Staffing Industry Insurance: The Rise of Co-Employment
President Obama recently signed new legislation which created a definition in the federal tax code for the growing number of operations known as Professional Employer Organizations (PEO). According to the National Association of Professional Employer Organizations (NAPEO), the legislation was part of the Small Business Efficiency Act which includes provisions that specifically define the role and duties of a PEO and create a voluntary certification program within the IRS. Supporters of the legislation state that the new inclusion will help legitimize and regulate PEOs. They hope it will also help provide legitimization to PEO that handle employment tax issues and back office administrative and HR tasks.
PEO’s are becoming increasingly prominent in America as more and more businesses are looking to cut costs and outsource staffing and human resources responsibilities. Just as the demand for staffing services has increased, so has the demand for outsourced human resources management. The National Association of Professional Employer Organizations estimates that 2-3 million Americans are currently co-employed in PEO situations and the industry has been growing at an average rate of 20 percent a year for the last six years. PEO’s are especially popular with small and medium sized businesses that lack the infrastructure and resources to perform such functions in house.
Unlike a traditional temporary staffing firm, PEOs typically do not supply labor to the worksites. Instead, they co-employ existing staff members and provide services and benefits to both the worksite employer and the employees. As defined by the APEO, Professional Employer Organizations are third party business entities which offer services such as the management of human resources, employee benefits, payroll and workers’ compensation.
Co-Employment, as these services are known, is one of the prevailing trends in the current U.S. economy, and many experts credit such practices as one of the driving factors of job growth and employment rates in recent years. As such, some staffing operations have begun offerings both temporary staffing and extended employment services as the demand for both continue to rise.
As the demands and needs of the staffing industry change, it is important that your client’s protect themselves, their assets and operation from growing risk exposures. Staffing is a dynamic and complex industry with many liability risk exposures. At World Wide Specialty Programs, we provide insurance solutions to help the staffing industry manage their risk exposures and protect their assets. Our complete portfolio of staffing industry insurance policies is available to agents and brokers to help their staffing clients attain the unique coverage then need. To learn more about our operation, give us a call today at (877) 256-0468.