Issue 5 - April 2003

PEOs: a management alternative
By Michael LaMancuso

Why did you become a chiropractor? Probably not because you wanted to “boss” people around. But your practice is a business, and if you have people on your payroll, that’s what you have to do – manage them, with all the paperwork and pain that goes along with it.

One way to relieve that headache is to use a Professional Employer Organization (PEO), an alternative way to manage the people side of business, including chiropractic.

When you contract with a PEO, you and the PEO become co-employers in the employment of your office staff. The PEO assumes most responsibilities and liabilities associated with a “general employer” or “statutory employer”. You generally retain those rights and responsibilities associated with “special employers” or “operational employers”.

The PEO typically:

• Establishes and maintains an employment relationship with current and future employees at the client’s worksite;

• Pays wages and employment taxes of the employee out of its own accounts;

• Reports, collects and deposits employment taxes with state and federal authorities as the employer of record;

• Reserves a right (not the right) of direction and control of the employees and may share such responsibility with you, consistent with your responsibility for service,

• Provides benefit plans to your employees with the leverage as a much larger employer than you might be able to provide.

Why use a PEO?
Entering into a relationship with a PEO benefits a small business, even small chiropractic practices, which typically only employ three to four people. Benefits may include:

• Improved productivity. Employee-related responsibilities require specialized knowledge and considerable time. When they are done right, you get high morale and productivity, which ultimately affects patient relations. When they are done wrong, your practice can suffer.

• Focus on patients, not business. Perhaps the biggest benefit is that when a PEO assumes these responsibilities, you can concentrate on the revenue-producing side of the operations. In a chiropractic practice, it means spending more time with patients and doing the things you went into chiropractic to do.

• Better benefits for employees. Many PEOs provide Fortune 500-quality benefits, including health insurance, 401(k) retirement plans and aggressive workplace risk management, because of an economy of scale.

Not a temp agency
Don’t confuse a PEO with a temporary-placement employment agency. A temporary staffing service recruits employees and assigns them to clients to support or supplement the client’s workforce in special situations, such as employee absences, temporary skill shortages or seasonal workloads. A PEO contractually assumes and manages responsibilities for all or a majority of your workforce. A PEO arrangement is typically non-contingent in nature, while a temporary staffing arrangement usually is contingent on a completion of a project.

Michael LaMancuso is President of Contract Staffing, Inc., a Buffalo, New York-based Professional Employer Organization. Contact LaMancuso at michael@contract-staffing.com or visit Contract Staffing’s website at www.contract-staffing.com.