Thoughts from the PEO Capitol Summit:
Two-plus years into the pandemic, it’s no secret that COVID-19 has affected people from every country in the world.
The pandemic has also had a profound impact on companies, too, but none more so than small businesses.
An additional 200,000 small companies closed during the pandemic than what we would normally see—and that was considered less than what was even expected.
Still, you’ll forgive small-business owners if they’re not cheering that news.
The pandemic along with turmoil around the world has led to many headaches for small businesses, from supply chain issues, rising costs and, of course, a talent shortage caused by the Great Resignation, Great Reshuffle or whatever your preferred moniker is.
The PEO Advantage
On the other hand, small businesses that used Professional Employer Organizations (PEOs) were 58% less likely to have been permanently closed, 32% less likely to have had a negative effect from the pandemic and were 82% more likely to have business operations come back to normal or become better by the time the survey was taken, according to a National Association of Professional Employer Organizations (NAPEO) report released in September 2021.
While big companies generally get most of the press, the 31.7 million small businesses in the United States have created almost twice as many new jobs than large companies between 2000 and 2019 (10.5 million vs. 5.6 million), according to U.S. Small Business Administration statistics, and small businesses make up 99% of the companies in the country. Additionally, we know that innovation often comes from smaller businesses that tend to be more agile than their counterparts from larger companies.
As an organization that supports PEOs, PrismHR was thrilled to be a part of the recent PEO Capitol Summit to advocate to members of Congress on behalf of PEOs that offer smaller businesses the HR-related tools they need to successfully compete with larger organizations for recruiting, retention and more.
Last month, a group of us from PrismHR, including Tim Pratte, our president of human resources outsourcing (HRO), and Chris Babigian, a PrismHR compliance and product manager, joined NAPEO and other organizations to talk with key congressional stakeholders.
Joining us on the trip to the District were Bob Burbidge from GenesisHR Solutions and Jeff Wasco from Guardian Life Insurance Company of America. We spent the afternoon meeting in the Hart Senate Office Building with Alexis Freeman and Jay Weismuller, the legislative correspondent and senior tax and economic policy adviser, respectfully, for Sen. Maggie Hassan of New Hampshire. We then walked to the Longworth House Office Building to meet with John Chambliss, a legislative aide for Rep. Seth Moulton. We also got to meet with Rep. Susan Wild (see picture below).
Importance of PEOs
Representatives from both branches understood the importance of PEOs, and had a solid understanding of some of the challenges smaller companies are facing, especially with the Employee Retention Tax Credit (ERTC). The ERTC was established under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), and was designed to encourage businesses to keep employees on their payrolls even when the going got tough and help them manage change caused by the pandemic. Companies could claim up to $26,000 per employee under the ERTC.
Additionally, through the American Rescue Plan (ARP), companies could claim an additional credit of $7,000 per quarter per employee in 2021. Some businesses qualified for up to $50,000 per quarter.
While the ARP ended in September, there is still a huge backlog of payments that are due to small businesses. And many of them need it badly!
The problem? The Internal Revenue Service was stymied by the pandemic as well. In March, IRS Commissioner Charles Rettig told a House Ways and Means Committee hearing that payments would be made by the end of the year. “If the world stays as it is today,” he testified, “we will be what we call ‘healthy’ by the end of calendar year ’22 and enter the ’23 filing season with normal inventories.”
Six months can be an eternity in the business world, and, as you know, the last thing small businesses need is another obstacle to help slow them down.
Still, as we told the congressional stakeholders, PEOs work hard every day to make things better for small businesses. Whether it’s helping companies manage benefits, payroll, recruiting and retention or even other new and current regulations, such as the Work Opportunity Tax Credit (WOTC), PEOs help small businesses thrive.
What we learned at the PEO Capitol Summit was that regulators were receptive to and familiar with our industry. They also understood the important role small businesses play in lifting our economy. We were excited to be able to tell their story as representatives of the PEO industry, and we will continue to advocate on PEO’s behalf.
We also know that small businesses need our help more than ever to navigate through the tough terrain they find themselves in. Regulators must help, of course, but, just like small businesses count on PEOs, so, too, can PEOs count on PrismHR. Advocating for PEOs is what we do, and that will never change–and the small-business world needs you more than ever.
Angela Hoch contributed to this post.
Sean Yolish is PrismHR’s vice president, insurance and financial services. He is a strategic senior executive with 23 years of demonstrated success in the HRO industry. Sean has extensive operational leadership experience in employee benefits, payroll, human resources administration/consulting, IT, Risk Management and commercial real estate. Sean has a bachelor’s degree in human resources and is a licensed health, life, property and casualty insurance consultant.
Angela Hoch is PrismHR’s senior director of customer success. She started her career in the PEO industry in early 1995, and spent 15 years overseeing the operations for a multistate PEO. Angela then transitioned into the PEO software side of the industry. She now oversees the PrismHR Customer Success Team.