Workers’ compensation is one of the most important rights that certain employees have. It can be the difference between them getting the compensation that they deserve when they get hurt on the job and being put in a very difficult financial situation.
In 2021, there were over $42 billion in net premiums written for workers’ compensation.
This works differently for every industry, so it is important to recognize what employees are entitled to when it comes to workers’ compensation in your industry. Today, we will be focusing on landscaping companies.
What do you need to know about this if you are part of a landscaping business? What expenses do you have to consider for this if you are a landscaping business owner?
This is your guide.
What Do PEO Companies Do?
The first thing you need to know about workers’ compensation is that one factor in how it is given out is what type of company you have set up to do so. One of these options is a PEO company.
So, what is a PEO company? PEO stands for professional employer organization.
These are companies that can handle your workers’ compensation needs along with other human resources needs from top to bottom. What this means is that this type of company already has a workers’ compensation program in place.
Essentially, if you were to enter a situation where you get hurt with this type of place, they would already have all of the resources in place to start the process for you to get workers’ compensation.
These types of companies also do not hand off the insurance responsibilities to another company. If anything, they may hand off the operations aspect of it to a third party. We will get to that later.
What you need to know here is that these types of companies are the ones that have employees on full payroll, they give benefits to employees, they have a human resources outlet for employees with any concerns, plus the workers’ compensation described above. In other words, these types of companies should be able to give employees access to everything that they need.
These types of companies are also typically the one place that can handle all of these needs for a company that they are working with. It could be exactly the thing that can help landscaping owners focus on other aspects of their business. With a PEO handling everything in the HR department, it frees up owners to think about things like equipment, staffing, and marketing.
What Is a PEO Insurance Policy?
Next, we will talk about what exactly a PEO insurance policy is. Essentially, this is an insurance policy that can help small businesses get covered for work incidents at an affordable rate.
How this works is that a business owner may buy a group package with an insurance company. The terms of this policy typically cover any liabilities that the business owner has, the minimum health insurance coverage that they need to provide their employees, benefits, potential workers’ compensation, and more.
You need to think about workers’ compensation as insurance coverage. This basically covers your business from the majority of incidents that may happen around your business.
The cost of this type of policy may depend on how many employees you have in your company. That is because some of these types of insurance policies charge depending on how many employees you want to be covered.
For example, you could end up paying up to $160 per month per employee in certain types of businesses. That is why it is important to do an estimate of this cost first before you sign up for a PEO insurance policy. You need to make sure that you can afford this cost as a business owner and that you are getting everything that you expect in your insurance policy.
This could be the difference between having the proper coverage for an insurance policy and being left on the hook for tens of thousands of dollars in an unexpected work incident. Make sure that you read over these terms carefully and that you select the right PEO insurance policy for you.
What Is the Difference Between a PEO and ASO?
Now that you know what a PEO insurance policy is, it is time for you to understand the differences between this and other options. For starters, we are going to compare a PEO to an ASO.
For those of you that do not know, ASO stands for an administrative services organization. What this means is that they will be in charge of making arrangements for a company that wishes to have workers’ compensation.
So, what is the main difference between that and a PEO? Well, the short answer is that an ASO may not actually have their own policies that they can offer employees of your company.
What they do instead is act like a middle management company. They will put you in contact with companies that can help you with this such as a PEO company. An ASO will also make sure that they find a workers’ compensation plan that is suitable for the company that it has as a client.
Another key difference here is that an ASO is not financially responsible for workers’ compensation plans or employee benefit plans. Their main job is to connect you to a company such as a PEO that can help you with this.
So, if you are looking for coverage for an incident, that is something that you are going to have to lock down with another company before it happens.
For administrative services, these companies can be useful because they can save a business owner a lot of time on research for the proper insurance company. However, as a business owner, realize there may still be an extra step or two that you need to take if you are going to work with an ASO.
What Is the Benefit of a PEO?
Just above, we talked about the differences between a PEO and an ASO. The main question now is, what is the benefit of a PEO?
Well, the main benefit is that you can work directly with a company on all of your human resources needs. This does not just stop at workers’ compensation.
It can include anything from employee benefits to human resources, payroll, workers’ compensation, and more. What this means is that you have a company working directly with you on all of this stuff.
This can be a great arrangement for those that have small businesses and simply do not have the manpower to keep up with all of this themselves. Rather than hiring an entire staff to do this, you have the option to outsource your entire human resources department.
Human resources can spend about 21 days each year in working hours for payroll. This can be anything from adding up the costs of insurance, handing out benefits, making sure employees receive their proper pay, calculating payroll taxes, and more. With a PEO, you rid of all of the working hours it takes to manage this and you hand this off to somebody else.
As a business owner, this can leave you more flexible not just in time but in financing your business. You can use the money you would have had to use on human resources for marketing your business. You can also invest in better equipment for your landscaping company to get jobs done faster.
For those that want to grow their business quickly or simply cannot afford to hire an entire human resources staff, a PEO provides these business owners with a great alternative.
What Are the Differences Between the Services Offered by an HRO, ASO, and PEO?
We talked about both PEO and ASO companies above. Now, we will add the HRO into the mix. For those that do not know, this stands for human resources outsourcing.
The main differences between that and the above are really quite simple. When it comes to an HRO, it is specifically a third-party company that helps with very specific human resources tasks.
So, if you only need certain tasks done for human resources in your company, then this can be something that works very well for you.
An example can be if you only need a company to do payroll and tax services for you. With an HRO, it is possible to have a package plan with a company that is exclusive to these tasks. Because of this, your company can end up saving money but still be more responsible for other HR tasks versus working with one of the other companies.
Now, we will go back to a PEO. As discussed above, a PEO is a company that is essentially a co-employer. That is because they already have all of the human resource package plans that you may need to hand out to your employees.
So, they would be responsible for providing a company with things such as human resources, payroll services, benefits packages, workers’ compensation, and more.
How does an ASO fit into this? Well, this company is more like an HRO because it is technically a third-party company. However, the main difference here is that this is the type of company that can provide all of the human resources and administrative services that your business needs.
All of these companies can provide efficient services for your business. Which one provides the best services? Well, that is going to depend on your business needs.
Is a PEO a Good Idea?
The answer to this question depends on your specific business needs. If you are someone that wants everything done with one company and you have a direct contact that can answer your questions, this may be the way to go for your business.
There are plenty of businesses across the United States that are very happy to work with a PEO company. These companies have over 173,000 clients across the country.
That means there are plenty of small businesses out there that can use some assistance from a PEO company to manage all of their human resource needs. If you are a business owner that needs to dedicate time to grow your business, this type of company can take some of the pressure off of your hands.
What Is ASO in HR?
Finally, you may still be confused about what an ASO is. Think of it as a company you can outsource all of your HR stuff too. However, because they are not a co-employer, they are still specifically a third-party company.
As a landscape business owner, there may be other tasks that you have to outsource or hire independent contractors for. Well, think of an ASO as another one of those things that you need outside help with.
The reason for this is that they can technically be an independent contractor and are not part of your business in any shape or form. This is different from a PEO that would technically be part of your business.
Learn More About Landscaping Companies
These are just a few things that people who own landscaping companies should know about workers’ compensation. It is something that you are going to need to be covered as a business owner if you want to avoid a potential financial disaster.
Use the information above to get a better idea of how this works. Then, you can decide which human resources arrangement, if any, is the right option for your business.
Do you want to know more? Get a quote from us today.