At just 20 years old, the Employee Leasing, a.k.a. PEO (Professional Employer Organization), industry continues its steamrolling success at a hefty growth rate of almost 30% per year. Approximately 2.5 million Americans are currently co-employed by one of the more than 400 Employee leasing companies operating in the 50 states.

The reason for this trend is the need to outsource the frustrating "business of employment" tasks- such as hiring, human resource training, payroll, benefits and regulatory compliance. Between 1980 and 2000, the number of labor laws and regulations grew by almost two thirds, according to the federal Small Business Administration. This same study estimated owners of small or mid-sized business spent up to a quarter of their time on employment-related paperwork.

Employee leasing companies assume much of this burdensome responsibility and help businesses comply with all regulations. The employer can then focus on the income-producing areas of the business, where he/she is the expert.

Another advantage of using an employee leasing company is their ability to arrange a business' workers' compensation coverage with major insurance carriers, as well as manage the claims. They also offer human resources services delivered by certified professionals. Most provide services such as customized employee handbooks, recruitment, pre-employment screening, wage and compensation planning, and assistance with job descriptions.

Employee leasing companies help tens of thousands of businesses provide benefits such as health care plans, 401(k) tax-free savings accounts and other perks to their employees. Sponsored benefit programs can include major and supplemental health-care choices, including vision and dental care, employee assistance programs and even adoption assistance. An estimated 95 percent of workers in an employee leasing arrangement have access to a pension plan.

Almost any business can find value in a PEO relationship- clients range from accounting firms and construction to manufacturers and government agencies. The average client is a small business with an average of 19 employees, but some clients have fewer than three employees. Increasingly, larger businesses are signing up, too.

The employee leasing company enables each client company to lower employment costs and increase their business's bottom line. The client can maintain a simple in-house HR infrastructure or none at all by relying on the employee leasing company. Their professionals can provide critical assistance with employer compliance, which helps protect the client against liability. In fact, employee leasing companies have an 88 percent client retention rate due to strong client satisfaction.


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