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Construction PEOs: What Does It Mean To Be a Leased Employee?

Apr 5, 2008
A construction PEO is a Professional Employer Organization. Essentially, their job is to manage the employment aspect of a business for a fee from the business owner. The business usually already has employees that work for them, and the PEO will assume employment of those employees. Typically the jobs of the employees change very little. In fact, as an employee you may notice no change except perhaps a different name on your paycheck and a change in your employee benefits. Any changes employees perceive with a construction professional employer organization transition are usually improvements as its job is to provide better management of the employees.

When a construction company decides to utilize a construction employee leasing, they will hire the company of their choice to hire their current employees, then "lease" them back to the construction company for a price. The construction employee leasing company becomes the legal employer of all of these employees, however the owner of the company still has control over the employees on a daily basis. The construction PEO company handles the aspects associated with being an employer, such as payroll, payroll taxes, employee benefits, workers compensation, unemployment, etc. The construction company owner will simply write one check every pay period and all of the expenses are covered out of that check.

As an employee working for a company that is being transitioned to a construction PEO, you will probably be informed of the change, however very little in your daily job will change. You will start to receive a paycheck from the HR outsourcing company instead of the company you are doing work for, which is hardly noticeable for most employees. You will also probably have to sign up for your employee benefits again, or for the first time if your current employer didn't offer them. Depending on the construction PEO being used, you will probably have to go through some form of background check and screening process but, for the most part, if you are working for the construction company that utilizes a PEO, very little else will change.

So what are some of the benefits of being a "leased" employee of a construction PEO? Stability, for one thing! When your employment is through an employee leasing company, they can help find other work for you if the company you are currently working for needs to downsize. If the company manages a large number of employees for companies, the chance are very good that as one company needs fewer employees, another one needs more. Construction PEOs can operate similar to a temp agency in that aspect which is mutually beneficial for the employees that can take advantage of stable employment as well as the construction companies that can have more or fewer employees as business demands change. They are different than a temp agency because they assumes the responsibilities for a business' existing and future employees.

Another advantage to being with a construction PEO is that you may experience a change in benefits for the better. A construction PEO may have thousands of employees, whereas your former employer might have had between 50 and 100. Smaller companies have a more difficult time offering benefits to their employees because the risk pool is smaller so rates tend to be higher. A construction PEO with many employees has a much larger risk pool, meaning lower rates for insurance, saving the employees money in copays and deductibles. In addition to insurance, smaller companies are less likely to have a retirement plan whereas larger construction employee leasing companies may have that option. Ultimately, construction PEOs are almost always mutually beneficial for the company and the "leased" employees.
About the Author
Stewart Baker writes for PinnacleOutsourcing.com They are the leaders in offering high-risk construction PEO services. AMS Staff Leasing relieves construction company owners from the day-to-day grind of dealing with paperwork and employees by acting as a leasing PEO.
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