How Professional Employer Organizations have a positive impact on Michigan and Overall Hospitality Industry


The hospitality industry has provided a bulk of opportunities, especially in Michigan. So far, the hospitality industry is the world’s fastest-growing industry and will add one new job every 2.5 seconds. In the US alone, the hospitality industry is the nation’s number one employer after the government with about 8.1% of all jobs. According to Eastern Michigan University, hospitality industry employment is expected to increase to 16.3 million by 2027 from 7.6 million in 2016.

The hospitality industry is comprised of businesses like restaurants, hotels, bars, bakeries, casinos, and other entertainment establishments who rely basically on the ability to retain customers. If you own a business in the hospitality industry, then you must be looking for an opportunity to advance your business.

Like many companies, hospitality companies have discovered that as their business grows, the administrative aspects require more and more time. Eventually, the company needs to hire additional administrative staff or outsource those tasks to a third party. As the regulatory and legal environment for business gets more complicated, many companies have hired a PEO company to handle those non-revenue producing activities that do not enhance the hospitality companies’ bottom line.

What is PEO?

PEO or Professional Employer Organizations offer comprehensive HR solutions to small and mid-sized businesses. PEO can be a cost-effective solution for bars and restaurants to help employee retention, save money, streamline compliance, executing payrolls and tax administration, regulatory compliance, etc.

Hospitality business managers need to satisfy the diverse needs of their customers while managing the intricacies of service, staff, and facilities. PEO companies offer comprehensive HR solution which combines workers’ compensation, payroll, benefits, HR administration, compliance support, and technology, so you can focus on turning first-time guests into lifelong customers.

By taking care of the paperwork and offering regulatory compliance assistance, PEOs assist hotels, restaurants, bars, and other hospitality establishments to improve productivity, increase profits, and enhance the concentration of managers, owners, and employees on the core aspects of their business.

More so, PEO enables the employees in the hospitality industry to access the big business employee dividends like the 401(k) plans, life, dental, and health insurance, and other benefits they are not naturally entitled to as employees of hotels, bars, and restaurants.

PEOs activities in Michigan

The Department of Licensing and Regulatory Affairs (LARA), Michigan, attested that the Professional Employer Organizations are regulated under Act 370 of 2010.  The Act defines a “PEO” or “professional employer organization” as any person engaged in the business of providing professional employer services regardless of its use of a descriptive term other than “professional employer organization” or “PEO”.

In Michigan alone, there are about 71 PEOs operating in the city serving different businesses including those in the hospitality industry. Each of these firms has different capabilities in terms of payroll services and HR management. Likewise, each of these PEOs has different access to various medical and insurance plans. Thus you need to compare plans and see the PEO firm that suits your business most.

Roles and Duties of PEOs and How the Michigan Hospitality Industry Can Benefit From Them

The roles and responsibilities of PEOs can be categorized into four with respect to how the Michigan hospitality industry can benefit from it. These categories are:

1.     Workers’ Compensation Administration

PEOs take charge of your workers’ compensation administrative tasks like reviewing and administering claims, creating and administrating workers safety plans, performing safety-related audits and reviews, complying with the OSHA regulations, reporting and documenting on-the-job accidents, and workers’ compensation billing reconciliation.

If you operate a restaurant, hotel, bar, bakery or any other hospitality company in Michigan, chances are that one or more of your employees can get hurt. Using a PEO to manage your workers’ comp can save you thousands of dollars. With a PEO, the workers’ comp claims are charged against the PEO in order to evaluate the insurance costs instead of your own business. Thus, the workers’ compensation administrative tasks of a PEO prevent the potential disaster of having a major claim filed against your business.

2.     Payroll Administration

The payroll administrative tasks provided by PEOs include the preparation and distribution of payroll checks, management of government withholdings, execution of employee direct deposits, preparing and reporting W2s, W3s and other employee-related documents, tracking vacation and sick time, and keeping payroll records for audits and inquiries. Perhaps, nothing makes an employee happier than getting paid on time. PEOs ensure that your employees get paid on time and you know how this can greatly influence your hospitality business.

3.     Benefits Administration

The Benefits Administrative tasks provided by PEOs include tasks like 401k administration, life insurance administration, management of disability plans, COBRA compliance, flexible spending account administration, benefits handbook creation, annual benefit plan review, and administration of employee assistance plans.

Providing your employees with the best possible plans through the use of PEOs can possibly be a good way to keep your employee happy and highly productive. Using a PEO can save you the hassle and resources required to research, shop, and compare different benefits plan. It also saves you money by offering you lower rates than you’d be able to get on your own.

4.     Human Resources Administration

The Human resources administrative tasks offered by the PEOs include tasks like accepting employment applications, creating employee handbooks, performing background checks, creating a channel of communicating policies with the employees, managing EPU insurance and providing legal assistance,

Instead of spending hours managing the HR tasks of your hotel or restaurant, you can easily use a PEO firm to handle that for you. Likewise, hiring a PEO firm with little or no clear understanding of their roles and duties can hurt your business more.

Is a PEO for you?

The next question that will probably come to your mind right now is whether or not a PEO is for you. If you run a hospitality business in Michigan, such as a restaurant, hotel, bakery or any other business in the hospitality industry, there are some instances where the role of a PEO comes handy. You need the service of PEOs if:

  • You find your time taken with personnel and compliance issues
  • You desire to recruit and retain experienced and productive employees to your restaurant, hotel, bar or bakery
  • You want to offer the benefits package of a much larger company without the cost and hassle of adding another department to administer those benefits
  • You want to refocus on increasing revenue and driving down costs
  • To you, the area of payroll has become a laborious and complicated procedure

Enhance your customer experience with an incredible HR solution. By hiring a PEO company to handle the HR services of your restaurant, hotel, bar, lounge, bakery, and any other business in the hospitality industry, you are saving more time for yourself to handle other crucial aspects of the business while the company handles the non-revenue producing aspects of the business.