Workers Compensation Rates, Payroll and Human Resources … Three areas that will often make the small business owner cry out for help. Are you the owner of a Daycare Facility or Preschool? Finding a solution for all three of these can be challenging, but chin up, it’s not impossible.
PEO Advantage invites you to join us for our 3 part series on Daycare and Preschool-specific PEO solutions! We’re making it easy to digest and so that you can go back to investing time and energy into what matters most – the children!
Part 1: Workers Compensation
Meet Sandra. Sandra is the owner of a Daycare Facility that has been in business for ten years with no hiccups aside from the kids. Yet, she pays extremely high workers compensation insurance due to the “high risk” labels stamped on her industry.
Why is she considered “high risk?” Employees of Daycare Facilities, Childcare, and Preschools are constantly bending over to pick up children or reach into cribs and playpens, which results in a high propensity for back injuries.
Workers Compensation rates vary from state to state and in Florida where Sandra and her business reside, there is a manual rate of 1.28% per $100 of wages. Sandra has numerous employees making $12/hour which is an annual salary of about $25,000. As a result, one employee only generates $320.00 per year in insurance premiums. One sprained back can cost the insurance company more than $5,000!
Realistically, Sandra is very fortunate she even has Workers Compensation Insurance right now. This common scenario within the industry creates extremely high loss ratios for the insurance companies, and daycare facilities with claims often become uninsurable!
Solution? Go PEO! A PEO (Professional Employer Organization) enables clients to responsibly and cost-effectively offload the management of human resources and other employment-related tasks including employee administration, workplace safety, compliance, unemployment and workers compensation claims, risk management, benefits, payroll, payroll tax compliance and more (Read more here: “What is a PEO?”)
For the owners of Daycare Facilities and Preschools specifically, PEOs play an extremely important role in risk management, purchasing power and claims management. Through the co-employment relationship, a PEO inherits the risk by placing your employees on their deductible – This also allows them to buy coverage at much cheaper rates since they are pooling thousands of employees.
While prevention is limited to “safe lifting practices” and may not actually prevent the next injury in the workplace due to an employer’s inability to monitor every single lift of the day, a PEO’s claims management team will help keep a $5,000 claim to $5,000 before it spirals out of control into a $20,000 claim.
What about Sandra who already has Workers Compensation Insurance? Through a PEO, she gains more purchasing power. If she tries to secure a new policy on her own, insurance companies see her as a group of 7 employees – the risk is high! With a PEO, the risk is spread out across the whole policy, which includes many other companies and employees. A PEO can help secure much better rates because they are spending millions of premium dollars.
So, Sandra saves money, and Sandra can now invest that money into bettering her business. More learning materials, more toys, more field trips … All areas that make her facility more attractive than her competitors. What will you decide to do with your savings?
Join us next week as we review Payroll and Human Resources. In the meantime, if you have any questions about Workers Compensation Insurance, and would like to request a quote, contact PEO Advantage today!