Published on February 20, 2014
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Human Resource Outsourcing: Success Stories 2 Overview “ A key to business success in today’s environment will be concentrating on improving the human resources systems within the organization: developing and motivating their employees, protecting their companies against employment lawsuits, and researching more efficient and cost effective HR systems. ” As the economy continues to improve and stabilize, employers have begun refocusing their efforts on growth and profitability. Many have begun hiring new staff as evidenced by the slowly dipping national unemployment rate. Others are using the time to restructure and regroup, turning to activities that have been neglected during the previous three years. Developing new products, capitalizing on burgeoning sales opportunities, or investigating new financial and banking relationships are just a few of the actions employers are taking to gain traction in the strengthening economy. In almost every organization, it is the employees that drive their success. From growth and product development, to customer service and quality assurance, it is the people who will ultimately have the greatest impact on the company’s future profitability and stability. A key to business success in today’s environment will be concentrating on improving the human resources systems within the organization: developing and motivating their employees, protecting their companies against employment lawsuits, and researching more efficient and cost effective HR systems. The obstacles faced by most businesses are the limitation of time, resources, and manpower to effectively improve their HR infrastructure. The level of expertise and know-how required to impact the HR systems is usually beyond their means. More often than not, these critical areas are left by the wayside as other tasks dominate management’s time and energy. CPEhr | 9000 Sunset Blvd. Suite 900, West Hollywood, CA 90069 | www.cpehr.com | 800-850-7133
Human Resource Outsourcing: “ HR Outsourcing: By entrusting noncore, non-revenue generating tasks to an outside expert or firm, the business can comfortably focus on other critical areas, assured their human resources systems will be managed professionally and efficiently. ” Success Stories 3 The HR Outsourcing Solution A solution that has been growing in popularity over the past decade has been to bypass the conflict completely, by outsourcing the complex, time consuming, or unproductive tasks relating to employee administration. The Human Resources Outsourcing industry has continued to grow in recent years, despite the global recession. Human Resources Outsourcing can take on many appearances, from complete end-toend processes, to specific, discreet functions. But in the end, they all share the same principle: by entrusting non-core, non-revenue generating tasks to an outside expert or firm, the business can comfortably focus on other critical areas, assured their human resources systems will be managed professionally and efficiently. The HRO firm employs teams of experts in a wide range of disciplines. It functions as the business’s off-site HR department, handling all employment related tasks in a more timely and cost-effective manner. Furthermore, the HRO firm can offer their clients economies-ofscale, providing more robust benefit plans, HRIS platforms, more cost effective insurance products, and a wide range of advice and support, typically found in larger corporations. Human Resources Outsourcing services can include any, or all, of the following services: • Labor law compliance • Employment administration • Forms and documentation • Management and employee training • Payroll and tax services • Workers’ Compensation Insurance • Safety consulting • Employee benefit packages • Retirement Planning • Recruiting. • Read first-hand the stories of seven organizations that achieved business success, each in their own way, through Human Resources Outsourcing. CPEhr | 9000 Sunset Blvd. Suite 900, West Hollywood, CA 90069 | www.cpehr.com | 800-850-7133
Human Resource Outsourcing: Success Stories 4 Success Story #1 Prestigious Medical Practice Mitigates Its Employment Risks Company Background This medical practice was founded in 1980 with the mission to provide the highest quality health care combined with clinical research and education. It is currently one of the few cardiovascular practices in the country that balances private practice with academic medicine, and runs one of the world’s largest cardiac transplant programs. They currently employ over 30 employees, but are expecting to significantly grow their employee base in the coming months. It was obvious to the Executive Director of this prestigious medical practice that his time would be best spent on providing superior patient care and conducting scientific research. Managing employee issues should have been the last thing on his mind. Unfortunately, it wasn’t. Business Challenges As the practice grew in size and prestige, the Director recognized the critical role Human Resources played in his practice. “We do not have a dedicated HR staff,” he explains, “But I understand that human resources can’t be put on the back burner. HR is still a critical part of our practice.” With the lack of sufficient internal HR resources they struggled to standardize employee practices and stay abreast of changing employment regulations. While the Director and his Office Manager continued to personally handle the employee relations, an incident pushed them to consider outsourcing their human resources to a professional firm. An argument ensued between two front office staff, and the altercation ended with one employee threatening to physically harm the other. The event was witnessed and the employee was let go. A short time later she sued the practice for race discrimination. Even though, at the time, the Director was sure he was doing the right thing, he ended up in an 8 month lawsuit with the EEOC that cost him hundreds of hours of time and distracted him considerably from running the practice. While he ultimately won the case, he realized it was time to work with human resource professionals. He needed a firm who would help him structure an HR system to prevent this from recurring, and to take over the administration of a lawsuit if one ever occurred again in the future. “As our firm continues to grow and we open new offices, managing the staff in multiple CPEhr | 9000 Sunset Blvd. Suite 900, West Hollywood, CA 90069 | www.cpehr.com | 800-850-7133
