COVID-19 forces small employers to get creative with their benefits

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HR and information technology management provider Rippling has debuted a professional employer organization to simplify the remote hiring process for U.S. startups.

PEOs gives employees access to the same benefits utilized by larger employers, without the high costs and minimal compliance headaches.

“There's a huge amount of pain that comes with manually administering employee information across a company,” says Matt Macinnis, chief operating officer of Rippling. “If a company joins a PEO then that company's employees have access to a full pantheon of benefits. There are two big buckets of what employers get out of a PEO, and one is really significant cost savings around benefits.”

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The second thing is that PEOs can take on the heavy load of HR administrative burdens, such as providing healthcare coverage and handling all payroll, benefits, tax and compliance on behalf of the employer. The COVID-19 crisis has hit startups with new challenges. A PEO can help these employers, who must register separately in each state where they hire, in order to keep everyone insured and comply with local tax and labor laws.

PEOs also offer access to retirement plans that small businesses may not be able to administer on their own, according to data from the National Association of Professional Employer Organizations. The NAPEO data also suggests that businesses in a PEO arrangement grow up to 9% faster, can have a 14% lower turnover, and are 50% less likely to go out of business.

What makes Rippling's PEO offering different is that employers — and their brokers, if they choose — still have control and access to payroll and benefits, rather than having to talk to someone at the PEO to make changes or navigate clunky third-party software. Because the PEO is built on top of Rippling's HR platform, it's easy for clients to leave the PEO when they get larger without losing their employee data or having to implement all new software.

“Fundamentally Rippling is a software company for managing your company overall,” Macinnis says. “The idea that we could implement this on top of the software, instead of it being a separate thing was so tantalizing because we can walk up to a customer and say: ‘Hey, click this button and you will reduce your benefits expenses by 20%.’ [Employers can] save an average of $1,800 per employee, per year on HR and benefits if they opt-in.”

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