry

  1. No control over employees- This is flat out inaccurate. The term ‘Employee Leasing’ is not meant to say that you pay a fee and then some random people show up at your office and say, “Hey, we’re here to work.” The employees you had from the beginning are the ones you keep. No one is hiring for you. You find who you want and fire who you don’t just like you did when you started. It’s that simple. Although, it is good to point out that you will be held responsible for adhering to all state and federal laws regarding employment. Don’t worry though, the PEO’s job is to help you understand what you are responsible for and to make sure you are staying within legal guidelines.
  2.  By the time you add all the fees and services, it’s a wash- Too many small business owners believe this without really doing their homework. If this were true then the PEO industry certainly would not be a multi-billion dollar industry. There are over 700 of them nationwide. Why? Because for a small business, they work. When you consider the legal and financial implications handed down by the ACA, this alone is one of the best reasons for a small business to consider working with a PEO. Sourcing and paying for all the benefits and insurance that a company must have now is not only costly to do on their own but takes hours to research and make decisions on. The cost for service, isn’t nearly what it would be if you were to go out on your own.
  3. If I don’t like it, I am stuck with it AKA Setting it Up Takes Too Much Time- Neither one of these statements is true and yet it is amazing how often these go hand-in-hand. Suffice it to say, no small business owners wants the upset of putting together a PEO service for themselves and their employees only to suffer the misery of unhappy workers and promises from sales people that were not necessarily true. You are not stuck in an unhappy contract. Sometimes all you need is a renegotiation with your existing PEO to get things back on track. If not, a better PEO choice can solve your problems. PEOs want you to work with them. They make your enrollment process as easy as possible in order to earn your business. A well-qualified PEO broker, like PEO Spectrum, will walk you through the enrollment process before you even ask for a contract so you’ll be prepared when it’s time to sign up. If you need to switch PEOs or renegotiate, they can walk you through that as well.

Why You Should Consider a PEO Broker

  The greatest of all myths around PEO brokers is that any savings to be had will just be lost in brokerage fees. This is not even close to true. In fact, a broker, like PEO Spectrum, does not the customer a fee. They charge the PEO for their services instead.   We know what you’re thinking, “Not so fast! Their just going to recommend the ones that pay them the most.” This is not accurate either. A PEO broker works for you. They want you to be happy with not only their services, but your PEO choice as well. An unhappy customer tells everyone. A PEO broker, like PEO Spectrum, would like you to sing their praises instead. Hopefully you are less skeptical about the PEO industry. If nothing else, you are armed with more factual information when you are looking for a PEO in the future.

If you’d like to find out more about how PEOs can help you provide great benefits and payroll management at less than you are paying now, contact us today for a free consultation.

Related Posts


You renewed with ADP and just got your new rates. They undoubtedly went up, but the question is did they go up more…

Read More

We have a current client that used our PEO Comparison Service and found a new PEO that offered better service, a better payroll…

Read More

PEOs provide a cost-efficient way for small businesses to have the HR resources and employee benefits usually reserved only for large corporations. But…

Read More

Subscribe for best practices & industry updates