Human Resource Outsourcing: “ I have run the office for more than a decade,” says the Director, “But knowing CPEhr is here to guide me through all employee matter offers tremendous peace of mind. Now, instead of being distracted by minor personnel issues, I can focus on the practice. They have truly become our partner. ” Success Stories 5 worksites is only going to become more complicated,” he says. He invited CPEhr to present their outsourcing HR solution, and quickly engaged their services. HR Solutions Upon entering the HR Outsourcing relationship with the practice, a Human Resources Specialist immediately began to review their policies and employee documentation. Many gaps in employment protocol were identified. Arrays of new employment forms were created, compliant procedures were implemented and new guidelines were put into practice. The Director and Office Manager received training on proper employee review and termination procedures, and their designated HR Specialist was invited to attend exit interviews and assist in the termination process. “I have run the office for more than a decade,” says the Director, “But knowing CPEhr is here to guide me through all employee matter offers tremendous peace of mind. Now, instead of being distracted by minor personnel issues, I can focus on the practice. They have truly become our partner.” The most critical assistance occurred when the practice decided to outsource their billing function and to layoff the entire department. Several HR staff were assigned to assist in the layoffs, with proper termination procedures, protocol and severance packages that were in the best interest of both the practice and the employees. The Director sums up the incident succinctly: “We could never have done this on our own.” Real Results Since joining CPEhr, he feels that the day-to-day protection he experiences in the area of employment exposures is immeasurable. “I now have tremendous peace of mind. CPEhr has become our ‘go-to resource.’ Without this type of relationship we end up making our own decisions, without proper knowledge of the law, and will ultimately make a mistake. You think you can use common sense, but common sense and the law rarely match!” The Director says the benefits of outsourcing HR were immediately realized, as the new systems and processes were implemented and functioning within 30-60 days. “I recognize the reality that as the practice grows. So too would the need to hire an HR Manager. However, by outsourcing our human resources, we don’t need to spend the money on another hire and can use those funds to invest back into patient care and clinical research.” CPEhr | 9000 Sunset Blvd. Suite 900, West Hollywood, CA 90069 | www.cpehr.com | 800-850-7133
Human Resource Outsourcing: Success Stories 6 Success Story #2: Kitchen and Bath Retailer Reduces Workplace Injuries and HR Risks. Company Background This high-end kitchen and bath retailer opened its doors in Santa Monica, California in 1949. Today, it is regarded as the pioneer of “one stop shopping” for major appliances in the kitchen and bath industries. With locations throughout Southern California and close to one hundred employees, it has grown to be one of the largest and most respected retailers of its kind in California. Business Challenges From its earliest years, it considered itself a family-run business, and always treated its employees as such. For the first five decades of business, that philosophy worked well. But as the ‘90s and turn-of-the-21st-century witnessed a rise in workers’ compensation costs, safety requirements, and employment lawsuits, management recognized they needed to take significant steps to protect their company. Additionally, the expansion of the company from a single location to multiple-worksites further complicated their operations. “In its early days, there was no communication path to employees,” reflects their CFO of 15 years. “While management always prided itself on its relationship with its staff, they never established a formalized method for discipline, safety, performance reviews or implementing policies and procedures.” The CFO admits that while she has decades of personnel management experience, it became impossible for her to stay abreast all the mandatory laws and regulations required of today’s employers. Changing employer responsibilities also manifested themselves in the area of risk management and safety. Whereas Cal-OSHA has dozens of guidelines and laws to which employers must adhere, the business had never taken serious steps to ensure their compliance. “Our employees had never really thought much about safety procedures and equipment,” says the CFO. “But after an incident with a worker standing on a forklift 3 racks high without a safety harness, we realized we needed to create a culture of safety awareness.” It was almost 60 years after opening their doors, that the business called CPEhr and joined their Human Resources Outsourcing program. HR Solutions The most pressing area that required immediate attention was safety. CPEhr assigned one of their senior Safety Consultants to the task. The consultant conducted multiple CPEhr | 9000 Sunset Blvd. Suite 900, West Hollywood, CA 90069 | www.cpehr.com | 800-850-7133
