Your Guide to Professional Employment Organization Bond
The professional employment organization (PEO) bond is relatively new to the surety industry. Because PEOs essentially function as outsourced HR departments, they have a great deal of financial responsibility. To reduce fraud and other instances of malpractice within the PEO market, government agencies have begun regulating PEOs much more strictly. As a result, a number of states have established PEO bonding requirements.
What is a PEO bond?
PEO stands for professional employer organization. A professional employer organization is a firm that provides a service of outsourced employee management tasks. This may include handling employee benefits, payroll, risk/safety management, and training and development while the client company continues to manage the employees’ day-to-day activities. PEOs will charge a service fee for providing the human resources and payroll functions of the client company.
Required by a number of government entities, A PEO bond is a license and permit surety bond.This bond is required for business in order to receive a license to provide employer services to businesses. The surety bond helps ensure the professional employment organization conducts business in compliance with the rules and regulations of a particular state.
What do PEO bonds do?
The financial security provided by surety bonds reinforces the operational certainty for professional employment organizations. The legal language found on PEO bonds typically requires the bonded organization to do the following:
Meet state registration and licensing requirements
Provide workers’ compensation policy collateral
Guarantee PEO performance of employer responsibilities
Guarantee payment of clients’ service fees
How Can I Get a Professional Bond?
The PEO bond amount varies but typically ranges between $50,000 and $100,000. For this reason, underwriters are relatively rigid when reviewing applications. Those who qualify for the standard bonding market will have a much easier time getting a the bond. If you need a PEO bond, contact a SuretyBonds.com surety specialist to see if you qualify.
State Specific Costs
Over 40 of the US states require surety bonds for PEOs operating in their state. Professional employment organization bond costs and requirements vary greatly as the bond amounts and regulations surrounding each license are established on a state level. Select your state below for more information about PEO bonds in your area or call 1 (800) 308-4358 to speak with a surety expert.
How Much Will a PEO Bond Cost?
Your surety bond cost will vary depending on your state, bond amount and individual application. The best way to determine what your PEO bond will cost is to contact one of our surety specialists for a free, no obligation surety bond quote. SuretyBonds.com can provide qualified applicants with a price quote with one business day.
If you are establishing a new professional employment organization or are looking for a new surety bond producer, look no further. Call SuretyBonds.com at 1 (800) 308-4358 and speak with one of our specialists immediately, or apply online in less than five minutes. After reviewing your application, one of our surety specialists will call you to discuss your options and help you get your bond at the most competitive rate!