The unique nature of a co-employment relationship can put a professional employer organization (PEO) at risk. Anyone can make a mistake, but if that mistake costs the client money, the PEO can be liable. This is why PEO insurance is important.
The risks and liabilities for PEOs can be complex, but here are a few basic risks that PEO insurance can help with.
1. Inadequate screening
One of the services a PEO provides is pre-employment screening. If the PEO doesn’t provide adequate screening and places an unqualified worker, the PEO may be held liable for any financial loss resulting in the contract employee’s placement.
2. Lawsuit filed by the contract employee
One of the risks of co-employment is that the PEO and client company may be equally liable for each other’s actions towards a contingent employee. If the contingent employees files a lawsuit against the client company, the PEO may be at risk as well.
3. Services Provided
PEO’s often provide services, such as managing payroll or workers’ compensation. If any mistakes are made while providing these services, the PEO may be liable.
Focus on Service
PEO’s face a lot of risk by providing staff and services to clients. PEO insurance can help reduce this risk so you can worry less about liability and focus more on providing great service and staff.