Human Resource Outsourcing: Success Stories 7 on-site walkthroughs of the three warehousing facilities. What he found was a list of infractions, some of which carried heavy fines, if caught by Cal-OSHA. The consultant immediately created a to-do “punch list” with detailed instructions how to remedy the violations. He made practical suggestions, procured the necessary safety equipment, and implemented forklift training. Most importantly, he created an overall awareness and culture of safety that the business needed. CPEhr’s aggressive risk management resulted in an extraordinary reduction of injuries and workers’ compensation costs: 1. Over a period of four years, the client only experienced two minor injuries, for a total expense of $1040. This is a combined loss ratio of less than half of one percent (0.45%). With industry loss ratio averages in excess of 30%, similar size organizations experienced $60,000 losses over the same period of time. 2. Over a period of five years, the businesses Experience Modification dropped from 115% to 77%, a reduction of 33%. The bottom line: a 1/3 savings off their workers’ compensation premium costs, equaling tens-ofthousands of dollars in savings. “Their safety consultant really turned us on how to be safety-minded,” says the CFO. “He pointed out many areas we would never have thought of and, with separate locations and different management styles, provides cohesiveness to the company.” In the area of employee administration, Human Resources protocols were created and implemented. The managers at each location were trained in compliant HR procedures and specific practices, such as employee handbooks, benefits, responding to employee questions, conducting employee evaluations and proper terminating procedures. The entire staff also received Unlawful Harassment training seminars, as required by law. Real Results The client’s management team gained a real sense of security knowing that they had an HR partner standing by their side. With a dedicated HR Manager available to address employment issues and questions, they no longer had to be concerned about inadvertently crossing a line or violating the law. Despite a few complaints and employee threats, since joining the HR Outsourcing program over ten years ago, they have never been sued. “You can never really be objective in your own workplace,” says the CFO. “As issues come up, I always run it by our HR person; it is very helpful to talk to someone on the outside, and it’s always better to be safe than sorry.” The attitude of the client’s staff towards safety increased dramatically as a result of the safety team’s proactive response to the issues they identified. Early in the CPEhr relationship, there were items added to the compliance “to-do” list. But according to the CFO, the last time he came out, there was nothing new to add to the list. “Their safety team brought us a level of consciousness we never had before, and imbues us with ongoing responsibility.” CPEhr | 9000 Sunset Blvd. Suite 900, West Hollywood, CA 90069 | www.cpehr.com | 800-850-7133
Human Resource Outsourcing: Success Stories 8 Success Story #3 Vendors and Simplifies HR Systems Real Estate Management Firm Consolidates Multiple Background and Business Challenges This Woodland Hills, California-based real estate investment and management company was founded in 1980. It grew to 35 employees and focused on property development and management throughout Southern California. Shortly after joining the firm in 2007, their new CFO quickly indentified four critical challenges within the organization which needed to be quickly addressed. Payroll. The processing and production of payroll was being handled by outside CPA firm. The CPA was charging exorbitant fees for the preparation of payroll, electronic tax deposits, quarterly tax returns, annual tax returns, and W-2s. Despite the excessive fees, the CPA firm had no system for tracking vacation, sick and other time off, and the organization constantly found itself requesting information that was unavailable. Medical Benefits. Any questions, clarifications or employee health benefit issues needed to be handled through an outside broker or directly with the insurance company. All of the health plan administration was being managed through the organization’s accounting department. This process was extremely time consuming and did not provide them with accurate results. “The process caused a great deal of stress to myself, my department, and other employees within the company,” explains the CFO. “I knew we had to make a change”. Additionally, their benefit premiums were extremely expensive. It was one more reason they needed to look for alternative health care solutions. Workers’ Compensation. While they did not face excessive workplace injuries, there were several incidents that required attention from the insurance company. They found that claims were not being addressed satisfactorily from their insurer, and as a result, faced increases to their workers’ compensation insurance premiums. Employee Management. Lacking a dedicated personnel department, the company did not have proper Human Resources systems established. Employee termination issues were not handled properly, many employees’ exempt vs. non-exempt statuses were questionable, and employee personnel files were in disarray. “There was no way we could continue managing our HR responsibilities as we were,” says the CFO. “We began researching alternative HR management options. After extensive research we selected CPEhr as our HR outsourcing provider to assist us.” CPEhr | 9000 Sunset Blvd. Suite 900, West Hollywood, CA 90069 | www.cpehr.com | 800-850-7133
