Businesses embrace staff-leasing concept

PEOs go into businesses and basically take over all of a company's workers, eliminating the headaches that come with doing payroll and administering employee benefits. The PEO pays the employees, sets up health and 401K plans, and provides workers compensation benefits. Here's how they make money: The client company pays the PEO a certain percentage of the overall payroll depending on the size of the client. Many companies are attracted to this concept because it cuts down on the problems and paperwork that come with the human resources side of their business. The administration of benefits has become increasingly complicated in recent years. Years ago, the "personnel office" of a company was made up of low-level clerks. Now, high-paid human resources professionals -- many with post-graduate degrees -- are necessary to administer benefits. Large companies hire an army of accountants, lawyers and benefits specialists. So what's the downside of PEOs? Some employees are still a bit distrustful of the concept. If they work for a company, they want to be paid by that company. That is likely to change, however, as PEOs become more commonplace, proponents of staff leasing say. They point to studies that show that "leased" employees are usually very happy under the PEO relationship. The numbers show that more companies are turning to leasing. "It's the new American mouse trap," said Myra P. Yager, executive vice president of the National Association of Professional Employee Organizations. "It is an awesome idea for small and medium-sized businesses. We are a one-stop shop for payroll, employee benefits and other business functions." One local staff-leasing company that has experienced growth is the Baltimore-based Integrated Employment Group. Founder Brian M. McComas currently has 980 employees under contract, with plans to expand in the Mid-Atlantic region in three years. Integrated Employment also has 39 contracts with about 300 employees.