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Business Observer Friday, Mar. 6, 2020 2 months ago

Inside outsourcing: Employment law veteran reflects on niche industry's rise

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Florida’s professional employer organization sector has come a long way since it was first established in the 1980s. One of its original champions says it has more room to grow.
by: Brian Hartz Tampa Bay Editor

With more than 100 professional employer organizations, Florida is an epicenter for what, in Mike Miller’s heyday, was known as the employee leasing industry.

PEOs — often referred to as outsourcing or staffing firms — essentially wouldn’t exist without Miller. In 1986, he became general counsel of the nascent Florida Association of Employee Leasing, which in 1995 changed its name to the Florida Association of Professional Employer Organizations.

At 73 — and having recently wound down his firm, Miller Tack & Madson, in order to join Fisher Phillips’ Tampa office (his partner, Timothy Tack, also joined) — he remains a PEO pioneer, with no plans to retire.

“It used to be an industry that no one understood,” Miller says, “but suddenly, it's become an everyday part of life in the business community.”

‘We don't get into running any client's business. PEOs are there to lift the administrative burden from the shoulders of employers.’ Fisher Phillips employment lawyer Mike Miller

With multibillion-dollar companies including Tampa-based Kforce and Clearwater-based FrankCrum, the Tampa Bay region, in particular, has become a hotbed of PEO activity and growth. The Bradenton area, especially in the 1980s, was also a hotspot of PEO activity, with several startups growing to become industry leaders. Statewide, Miller says, PEOs now process about $25 billion per year in payroll.

“That’s way beyond anything that anyone ever envisioned back when we formed the association in 1986,” he says.

However, PEOs — despite the wide range of economic benefits they offer to both employers and employees — face major challenges and obstacles, which is why Miller continues to advocate for them. He recently spoke to the Business Observer about what companies should know about PEOs.

How are PEOs able to provide staff to companies in highly regulated industries, like the medical field? 

We have opinions from the Florida Board of Medicine, the Board of Dentistry, the Board of Accounting and the Florida Bar, all of which say that even though those are regulated industries, PEOs can provide services to them because we don't control their day-to-day operations. Early on, that was a major part of what I did — trying to explain to various regulators that we are not going to intrude on the regulated aspect that regulators control. They still have control over licensees, and they still have the ability to oversee discipline.

With the economy booming and unemployment low, what are the benefits of a PEO?

It’s certainly a great time to use a PEO because obviously with unemployment as low as it is, it’s a struggle sometimes to find qualified workers. But you also have the enhanced benefits of a PEO, which can be enticing. The employer can say to a worker: “Take a look at the benefits that we have. We may have only 10 employees, but you're getting the benefits of a very large employer by way of coming with us because of our relationship with this PEO.”

What does it take to be a successful PEO today as opposed to when those types of companies were first getting started in the 1980s and '90s?

Now PEOs have to have a variety of people with a variety of different expertise. You need people with insurance expertise; you need people with HR expertise; you need some people with immigration expertise.

What criteria can an employer use to decide whether a particular PEO is a good fit for their needs?

The industry runs the gamut from small to large PEOs. We're fortunate that the people who have chosen to start PEOs or acquire PEOs are doing it because they have expertise to offer the business community. Now there are folks in the PEO industry who will specialize in construction; there are folks who will specialize in agriculture. There are some that have additional expertise that some other PEOs might not have. We're licensing new PEOs every month. The Department of Business and Professional Regulation has a monthly meeting, and if you check out their agenda, you'll see new companies every single month being formed and becoming licensed. It's amazing.

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