Human Resource Outsourcing: “ Success Stories 9 HR Solutions. Once on-board, CPEhr provided the client with a dedicated Human Resources Represen-tative that acted as their primary liaison with all other departments - Workers’ Compensation, Benefits, Payroll and HR . ” CPEhr conducted an initial consultation to determine which service package would best fit the needs of their company. Due to them multiple challenges, the complete HRO package was selected. This program included payroll and tax administration, human resources management, workers’ compensation and safety services, and full range of medical and voluntary employee benefit packages. The first step was to provide each employee with a new employment packet, including I9’s, W-4’s, general information sheet, and other mandatory state and federal documentation. The client’s management team then reviewed the benefit options with the HRO’s Benefits Representative, discussed options, and selected a variety of HMO and PPO plans to offer their staff. Finally, the Business Implementation team conducted an Employee Orientation with all their existing staff and assisted them in completing the paperwork and enrolling them in their new benefit programs. Once on-board, CPEhr provided the client with a dedicated Human Resources Representative that acted as their primary liaison with all other departments – Workers’ Compensation, Benefits, Payroll and HR. One by one, each employment challenge was addressed, and solved: • Payroll was processed accurately and timely, and all paid-time-off benefits were tracked and managed; • Health benefit premiums were significantly reduced; • All employee benefit issues were managed by the HRO Benefits Representative who acted as the intermediary between the client and insurance carrier; • Workers’ Compensation premiums were significantly reduced, and a Claims Manager was assigned to address all future workplace injuries; • Employee files were updated and all exempt and non-exempt status questions were resolved. Tangible HR Results To cover the services provided, the HR outsourcing firm charged a monthly administration fee as a percentage of payroll. “The administrative fee charged by CPEhr was most reasonable,” reflects the CFO. “It provided our company a significant cost savings in both hard and soft costs.” Offsetting the fee were reductions in workers’ compensation, health and other benefit premiums, consolidated vendors under a single roof, streamlined employment processes, and a reduction in employment risk. “Beyond the savings, CPEhr protected our company against making bad employment decisions and running inefficient HR systems. They provided exemplary advice on employee termination issues and kept us out of trouble on numerous occasions. Outsourcing human resources was probably the best business decision our company ever made.” CPEhr | 9000 Sunset Blvd. Suite 900, West Hollywood, CA 90069 | www.cpehr.com | 800-850-7133
Human Resource Outsourcing: Success Stories 10 Success Story #4: Credit Card Processing Service Reduces HR Liabilities and Avoids Lawsuits History This credit card processing company opened in 2000 with just six employees and quickly established itself as a leader in the credit card industry. It is currently one of the fastestgrowing merchant service providers in the U.S. Today there are over 50 employees in the areas operations, finance and sales. Business Challenges Since its inception, all in-house sales people were classified as independent contractors. While classifying sales people as 1099 contractors was considered an acceptable practice in the industry, the company found itself caught in a class action lawsuit approximately 3 years later. Initiated by two employees that complained about missed overtime pay and lunch breaks, the lawsuit swelled dramatically and eventually incorporated over 200 current and former employees. “Even though we have always run a clean ship”, reflects the company’s Chief Financial Officer, “We seem to have a history of employee disputes and often run into trouble.” The CFO also recognized that their high turnover rate and complex compensation plans were far too difficult for his staff to manage on their own. “Ultimately”, he said, “We realized we needed to put our sales staff on hourly compensation and create a more sophisticated and appropriate compensation plan for a group of people that were never employees. That’s when I called CPEhr.” HR SOLUTIONS CPEhr was brought in to begin the process of converting 30 independent sales reps to employees. A Human Resources management team created job descriptions, opened employee files, and verified the completion of all mandatory documentation. A compensation program was designed and compliant vacation policies were established for all employees. While the plans went through several iterations, they were eventually completed to the satisfaction of both CPEhr and the client. To address their high turnover rate, CPEhr assisted in the termination procedures, exit interviews and severance packages. Additionally, Sexual Harassment training was presented to all employees, and the client successfully outsourced the management of CPEhr | 9000 Sunset Blvd. Suite 900, West Hollywood, CA 90069 | www.cpehr.com | 800-850-7133
