What is an HRO?
Formerly known as employee leasing, an HRO is one of today's best management strategies for small to medium sized businesses to satisfy their employee administration needs. Our program is available to you no matter what your business size-whether you are running a small business with just two employees, a division of a major corporation or anything in between. Here's how it works: ESC transfers your employees to our payroll and, as a result, ESC becomes the employer of record (co-employer). However, you maintain the supervision and control of your workers including wage and scheduling decisions.

Who uses HRO's?
Any business can find value in a HRO relationship. An average client of a NAPEO member company is a business with 16 worksite employees. Increasingly, larger businesses also are finding value in a HRO arrangement, because HRO's offer robust Web-based HR technologies and expertise in HR management. HRO's can partner with companies that have 500 or less employees and work in conjunction with their existing human resources department. HRO clients include many different types of businesses ranging from accounting firms to high-tech companies and small manufacturers. Many different types of professionals, including doctors, retailers, mechanics, engineers and plumbers, also benefit from HRO services.

Do the business owners lose control of their businesses?
No. The client retains ownership of the company and control over its operations. As co-employers, the PEO and client will contractually share or allocate employer responsibilities and liabilities. The PEO will generally only assume responsibilities and liabilities associated with a "general" employer for purposes of administration, payroll, taxes and benefits. The client will continue to have responsibility for worksite safety and compliance. The PEO will be responsible for payroll and employment taxes, will maintain employee records and reserves a right to hire and fire. Because the PEO also may be responsible for workers' compensation, many PEOs also focus on and improve safety and compliance. In general terms, the PEO will focus on employment-related issues and the client will be responsible for the actual business operations. You continue to run your core business just as you did before. You will continue to set job responsibilities and measure work performance just as you do now.

What are the benefits to me as a business owner?
The benefits ESC's customers most often discuss are: 1. ESC's Extensive Customer Base: With companies including INC 500 firms, WNY Top 100 firms and many of western New York's leading companies utilizing ESC, business owners rest assured they are in good company. ESC's methods are proven, our services work for all industries and any size business. In fact, successful people are ESC's best customers. 2. Increased Core Focus: With ESC, business owners are able to focus on core activities like strategic planning, revenue generation, cost reduction, staff development, customer and employee retention, increasing growth and profitability. 3. Variety of Value Added Services: With ESC, business owners have a single resource dedicated to managing and supporting every facet of employment administration based on their specific business need. ESC handles everything from a simple payroll processing solution to a customized, full-scale human resource outsourcing solution. And of course anywhere in between. 4. Ability to Attract/Retain/Develop Great People: Business owners all know the value of great people. They are hard to find and tougher to keep. ESC's Fortune 500 type benefits program and Care Center provides business owners the opportunity to compete for, acquire and retain the best people. The very people that will help them become successful. 5. Increased Volume Purchasing Power: Each time we add a customer and their employees to the ESC family we become a more powerful purchasing unit for the collective ESC family. With ESC you will receive discounts or increased options on everything from health care to payroll processing. 6. The Assurance of Compliance: ESC's human resource specialists can provide guidance on ever-changing state and federal government regulations and procedures so your company remains in compliance. 7. A Built in Advisory Board: The very nature of ESC's business provides us the opportunity to learn the "best practices" of hundreds of successful companies and to confidentially share that information with our customers. The value of this is difficult to measure but remember this: what we have learned and applied have placed ESC on the INC 500 list as the 72nd Fastest Growing Company in America.

Does ESC's benefits program add value?
Yes. We use top rated, national and regional providers. We have no vested interest in buying a high priced product. It is in our collective interest to get the best price so that we can keep our total package price as low as possible. Throughout the year, we allow companies to quote on our business to ensure that we get the best value for our subscribers.

Will my employees understand ESC's program?
Absolutely. An ESC representative will explain how your company has joined forces with a larger group to provide better benefits and services to employees at reduced costs.

What is a Co-employment Relationship?
Once a client company contracts with a PEO, the PEO will then co-employ the client's worksite employees. In the arrangement among a PEO, a worksite employee and a client company, there exists a co-employment relationship in which both the PEO and client company have an employment relationship with the worker. The PEO and client company share and allocate responsibilities and liabilities. The PEO assumes much of the responsibility and liability for the business of employment, such as risk management, human resource management, and payroll and employee tax compliance. The client company retains responsibility for and manages product development and production, business operations, marketing, sales, and service. The PEO and the client will share certain responsibilities for employment law compliance. As a co-employer, the PEO will often provide a complete human resource and benefit package for worksite employees.

How do employees benefit from an HRO arrangement?
How do employees benefit from a HRO arrangement? Employees seek financial security, quality health insurance, a safe working environment and opportunities for retirement savings. When a company works with a HRO, job security is improved as the HRO implements efficiencies to lower employment costs. Job satisfaction and productivity increase when employees are provided with professional human resource services, training, employee manuals, safety services and improved communications. And in many cases, a co-employment relationship provides employees with an expanded employee benefits package, to include a 401(k), life insurance, disability insurance, discount plans, a flexible spending plan and more.

How will my staff be paid?
In the same way you pay them now: weekly, bi-weekly or monthly. We will deliver the payroll, reports and invoice. You simply pay the total amount on the invoice and we take care of everything else.

