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Why Blue-Collar Employers Should Consider PEOs

What Can PEOs Do for Blue-Collar Businesses?

Professional employer organizations, known as PEOs, provide small to midsize businesses comprehensive HR for routine needs and emergency solutions. Overall, PEOs ease the administrative process, mitigate risk, create healthier work environments, and lower costs for businesses. 

Working with a PEO offloads payroll, benefits, HR, tax administration, and more from businesses and onto outside experts. In addition, PEOs administer HR according to state and federal laws, allowing small businesses to focus on their product rather than complicated regulations. 

On average, businesses utilizing PEO services expand 7 to 9 percent faster, report employee turnover 10 to 14 percent lower than those without PEOs, and cut their chances of closing down in half. Per employee, PEOs save businesses $450 on the administrative costs of HR.

Many small to midsize businesses recognized these benefits and switched to PEOs. In 2018, 15 percent of employers with 10 to 99 employees used PEOs;  meaning PEOs handled 2.4 percent of United States civilian employment HR needs that year.

Certain businesses benefit from using PEO services more than others. For example, industries with high risk, like construction or manufacturing, require specialized HR. Rather than navigating OSHA regulations and regional laws themselves, businesses in high-risk blue-collar industries benefit by utilizing the expertise of a PEO.

PEOs can reduce risk in blue-collar businesses specializing in:

  • Machinery
  • Aircraft maintenance
  • Materials handling
  • Food service
  • Electric
  • Pipefitting

In high-risk industries like these and more, PEOs may handle risk mitigation, workers’ compensation, payroll, and tax deductions. Exact responsibilities occur according to the client service agreement between a PEO and their client. A client service agreement determines contractual allocations. For the responsibilities a PEO agrees to take on, the PEO assumes specific employer rights, obligations, and risks by establishing and maintaining a relationship with the client’s workers.

PEO Benefits Specific to Blue-Collar Employers

Blue-collar employers require the same HR needs as white-collar companies; however, they necessitate additional risk mitigation and regulatory compliance assistance. PEOs take this and other factors under consideration when responding to blue-collar HR needs. 

PEOs offer blue-collar employers limitless benefits. The most popular PEO services for blue-collar employers address risk management, workers’ compensation, union affiliation services, payroll, and certification needs.

Risk Management

All employers must provide a safe work environment for their employees, but a blue-collar business operates in riskier environments. Therefore, PEOs work with businesses to design workplace safety programs that keep employees and regulators pleased. Specifics include safety training resources and guidance on OSHA inspections and compliance for an unlimited number of worksites.

The risk management process includes multiple steps. PEOs manage these steps. To reduce risk, PEOs will begin the risk management process by:

  1. Identifying potential risks such as general liability, workers’ compensation, and employment practices liability.
  2. Measuring frequency and severity of the risk to establish workplace safety weaknesses, strengths, and goals.
  3. Exploring alternative solutions, including controlling, transferring, accepting, or avoiding risk. 
  4. Implementing the chosen risk management plan, including the establishment of a formal process developed for consistency. 
  5. Monitoring results and continuing to adapt the strategy for long-term safety and profitability. 

The risk management process includes multiple steps to best ensure lower experience modification rates. Insurance companies calculate experience modification rates, or EMR, by inputting the number of claims/injuries a company has had and their related costs into a formula. An EMR of 1 or lower indicates safe workplaces. Insurance companies may lower insurance costs for businesses in this EMR range. Conversely, an EMR above 2 will lead to higher insurance rates. So, besides reducing injury, PEOs implement rigorous workplace safety programs to prevent rising insurance costs.

Outside of traditionally unsafe environments, workplaces should consider risk management to keep their insurance rates low from the start. For example, one of the leading causes of injury at work is tripping. The 2017 Liberty Mutual Workplace Safety Index reported that tripping or “falls on the same level” was the second most common cause of workplace injury that year. Tripping can happen in the kitchen, bathroom, or parking lot, putting nearly every business at risk for this type of injury. Avoid the financial fallout of trips and other risks with a risk mitigation plan.

PEOs also consider more significant environmental conditions associated with the location in risk management plans. Risks related to regions and specific areas include:

  • Asbestos
  • Low air quality
  • High carcinogens and rates of cancer

These above-mentioned serious risks can be accommodated in PEO risk mitigation plans. In addition, for unchangeable risk factors, PEOs allow better health insurance and related benefits, keeping employees and employers covered in the long run.

Download: Why Blue-Collar Employers Should Consider PEOs

Workers’ Compensation

Every blue-collar business fears expensive workers’ compensation cases. PEOs exist to ease the likelihood and results of workplace accidents with risk management programs. But what if an injury occurs despite risk mitigation?

Workers’ compensation insurance programs are another specialty of PEOs. If one of your employees gets hurt on the job, workers’ compensation insurance helps cover medical expenses, lost wages, ongoing care, and even funeral expenses. Almost every state in the country requires workers’ compensation, and PEOs will make sure you’re meeting regulations in your area while preventing excessive payouts.

A good workers’ compensation insurance plan is essential, but so are health plans with appropriate benefits to complement workers’ compensation insurance. PEOs offer workers’ compensation benefits within a business’s group health plans. PEO health plans can accommodate HMO, PPO, Traditional, and Self-funded Plans, so employees have the coverage they need for workers’ compensation.

PEOs can also develop managed care programs for injury response on the job site and at healthcare providers. Programs include on-site provisions, a network of talented providers, and lower workers’ compensation costs. The best-managed care programs include on-call medical professionals that utilize in-network medical systems for better care and lower costs.

Will Canal HR entirely replace in-house HR?s

Canal HR works to best meet the needs of small to midsize businesses. Some businesses prefer PEOs to replace HR entirely. In this case, Canal HR will need a contact point with the business, but besides this, we take-on most HR responsibilities.

For businesses retaining HR, Canal HR will bring in a custom set of services to fill-in the gaps and ensure low benefit prices. Have a question about another facet of PEOs and their positive impact on blue-collar businesses? Contact one of our PEO specialists today to learn more about the services and competitive prices that Canal HR offers.

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