Human Resource Outsourcing: Success Stories 11 maternity-leaves and other employment issues. “ Whenever we have a problem, CPEhr is always there to carry the burden, absorb the problem and see it through … I have a partner now and their services are an invaluable. ” Sometime after joining CPEhr, the client faced another lawsuit relating to minimum wage and break violations. However, this time the claim was bogus and CPEhr partnered with them to share the costs and management of the entire process. “If we were on our own,” says the CFO, “We would have hired our own lawyers and paid the bills. Instead, CPEhr conducted all the research, created all the reports and spreadsheets, and gathered all the necessary data to win the suit. It was a significant burden that we would have had to do it on our own.” Quantifiable Results As a credit card processing service, the business’s revenues are generated based on the volume of transactions by their credit card processor clients. While they continue to conduct business as usual, sales were slower recently than in past years and they are looking to control non-labor costs and overhead. One area of cutting they are NOT considering, however, is CPEhr’s service fees. “Despite their fees, their true value is seen when I’m in trouble. Sure I am paying for HR and payroll services, and maybe I can spend that money somewhere else,” reflects the CFO. “But whenever we have a problem, CPEhr is always there to carry the burden, absorb the problem and see it through. I have spent hundreds of thousands of dollars over the years just for legal fees, but the costs of a lawsuit are unfathomable. I have a partner now and their services are an invaluable.” CPEhr | 9000 Sunset Blvd. Suite 900, West Hollywood, CA 90069 | www.cpehr.com | 800-850-7133
Human Resource Outsourcing: Success Stories 12 Success Story #5 Barbecue Retail Chain Finds Solution to the Demands of Growing Employee Administration Company Background When the owner opened this barbecue franchise chain in Orange Country, California, in the mid-1980s, the last he thing on his mind was managing Human Resources. Priorities were focused on inventory, facilities, marketing and company growth. Over the past 20 years, the stores have grown to be one of the most successful barbecue franchise chains in California. They currently employ over 80 employees in four retail locations and 40,000 square feet of retail space. They also have a manufacturing company, as well as a distribution facility. Business Challenges “ Once CPEhr took over, the client was able to offer better medical coverage, attract better employees and reduce turnover rates. Their management skills improved and they were overall more comfortable with running their business. ” In the beginning, two stores were opened with a total of 35 employees. Two more locations were later opened, and the staff more than doubled to a total of 80 employees in a period of 6 months. During these early years, they had a several experiences in front of the Labor Board and did not understand the necessary regulations and compliance requirements. Even though they hired an attorney to assist and write their corporate policies, they were quickly out of date. “As a California based business,” the owner emphasizes, “there are many, many laws that an employer has to adhere to. If you ever find yourself trying to make a case before an employment board and you don’t know the laws really well, 99 percent of the time, you will lose the dispute simply because you didn’t follow procedures correctly.” They also realized they were outsourcing various Human Resource functions to different vendors and spent a great deal of time managing these relationships. Their Employee Benefits were sent to a broker, their payroll went to an outside service and their legal requirements were handled by a lawyer. Their management team would spend as much as 30% of their time managing non-revenue generating employment activities. They came to the realization that they were in over their head. “We were constantly bombarded with compliance concerns,” he says. “We tried our best but estimate we were probably only 60% compliant and 20% knowledgeable of the relevant labor laws.” It was at that point he decided to contact engage a Human Resources Outsourcing firm. CPEhr | 9000 Sunset Blvd. Suite 900, West Hollywood, CA 90069 | www.cpehr.com | 800-850-7133
Human Resource Outsourcing: “ Success Stories 13 HR Solutions Overall, the client estimates they saved over $100,000+ in salaries, insurance expenses, legal/ attorneys fees, employment policies and handbooks, and labor board penalties. ” The first thing the client implemented was a consolidated HR solution with CPEhr. Multiple vendors were brought under one roof, including their payroll, workers’ compensation, HR compliance, employment forms and employee benefits. “When you are integrating all HR services under one umbrella rather than outsourcing to different companies,” says the owner, “you save an enormous amount of time and eliminate unnecessary complications. You can have a one meeting sit down to go over the various things you have to do. Plus because all these services come as part of one package, the cost to us is reduced substantially.” CPEhr appointed a Human Resources Manager to oversee all aspects of ther client’s employment administration. A representative walked through the stores, changed and updated all the employee forms, customized their HR documents, reviewed all files and paperwork, and had the employees read and re-sign the employee handbook. CPEhr also introduced management training seminars and attended two labor law hearings, reaching a favorable decision on both accounts. Overall, the owner believes they were completely compliant within 3-4 months. “We have warehouses and a manufacturing plant and CPEhr helps us stay compliant with all OSHA regulations,” he says. “They give free training. In all, they have about 30 different services that we utilize.” Real Results Once CPEhr took over, the client was able to offer better medical coverage, attract better employees and reduce turnover rates. Their management skills improved and they were overall more comfortable with running their business. “Whereas everything before was gray, with CPEhr, everything became black and white,” the owner says. The relationship eliminated the need to hire an HR Manager, hire a trainer, and find an OSHA compliance consultant. Most importantly, their General Manager was able to gain back 30% of his time, and instead of dealing with HR issues, was able to focus his energy on helping build the company. Overall, the client estimates they saved over $100,000+ in salaries, insurance expenses, legal/attorneys fees, employment policies and handbooks, and labor board penalties. “In the past,” the owner explains, “I’d have to hire lawyers just to be sure we were compliant. But CPEhr is a specialist. They can do it virtually overnight. They are significantly cheaper, plus there are a lot of things that they bring to the table that we, as a small company, could not do.” He estimates that the services paid for themselves within 4 months of joining CPEhr. And after 7 years, that is quite a positive return on investment. CPEhr | 9000 Sunset Blvd. Suite 900, West Hollywood, CA 90069 | www.cpehr.com | 800-850-7133
