Professional Employer Organizations (PEOs) are often marketed as a way to reduce workers' compensation costs for Florida contractors. This guide compares the real total cost of a PEO arrangement vs. a traditional workers' comp policy, including hidden fees that are rarely disclosed upfront.
A PEO co-employs your workers, placing them on the PEO's payroll and providing workers' comp coverage under the PEO's master policy. You pay the PEO a per-employee fee (typically 2–8% of gross payroll) that includes WC, payroll processing, HR administration, and benefits access.
Example: Roofing contractor, $500,000 payroll, EMR 1.0. Traditional WC (code 5551): $33,760/year. PEO at 5% of payroll: $25,000/year WC component + $8,000–$15,000 admin fees = $33,000–$40,000 total. PEO at 3% of payroll: $15,000/year WC component + $8,000–$15,000 admin fees = $23,000–$30,000 total. The PEO advantage disappears when you factor in admin fees, loss of EMR ownership, and exit costs.
High EMR (above 1.25) that makes traditional WC unaffordable. New business with no loss history and difficulty getting admitted coverage. Access to employee benefits (health, 401k) that would otherwise be unavailable. When a PEO Makes It Worse: EMR below 1.0 (you are subsidizing other PEO clients). Large payroll where admin fees compound significantly. When you want to own your loss history and improve your EMR over time.
Yes. Your claims experience is absorbed into the PEO's master policy. When you leave the PEO, you may have no EMR history, effectively starting over as a new account — often at a higher rate.
Yes: the FWCJUA (Florida Workers' Compensation Joint Underwriting Association) is the assigned risk market for contractors who cannot get admitted coverage. Bright Coast Insurance is an authorized FWCJUA agency.
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