How PEOs Ease Regulatory Burdens for Business Owners

Regulatory burdens can be a major strain for your small and medium-sized clients. These businesses, who are often already playing catch-up against their larger competitors, don’t usually have the manpower needed to keep an eye on the regulatory landscape. They may understand the requirements one year, but struggle to adapt to sudden changes they didn’t anticipate the next.

This is one of the main reasons why, as a trusted advisor, recommending a PEO can benefit your clients.

PEOs like BBSI make it their business to stay on top of the shifting regulatory landscape. Between all of the federal, state, and local regulations SMBs are subject to, having a partner in their corner whom they can trust can make a huge difference.

Today’s post will discuss how you can share this information with your clients and help provide them with peace of mind in the never-ending saga of changing laws and regulations.

Understanding the Regulatory Landscape

To relate to your clients, you should thoroughly understand the scope of regulations SMBs must comply with. Here’s a brief overview.

Employment Laws

SMBs are responsible for adhering to various regulations, including federal, state, and local laws. These can cover everything from tax compliance to workplace safety. Here are just a few examples:

Federal Regulations

Federal laws are often aimed at employee protection and benefits.

• Fair Labor Standards Act (FLSA): This law applies to most businesses and governs wages, overtime pay, and child labor standards.

• Affordable Care Act (ACA): The ACA can affect your medium-sized clients since it applies to any business with 50 or more full-time employees. It requires them to provide health insurance or face penalties.

State Regulations

State laws can apply to a wide range of business operations, from consumer protection to employee benefits.

• California Occupational Safety and Health Act (Cal/OSHA): This state law mandates that businesses provide safe and healthy working environments, following California's specific safety standards.

• New York Paid Family Leave (PFL): New York state requires businesses to provide paid family leave to employees for qualifying reasons such as bonding with a new child.

Local Ordinances

Similar to state laws, these can apply to various situations. They may be local, but they can still pose a real regulatory risk to your SMB clients.

• San Francisco Paid Sick Leave Ordinance: Businesses in San Francisco must provide paid sick leave to all employees.

• Chicago Fair Workweek Ordinance: Chicago also mandates “predictable scheduling” for employees in specific industries.

Clearly, the complex mix of state, local, and federal regulations can have a wide impact on your SMB clients. What makes matters worse is that they can, and often do, change on short notice.

How Companies are Punished for Non-Compliance

When business owners are caught off-guard, they risk significant penalties from federal and state governments.

For example, businesses that violate the FLSA may be required to pay back wages to affected employees and liquidated damages equal to the unpaid wages. Willful violators can face civil penalties of up to $2,014 per violation. In some cases, criminal prosecution may be pursued, resulting in fines and imprisonment.

In terms of workplace safety, Cal/OSHA violations can result in severe financial penalties, particularly if violations involve serious hazards. Fines for non-serious violations can reach $13,653 per violation, while penalties for serious or repeat offenses can be as high as $136,532. If a violation leads to an employee’s injury or death, the company may face substantial fines, lawsuits, workplace shutdowns, and even criminal charges.

Local ordinances are not without their teeth, either. In San Francisco, employers who fail to comply with the Paid Sick Leave Ordinance can be forced to pay back wages and fines and provide compensatory damages to employees. Repeat offenders may be subject to higher penalties, including up to $1,000 per violation​.

This challenge can be particularly daunting for SMBs that may not have the resources to dedicate a full-time team to regulatory compliance. That's where PEOs can be invaluable.

How PEO Eases Regulatory Pressure for SMBs

Your small business clients need to prioritize every minute they get. Extra time for scanning the regulatory environment is challenging to find, and even if they can spare the manpower, they may lack the knowledge needed to make a full assessment.

Dedicated Expertise

One of the biggest advantages of working with a PEO is access to a team of experts who specialize in regulatory areas such as employment laws, tax compliance, and healthcare. These experts are always up to date with changes in the law. They’ll help businesses remain compliant without the need to dedicate internal resources.

Example: Healthcare Compliance

Healthcare is an extremely common regulatory risk, especially for your medium-sized clients with 50 or more employees.

The ACA has its complexities. Having a PEO means having a partner who can manage benefits administration and ensure compliance with ACA reporting requirements. This includes:

• Tracking employee hours to determine eligibility for health benefits.
• Providing access to compliant healthcare plans.
• Ensuring that all necessary forms are submitted to government agencies promptly.

This is a major relief for your SMB clients, as missteps in healthcare compliance can result in fines or the loss of ACA tax credits.

Personalized Guidance

As illustrated earlier, every industry and locality will have unique regulatory requirements.

An experienced PEO will have broad and deep knowledge of many business environments. They work proactively to ensure they understand new regulations and can help SMBs implement changes before they become compliance issues.

Example: Workplace Safety and Risk Management

Some of your clients may have more risk than others. Companies that work out of an office aren’t exempt from workplace safety standards, but they’ll have different problems compared to your industrial clients.

PEOs provide tailored risk and safety support to their clients, including:

• Helping to identify workplace and operational hazards and developing plans to minimize them.
• Advising on employee safety training programs.
• Developing incident response plans that help SMBs effectively investigate and respond to incidents.

By managing these risks proactively, PEOs can help businesses avoid costly fines and potential lawsuits.

Streamlining Documentation

Keeping up with compliance demands is just the beginning - additional administrative tasks often take up even more of your SMB clients’ time.

PEOs simplify the process by handling essential compliance documentation, from tax filings to employee-related forms. They can help ensure all documents are filed on time and accurately, significantly reducing the risk of penalties.

Example: Payroll and Tax Compliance

One of the primary areas where businesses struggle with compliance is payroll and tax regulations. The sheer amount of documentation can be daunting for SMBs who’d rather be focused on growing their business.

PEOs can make payroll and tax compliance a breeze. They do this by:

• Ensuring accuracy from the outset. Efficient and precise payroll technology eliminates many of the risks associated with late or inaccurate documentation.
• Understanding the federal, state, and local regulatory requirements surrounding payroll.
• Taking on the task of W2 & 1099 administration.

Ultimately, working with a PEO means far fewer documentation-related headaches for your SMB clients.

Help Your Clients Reduce Regulatory Burdens by Becoming a BBSI Referral Partner

PEOs like BBSI offer an essential service for businesses, especially SMBs, by simplifying the regulatory landscape and providing expert guidance in areas like payroll, taxes, healthcare, and workplace safety.

As a trusted advisor, partnering with a PEO to provide these services can mean one more tool for helping your clients grow and thrive. We can take on the burden of compliance, allowing SMBs to focus on their primary objectives without the threat of complex regulations hanging over them.

Unlock the benefits of proactive, dedicated compliance support for your clients. Contact your local BBSI representative today to become a referring partner.