Human Resource Outsourcing: Success Stories 14 Success Story #6: Hair Salon Chain Achieves Labor Law Compliance Company Background The owner and founder of this hair salon chain operated 8 hair and beauty salons employing 80 employees, throughout Southern California. The chain quickly grew to over 30 locations and 350 employees. While financially successful, the company soon realized they were insufficiently prepared to deal with labor law compliance and HR issues. Business Challenges But as his operations grew and his employee base increased, the owner quickly recognized his human resource limitations. He operated his chain of 30 hair salons from a single corporate office using an old payroll system and poorly-trained store managers. Over the years, they faced over a dozen employee lawsuits, stemming from issues involving the Department of Fair Employment & Housing (DFEH), Equal Employment Opportunity Commission (EEOC), and Department of Labor. “I knew that California especially has some major labor laws to contend with,” he says, “And I wanted to focus, not on that, but on building my business. I wanted to make sure that we were running everything properly, so that’s why I needed some help in HR.” He began researched HR Outsourcing providers, and ultimately selected CPEhr as his outsourcing relationship. HR Solutions Immediately, a comprehensive HR strategy was designed and implemented. Within 30 days, a comprehensive Employee Handbook was designed and distributed to all employees at all locations. The Handbook contained all corporate policies and procedures, as well as employee’s rights and responsibilities. CPEhr ensured that the owner enforced the policies in the handbook, and assisted as needed. The client’s employees had a direct line to their Human Resources Specialist at CPEhr regarding any issues that arose. Complaints were handled quickly and efficiently, before going to an outside agency. CPEhr | 9000 Sunset Blvd. Suite 900, West Hollywood, CA 90069 | www.cpehr.com | 800-850-7133
Human Resource Outsourcing: “ The client’s employees had a direct line to their Human Resources Specialist at CPEhr regarding any issues that arose. Complaints were handled quickly and efficiently, before going to an outside agency. ” Success Stories 15 Employees at each location received Harassment Training. Management Training Guides were distributed to each store, and every Store Manager received a personal visit from the HR Specialist to review the policies and answer any questions. Finally, a customized payroll system was implemented to help account for overtime, commission pay, bonuses and other irregular pay occurrences. Results Since beginning the HR Outsourcing relationship, the client has never paid a settlement for a DFEH/EEOC claim. Little to nothing has ever been paid for DOL Claims, and all DFEH claims were dismissed without any settlement amounts. In no circumstance was a penalty ever paid. CPEhr | 9000 Sunset Blvd. Suite 900, West Hollywood, CA 90069 | www.cpehr.com | 800-850-7133
Human Resource Outsourcing: “ Working together, the client and CPEhr have formed a seamless working relationship which has directly impacted each worker’s compensation claim and overall wellbeing of their staff. ” Success Stories 16 Success Story #7 California Vineyard Implements Risk Management Programs & Reduces Workers’ Compensation Premiums. Company Background This client, a family-owned agricultural business, is the largest table grape grower in the United States -- with 60 ranches covering over 12,000 acres in the San Joaquin Valley, California. They also produce a variety of specialty crops. Workers’ Compensation Challenges The client’s employee population fluctuates between 1,200 and 5,000 workers, depending on its various seasonal activities, including: pruning, tying, spraying, harvest, cold storage, packing and distribution. Each activity has its own particular behavior and each contributes to the overall risk of the business. After several years of terrible losses and skyrocketing worker’s compensation insurance premiums, they decided to partner with CPEhr. Safety Solutions At the time they joined CPEhr, the client faced an Experience Modification of 236%. CPEhr implemented a comprehensive Risk Management Program, including hands-on claims management, an on-site employee to transport injured workers to and from medical providers, and a safety consultant to conduct periodic safety walk-throughs In addition, CPEhr engaged the services of California Safety Training Corporation (CSTC) that specializes in safety training in the agricultural community. Working closely with CPEhr’s in-house Risk Management team, they were able to quickly and effectively address the client’s unique safety needs. Outcome The client’s first experience modification affected by CPEhr’s services was promulgated by the WCIRB at a rate of 217%. Thanks to a dramatic decline in the frequency and severity of injuries, the Experience Modification is expected to decrease over the next 2 to 3 years. The client also opted to secure worker’s compensation coverage through a highdeductible program instead of continuing to pay premium for guaranteed cost coverage. With a deductible of $350,000, the insurance carrier coordinates directly with CPEhr’s account manager, who has direct, on-line control of its claims, reserves, and settlement processes. CPEhr | 9000 Sunset Blvd. Suite 900, West Hollywood, CA 90069 | www.cpehr.com | 800-850-7133