What is the difference between temporary staffing services and an HRO?
A temporary staffing service recruits employees and assigns them to clients to support or supplement the client's workforce in special work situations, such as employee absences, temporary skill shortages or seasonal workloads. These workers are traditionally only a small portion of the client's workforce. An HRO contractually assumes and manages employer responsibilities for all or a majority of a client's workforce. Industry ratios identify the HRO arrangement as a long-term relationship with nearly 86 percent of the clients and worksite employees remaining with the HRO for a year or longer. Worksite employees participate in the HRO's full range of employee benefits including, health, dental, and life insurance, vision care, and retirement savings plans.

Is an HRO beneficial to all Industries?
Yes. ESC works with all kinds of businesses, from professional office and child care centers to printers and manufacturing companies. No matter what they do, we help every Customer run their business in a leaner, more efficient manner by getting them out of the employer business.

How will my employees feel about being on the payroll of ESC?
They will love it. While they will continue to perform the same jobs, report to the same people and receive the same compensation structure, they will now be getting a fringe benefits package that is most commonly found in Fortune 500 companies. (See the attached benefits list.) These benefits are valuable to you as well because, in today's competitive market, employees and prospective employees find the benefits to be just as important as their salary. The ESC program allows you to recruit and retain the highest quality personnel.

What is the cost to my company?
Using our service may actually reduce your total cost. Our large group gives us the power to purchase items at low rates, which offsets our service charge. When you take into account the time you'll be saving in personnel administration, payroll preparation, tax filings and government compliance, ESC can actually save you money.

How do HRO's help their clients control costs and grow their bottom line?
The HRO's economy of scale enables each client company to lower employment costs and increase the business's bottom line. The client can maintain a simple in-house HR infrastructure or none at all by relying on the HRO. The client also can reduce hiring overhead. The professionals at the HRO can provide critical assistance with employer compliance, which helps protect the client against liability. In many cases, the client can pay a small up-front cost for a significant technology and service infrastructure or platform provided by the HRO. In addition, the HRO provides time savings by handling routine and redundant tasks for its clients. This enables the business owner to focus on the company's core competency and grow its bottom line.

What is NAPEO?
Formed in 1984, the National Association of Professional Employer Organizations is the national trade association for the HRO/PEO industry. NAPEO is known both as NAPEO, The Voice of the HRO/PEO Industry for government affairs and as The Source for HRO/PEO Education due to the association's education and training programs. NAPEO promotes a Code of Ethics and a number of best practices to its member companies. NAPEO has approximately 300 members with employees in all 50 states, representing more than 70 percent of the industry's revenues.

Will ESC assist me with government compliance at my company?
Yes. ESC, under the leasing option, establishes and maintains a true employer/employee relationship, unlike trade associations or payroll services. Because of this employment relationship, ESC assits your company not only with compliance with relevant state laws, but also a myriad of federal laws, such as Title VII, FMLA, ADA, COBRA and HIPAA. In many cases, these laws would not apply without a PEO relationship. ESC develop policies and procedures to ensure compliance with employment laws.

How does the HRO/PEO industry and NAPEO view unions?
Both the HRO/PEO industry and the National Association of Professional Employer Organizations (NAPEO) endorse the right of employees to organize, or not organize, in accordance with National Labor Relations Board standards of and applicable federal and state laws. Nationally, HRO/PEO's are co-employers in both union and non-union workplaces. PEO's enjoy good relations with unions at union workplaces, perhaps because of the excellent benefits and human resource management expertise offered by PEO's and because the HRO/PEO's have no incentive to be "union busters." As a part of its continuing member education efforts, NAPEO frequently sponsors seminars which educate HRO/PEO's on the right of employees to choose whether or not to organize, and which educate HRO/PEO's about compliance with relevant federal and state labor laws. Federal courts have found a joint employer relationship where each of two employers exerts significant control over the same employees". NLRB v. Western Temporary Services, 821 F.2d 1258, 1266 (7th Cir. 1987); see also Lutheran Welfare Services v. NLRB, 607 F.2d 777, 778 (7th Cir. 1979). Generally, PEO's form just such a joint employer relationship; thus joint or co-employees share an "interest in working conditions sufficient to justify their inclusion in the [Customer employer's] collective bargaining unit." Id. at 1269. PEO's comply with the terms of a collective bargaining agreement, but generally are not appropriate signatories to the agreement.

Are HRO's recognized by the DOL, Taxation & Finance and IRS?
Yes. And even more, ESC has been a leader in our industry in the community for several years. We have been approved by each of the states in which we have employees, the US Department of Labor, the IRS and the Department of Taxation of Finance. ESC is even bonded and lists all customers as additionally insured on that policy.

How are HRO's dealt with in the 1986 tax Code?
Our fees are 100% deductible.

Are HRO's recognized as the employer at the State & Federal levels?
Yes. HRO's operate in all 50 states. Many states provide some form of specific licensing, registration, or regulation for HRO's. These states statutorily recognize HRO's as the employer or co-employer of worksite employees for many purposes, including workers' compensation and state unemployment insurance taxes. The IRS has accepted the right of a HRO to withhold and remit federal income and unemployment taxes for worksite employees. The IRS has promulgated specific guidance confirming the authority of HRO's to provide retirement benefits to workers.