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  • Saving Time and Money with Employee Leasing

    The Retail Florist

    Imagine being able to offer your employees Fortune 500 benefits — such as 401K plans, disability insurance and comprehensive health plans — while significantly slashing the amount of time you have to spend every week doing payroll, dealing with paperwork and juggling other nonproductive administrative tasks.

    It's possible to make such benefits available when you engage a professional employer organization (PEO).

    PEOs first surfaced in 1984 as a way to control spending and reign in health care, worker's compensation and other administrative costs. As of January 1998, employee leasing had grown from 10,000 employees and 98 participating companies to about 3 million employees and more than 2,469 firms, according to the National Association of Professional Employer Organizations (NAPEO:

    PEOs operate by forming a legal partnership with an employer to handle the nonproductive employee administration activities, including human resources, payroll, government regulation compliance, taxes and record keeping.

    In essence, the PEO becomes the employee of record for the business' staff, allowing the owner to turn all attention to the running of the business. The owner retains control over all administrative activities.

    What the owner doesn't have to deal with any more are the difficult tasks, such as recruiting, hiring and firing, not to mention the mountains of paperwork that often accompanies these tasks.

    PEOs can also save a business owner a considerable amount of money. Because PEOs represent thousands of workers from many businesses, they can negotiate huge discounts on workers' compensation and medical benefit costs. These savings are then passed on to the business owner.

    In fact, a PEO can save the average small business with 25 or fewer employees up to 40 percent on the cost of unemployment and workers' compensation, note studies by the U.S. Department of Labor, U.S. Chamber of Commerce and Society for Human Resource Management.

    In many cases, the benefits that can be offered to companies due to PEOs' buying power often are far better than the benefits small business owners themselves can afford to provide. They often offer "cafeteria style" flexible-benefit plans for medical care, disability insurance and 401K savings plans.

    Some groups even offer such desirable programs as deferred compensation plans, amusement park and movie discount tickets, free checking and Visa cards, payroll deducted auto and home payment options and store discount programs.

    Other benefits of PEOs, according to NAPEO, may include reduction of turnover among employees due to improved benefits; compliance with OSHA, Equal Employment Opportunity Commission, Employee Retirement Income Security Act and other government mandates; personnel services, such as employee handbooks, forms and procedures; reduction in accounting costs; and advice that may help employers avoid wrongful termination suits or negligent acts in the workplace.

    All this expertise and advice is available from PEOs at a cost that typically runs between 1.5 and 8 percent of the company's gross payroll.


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