PEO Data Session – Great Info from NCCI Data Conference
The PEO Data class from the NCCI Data Conference provided a treasure trove of great info nuggets. The Data Reporting Conference remains of the best sources of great info on workers compensation. Check it out here.
The session of PEO Data Reporting covers 77 pages of info from the class manual. I will point out a few nuggets of information. I recommend downloading the complete PEO Data Reporting manual by clicking here. The manual may require a few minutes to download – please be patient.
Page 3 of the NCCI PEO data presentation contains the NAIC definition of a PEO.
A business entity that enters into agreements with other businesses, whether under a formal contract or otherwise, under which the PEO assumes or shares employment responsibilities for all or a significant number of worksite employees of the other business, regardless of the terminology used by the parties to describe the relationship. This does not include a business entity that recruits and hires its own employees, assigns them on a temporary basis, and customarily attempts to reassign them when finished with an assignment.
The important part of the definition – what a PEO is not.
Sometimes an employer will mistake a PEO for an ASO or an HRO. I will not cover the definitions of each type of organization. The main concept to remember is to READ THE CONTRACT very carefully. We had assisted at least two companies that thought they were in a PEO when they were actually in an ASO agreement. An ASO is usually not responsible for obtaining Workers Compensation through the ASO. ASO’s and HRO’s are not undesirable companies. Make sure your company ends up with the company you contracted for services.
Check out Page 6-states that do not require a PEO to register or regulates their operation.
The material on pages 6 – 11 covers critical terms:
- Master Coordinated Policies (MCP)
- Master Policy
- Client Direct Purchase
Each state has its own set of rules on allowable types of PEO operational structures. The allowed structure should be reviewed very carefully before signing on with a PEO. Why? – Under a PEO, would your company have an individualized E-Mod or would your company assume the PEO’s Mod? The PEO’s Mod is almost always preferable.
I recommend reading all 77 pages. No one including myself or NCCI is saying that PEO’s are high-risk or an unwanted risk management technique. In fact, a properly handled PEO agreement can save a large amount of premiums.
So, go ahead and download the PEO data reporting workshop manual.
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