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Audited financials
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Audited financial statements from an independent CPA should cover all entities under common control and reflect adequate net worth and working capital as well as appropriate financial reserves for any loss sensitive or self-insured benefit or insurance plans. You may require the evaluation services of an experienced CPA with knowledge of the PEO industry and loss sensitive insurance plans.
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Insurance & benefit plans
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Insurance and benefit plans offered by a PEO should comply with applicable federal and state laws and provide coverage for the states where you have employees. This evaluation likely will require the services of an experienced attorney specializing in insurance law or confirmation by each state's department of insurance.
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Insurance evidence
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Insurance coverage confirmation should be provided for all plans offered under your service contract with the PEO, including workers' compensation, health insurance, E&O, fidelity and general liability.
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Carrier qualifications
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Insurance carriers and/or third-party administrators must be authorized to do business in the states where you have employees. Confirm each carrier's credit rating for each of the insurance products it offers via a service such as A.M. Best and research its standing with the National Association of Insurance Commissioners.
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State PEO licensing
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If your company's home state and any states where employees are located has PEO registration or licensing requirements, verify with each state's regulatory agency that the PEO is in good standing.
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Responsible leadership
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Verify via background investigations that the PEO's leadership is honest, ethical and has a history of compliance with state and federal law.
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