• Advocacy, Community

Why We Live With the P.E.O.

A friend of mine who is an independent contractor recently had her first brush with a Professional Employer Organization, or employee leasing organization. These innovations of the contingent worker era serve as the employer of record when a business wants workers but doesn't want to hire them directly. They handle things like payroll, tax forms, background checks, and administer health and retirement benefits--if there are any. See, one among many worker abuses facilitated by the use of PEOs is to get around "minimum participation" requirements in benefits plans. The firm can offload their lower-paid employees onto a PEO so that they're not counted for the purposes of minimum participation. My friend signed a contract to do work for a large company, which informed her that she would be paid via their PEO. This required filling out about 15 pages of forms and both faxing them and mailing them to another state, delaying payment by more than a month. Even though my friend generally bills by the project, and makes her own estimated tax payments, she must fill out a weekly time card and be paid according to a fictional "hourly rate," subject to withholding, because of the PEO's inflexible model. PEOs are like mirror images of unions--third-party organizations that help employers create less rewarding jobs, without offering the benefits of either association or independence for the worker. "It is important to regulate what type of temporary workers are being used in each situation and validate that the most effective and compliant type of worker is in use," says one PEO. Is the most effective worker always the most compliant? I think it depends what they're complying with.

Freelancers Union Creating a better future for all independent workers across the United States.

View Website