Human Resource Outsourcing: Success Stories 17 Success Story #8: PEO Client Case Study: Physical Therapy Practice Company Background This unique aquatic physical therapy company was founded by a visionary woman with the mission of helping patients recover from injury and physical dysfunction using pool and land therapies. The business opened in 1999 with just one therapist and four employees. By 2006 it had grown to ten employees, employing four therapists, several aides and administrative help. By 2009, the company had grown to employ over 50 people including therapists, aides, administrative, billing and executive staff. Then came a difficult downturn in 2010 with severe insurance reimbursement cut-backs and a slowdown in one of their primary client industries. The company was forced to make significant financial cuts and layoff 10% of their staff. “ We conducted a financial analysis,” says the owner, “And in end, even if we would have been able to save a little, it wouldn’t have been worth it. CPEhr provides us with so many services, from general HR support, to employee benefits and payroll, it just didn’t make sense to leave. ” The therapy company had utilized CPEhr’s PEO (professional employer outsourcing) services to help manage their human resources since their founding, and even during those difficult economic times, the owner did not want to give up CPEhr as their employment partner. “We conducted a financial analysis,” says the owner, “And in end, even if we would have been able to save a little, it wouldn’t have been worth it. CPEhr provides us with so many services, from general HR support, to employee benefits and payroll, it just didn’t make sense to leave.” Employment Challenges & Solutions As the company grew, so did their employment challenges. With dozens of new employees, there was a flow of day-to-day employment questions on numerous HR policies and employee relations issues that the business wasn’t equipped to handle on their own. The human resources experts at CPEhr worked closely with the owner and her management team to address the employment challenges they faced. “Overall, we feel extremely comfortable running the business knowing CPEhr‘s experts are just a phone call away,” reflects the owner. “They provide counseling on troublesome issues, and whenever we call, there is always someone there to help. Even if our primary contact isn’t immediately available, there is another HR specialist ready to step in. Watching any one of them handle a termination or correction of an employee is always impressive. They are true professionals.” CPEhr | 9000 Sunset Blvd. Suite 900, West Hollywood, CA 90069 | www.cpehr.com | 800-850-7133
Human Resource Outsourcing: Success Stories 18 The owner recounts several anecdotes where they turned to CPEhr for professional employment advice: Situation #1: An employee wanted to take five weeks off from work for continuing education. The business wasn’t clear how to handle this – should they hold the position or not? Could this be taken as a vacation? If the employee didn’t come back when expected, could they let him go? Solution: CPEhr provided the client with precise instructions on how to draft the employment and continuing education terms, sign an agreement with the employee, and get all policies approved and signed-off before letting the employee take their personal leave. Situation #2: From time to time, the client has general payroll questions regarding how to compute holiday pay and overtime, calculate pay periods, and other general wage and hour issues. Solution: With direct access to CPEhr’s payroll experts, the client receives thorough, step by step procedures on the right and wrong ways of setting up their payroll process to ensure wage and hour compliance. Situation #3: The client hired an employee who, over an 18 month period of several months, stole a great deal of money from the business. At the time, they did not realize he had a criminal record. Solution: CPEhr began implementing background checks on all new hires. In addition to employment support, the business also wanted to offer top-tier employee benefits with which to attract therapists and reward their staff. They accessed CPEhr’s benefit programs and now are able to offer a wide range of insurance products to their employees – from major medical, HMO and PPO plans, to a line of voluntary insurance products and 401 (k) retirement plans. The Value of Peace-of-Mind Despite the economic challenges of the past several years, and the administration fees paid to CPEhr, the client easily quantifies the value of joining CPEhr’s Professional Employer Organization. “Without a question, we would have to hire a full time HR manager, and spend thousands on an employment attorney without CPEhr. Their people are so knowledgeable and easy to work with that I couldn’t imagine doing business without them.” CPEhr | 9000 Sunset Blvd. Suite 900, West Hollywood, CA 90069 | www.cpehr.com | 800-850-7133
