Professional employer organizations are in the business of being the boss, and are usually good at what they do. With authority comes responsibility, however, and the need for PEO professional liability insurance is substantial. Here is an explanation of what PEOs do and the risks they face.
What PEOs Do
A PEO partners with companies to relieve them of leadership responsibilities associated with managing personnel. As co-employers, they provide the following services:
- Pay wages and taxes
- Comply with regulations
- Provide benefits such as life insurance and retirement accounts
Risks PEOs Face
Running a PEO encompasses all the financial risks associated with any business, such as having members of the general public sue for personal injury or copyright infringement. Besides these, a PEO also assumes risk from its clients, including liability for the actions of their co-employees.
What Professional Liability Covers
Professional liability protects a PEO from claims that it made mistakes causing a client to lose money. Examples of potential claims include the following:
- Giving bad advice
- Neglecting to fulfill contractual agreement
- Misrepresenting employee benefits
Professional liability insurance protects PEOs from claims that occur as it fulfills its duties of managing another company’s human resources. Whether or not the claims are true, a good policy can pay to defend a PEO’s reputation.