Professional Employers Organizations (PEOs)

The AAOMS has received many questions about Professional Employers Organizations (PEOs) as a result of the July/August 2010 Practice Management Notes article, "Emerging human resource trend: The use of professional employer organization for employee benefits in the oral and maxillofacial surgery practice." Below, please find the questions and answers most frequently asked about PEOs.

Question:: Pertaining to the contract with the PEO, can you get out of a contract with them? Steps to do so?
Answer:: The contract with a PEO must be a written contract signed by both parties. There should be language in the contract that details the procedure and amount of time required to terminate the contract, by either party.
Question:: Is the Doctor an employee of the PEO?
Answer:: If the practice is incorporated as a "C" or "Subchapter-S" then yes, the doctor (shareholder), as an employee of the corporation, would also be paid through the PEO. If the practice is not incorporated but functions as a limited liability company, partnership, or sole-proprietorship, then the owner of the practice would not be paid through the PEO.
Question:: Does joining a PEO influence your medical/dental malpractice insurance?
Answer:: Joining a PEO should have no affect on medical malpractice insurance.
Question:: Does joining a PEO affect your accreditation status and/or eligibility?
Answer:: Joining a PEO should have no affect on accreditation status and/or eligibility.
Question:: Who has the right to hire/fire employees?
Answer:: The practice retains the right to hire and fire, but may require a formal process as agreed upon in the written contract between the parties.
Question:: Who is responsible for employment taxes?
Answer:: The PEO is responsible for the collection and payment of employment taxes.