When shopping for the right PEO for your business, you’ll naturally look for a few checkpoints, such as technology, employee benefit options, and customer service. But perhaps the biggest point you’ll need assurance on is their trustworthiness. That’s where ESAC accreditation comes in.
The Employer Services Assurance Corporation (ESAC) is one of the Professional Employer Organization (PEO) industry’s top recognized accreditation and financial assurance organizations. Put simply, ESAC is a nonprofit third party that thoroughly audits a PEO to ensure it’s ethically, operationally, and financially stable.
Why ESAC is Important to PEO Clients
Nextep has proudly held ESAC accreditation since 2004. To us, this recognition is purely in the interest of our clients: small and medium-sized businesses.
It gives our clients the peace of mind that Nextep is a solid, trustworthy PEO. We don’t take the trust placed in our hands for granted, and we voluntarily hold ourselves accountable for providing excellence to our clients and their worksite employees.
There are several ways a business benefits from its PEO holding ESAC accreditation.
Your people are guaranteed to get paid
Through its audits, ESAC ensures the PEO has the money to pay your employees, tax authorities, and carrier invoices in full and on time.
In the unlikely event that the PEO defaults, ESAC holds $15 million surety bond coverage to protect you and pay on the PEO’s behalf. The chances of this are so unlikely that ESAC has never had to resort to this method since it began operating in 1995. Their rigid financial standards usually indicate that an accredited PEO would not default in the first place.
Your PEO has confirmed operational excellence
ESAC compares PEOs against 40+ operational checkpoints. They scour the PEO’s records to make sure it pays its bills and vendors on time. They also verify and monitor PEO owners and key managers to ensure they are competent, reliable, and honest.
Submitting to regular audits and high standards shows the PEO’s commitment to you. We don’t just want to earn your trust; we want to show we’re worthy of it.
Compliance is key
Company owners know that regulatory compliance is a huge part of employment and doing business.
ESAC holds PEOs accountable for maintaining compliance with all federal, state, and local regulations. They also verify that the PEO is in good standing with the regulatory agencies in each state where it does business.
Gaining ESAC Accreditation
Earning and maintaining ESAC accreditation is no easy task. The PEO must undergo rigorous testing, annual audits, and quarterly monitoring to pass ESAC’s verification process. Some of the things they look for:
- The PEO practices ethical standards in ways that benefit its clients and worksite employees.
- Internal staff have opportunities to further their education in their professions.
- Through ESAC’s financial audits, the PEO shows an Adjusted Net Worth of $100,000 or five percent of Total Adjusted Liabilities (whichever is larger).
- They have positive net worth and working capital in accordance with GAAP principles, along with healthy financial reserves.
- They’re compliant with all employment compliance regulations.
Nextep values ESAC recognition so much that our very own Director of Risk Management & Legal Compliance, Hank Johnson, sits on ESAC’s Board of Directors. (Note: To avoid a conflict of interest, Hank recuses himself from any of ESAC’s deliberations or determinations about Nextep.)
Nextep is one of the few PEOs that hold all three of the industry’s top accreditations: ESAC, IRS CPEO designation, and SOC 1 Type 2 certification. To learn more about this and other ways that partnering with us can enrich your business, let’s schedule some time to chat!
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Get help for your PEO search! Download this checklist as a guide for what to look for when shopping for a PEO.
Click here to download Nextep’s latest ESAC certificate of Accreditation.
Learn more about Nextep’s accreditations.
