Superior Court Judge in New Jersey argued that a professional employer organization, known as a PEO, can be considered a co-employer for the state’s law against Discrimination.
The important development you need to know is how New Jersey courts treat the relationship between employees and PEOs. Let’s learn all the details of the ADP PEO lawsuit.
What is a Professional Employer Organization (PEO)
A PEO is a type of full-service human resource outsourcing known as co-employment. The PEO performs multiple employee administration tasks in this system, such as payroll and administration benefits.
Some have strategic services, but the two are different. Therefore, it is important to research providers and compare their capabilities.
Benefits of PEO
The strategic guidance of a PEO may help you grow your business and give you peace of mind. There are multiple benefits, such as;
1. Payroll and Tax Filing
The PEO process can pay local, state, and federal employment taxes. Many integrate payroll with time and attendance, which helps reduce duplicate data entry and errors.
2. Benefits Administration
A co-employment arrangement includes access to high-quality health insurance, retirement benefits, dental care, and other employee perks. It handles employee enrollment for these benefits and processes claims for you.
3. Compliance
PEOs have compliance experts who can help you protect your business from fines and penalties. The areas of expertise include payroll tax law and reporting requirements.
4. Risk and Safety
PEOs also provide safety audits and training programs to help you limit claims. They also assist with Occupational Safety and Health Administration inspections.
5. Human Resource Support
A PEO has HR professionals who provide support and services in multiple cases. If there are in House HR person or team, the PEO strategically partners with them.
Talent Management PEOs provide end-to-end talent services like strategic hiring, employee training and engagement, and performance management.
Services of PEO
PEOs provide support services, such as human resources services, to companies. They serve small and medium-sized companies with internal staff committed to providing such services. PEOs have become a substantial segment of the employment landscape over the last 40 years.
According to statistics, in the United States, more than 907 PEOs have been operating, providing services to 175,000 small and medium-sized businesses.
How The ADP PEO Lawsuit Started?
PEOS are designated as the W-2 employer and typically work alongside the primary employer. Both parties would share responsibility for obligations. Many PEOs provide advice and counsel on employment law-related policies as part of their services.
Stephanie Perez filed the lawsuit for pregnancy discrimination against her two defendant PEOs, ADP and primary employer. She was terminated from her employment in mid-2018.
For potential liability, defendant PEO ADT filed a motion for summary judgment regarding the plaintiff’s discrimination claims. They argued that the primary employer terminated its contract at the end of 2017.
Evidence About ADP PEO Lawsuit
Superior Court Judge Keith E. Lynott found some evidence that shows the involvement of PEOs in the termination process of the plaintiff’s employment. In this case, the court considered some factors in deciding that the PEO was named the plaintiff’s employer on her 2017 W-2 statement. PEO identified and referenced throughout the primary employer’s employment as a human resource contact.
Furthermore, the plaintiff announced the pregnancy in 2017 when the PEO was assisting the primary employer. The plaintiff argues that the PEO must provide discovery to determine their role in termination. The company policies outlined in which fashioning and implementing the employment manual are included.
According to the plaintiff, the PEO was not liable for pregnancy discrimination; therefore, it is necessary to develop facts establishing the PEO’s involvement in active Discrimination.
Court Decision on ADP PEO Lawsuit
The court argues that the defendant was premature and the additional discovery was necessary. Lynott stated that it is possible the PEO played a material role in decision-making concerning the plaintiff’s employment status.
The court found that the record reflects a sufficient basis for a trial of the facts to conclude in 2017 and apply the Law against Discrimination. The court did not agree with the PEO’s motion and allowed discovery to proceed.
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Link to Order and Decision
The decision elevates substance over form, showing that a PEO will be responsible for its conduct regardless of the status of its relationship with the primary employer.
With NAPEO’s position in this case, PEOs create a real relationship with some issues, such as worksite employees. The judge keenly observed reality and allowed the plaintiff to determine if the defendant’s PEO was involved in pregnancy discrimination.