Human Resource Outsourcing: “ Even with an HR Director and generalist on staff, there was always more work that needed to be done,” explains their current President and CEO. “It is nearly impossible for a single person – no matter how smart that person is - to stay abreast of industry trends and regulations. ” Success Stories 19 Success Story #9: Non-Profit Organization: “We get the personal attention we want and the large company expertise we need.” Company Background This California based non-profit organization was founded over 25 years ago by two ambitious women with the mission of helping individuals struggling with substance abuse, mental illness, trauma and domestic violence. Their goal was to help women, children and communities rebuild their lives. In the beginning, the founders wore all the operational hats, running a “hands-on” organization while managing just a handful of employees and one program. As the community’s needs grew, the company soon expanded its operations. Today, the organization operates in 12 locations and employs over 250 employees throughout Southern California. Business Challenges After the significant growth surge in the early 2000s, the founders recognized their internal Human Resources and Finance departments were not fully equipped to manage the significant employment challenges that accompany larger organizations. “Even with an HR Director and generalist on staff, there was always more work that needed to be done,” explains their current President and CEO. “It is nearly impossible for a single person – no matter how smart that person is - to stay abreast of industry trends and regulations.” In 2009 and 2010, the company began investigating outsourcing alternatives. They recognized the value of having “back office support” to contact anytime a question arose. The President explains, “We looked at what we do really well and decided it was our services. We determined, where feasible, anything outside of our expertise should be outsourced. We had already outsourced IT and that worked really well for us. Obviously, we have employees and need to have a solid and professional HR infrastructure, but we don’t need to become the experts. That’s why we turned to outsourcing. We thought, let’s partner together, allowing someone else to manage the HR function so we can focus on delivering programs and services to our clients.” HR Solutions Over a period of more than a year, the non-profit interviewed three vendors and ultimately selected CPEhr. CPEhr | 9000 Sunset Blvd. Suite 900, West Hollywood, CA 90069 | www.cpehr.com | 800-850-7133
Human Resource Outsourcing: Success Stories 20 “What we found most attractive about CPEhr was their size. With 250 employees, we needed an organization that was large enough and professional enough to handle our business. But at the same time, we still wanted a company that could provide the handson customer service with which our employees had become accustomed. With CPEhr, it just felt right – we get the personal attention we wanted and receive the large company expertise we needed.” After joining CPEhr, the organization was assigned a Human Resources Manager to oversee all their HR compliance needs. The first order of business was reviewing their Employee Handbook, updating all their human resources forms and reviewing all the new employment regulations. “These were priority areas for us. It was great to have CPEhr help us accomplish our goals,” says the President. CPEhr conducts monthly management meetings with the senior executive staff at the non-profit to keep them abreast of changing employment regulations. In addition, Prototypes, with the help of CPEhr, has implemented quarterly supervisor trainings, providing all Prototypes’ supervisors with the resources and tools they need to more effectively do their jobs. “Having someone knowledgeable about employee relations was critical to us. With CPEhr, I feel very comfortable with our assigned HR Manager and never have a problem getting an answer. It’s providing that intimate customer service that we wanted for our employees.” Tangible Results In addition to the great customer service and human resources expertise, the client also experienced a reduction in their human resources overhead. “By partnering with CPEhr, we were able to reduce our onsite staff. We estimate, that even after CPEhr’s fees, we are saving approximately $35,000 annually. And of course, we love the great customer service and knowledge that goes along with the cost savings.” CPEhr | 9000 Sunset Blvd. Suite 900, West Hollywood, CA 90069 | www.cpehr.com | 800-850-7133
Human Resource Outsourcing: Success Stories 21 About CPEhr: Founded in Los Angeles over 30 years ago, CPEhr is one of California’s oldest and most experienced Human Resources Outsourcing and Professional Employer Outsourcing (“PEO”) firms. We provide professional HR services to over 75,000 employees nationwide, in a wide range of industries and workforces, ranging from 2 to 20,000 employees. With a retention rate that exceeds 90%, we know our team members are committed to our clients’ success. Our unrivaled industry experience, combined with the flexibility afforded to a privately held corporation, allows CPEhr to deliver highly customized human resources support, while at the same time offering benefits typically associated with Fortune 500 companies. Our areas of service include: • Human Resources Administration • ACA/Health Care Reform Compliance • Employment Compliance • Employee Benefits • Retirement Planning • Management Training • Safety and Risk Management • Workers’ Compensation Insurance • Payroll and Tax Administration • Recruiting For More Information about HR Outsourcing For more information regarding HR Outsourcing and how it may fit with your organization’s needs, contact CPEhr for a complimentary Business Consultation. In this no-obligation meeting, a senior consultant will analyze your current human resources practices and offer a customized HR solution to meet your needs. Email: email@example.com Phone: 877-842-4987 Website: www.cpehr.com Twitter: @cpehr Facebook: www.facebook.com/cpehr CPEhr | 9000 Sunset Blvd. Suite 900, West Hollywood, CA 90069 | www.cpehr.com | 800-850-7133
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