How does outsourcing compliance and risk management help employers?
Most employers are unprepared for the risks and regulations that affect their business. According to the Hiscox 2023 Underinsurance in Small Business Report, 75% of small businesses in the U.S. do not have sufficient insurance coverage. To add to that, research from NEXT Insurance shows that 69% of small businesses struggle to understand coverage, limits, and policies.
These gaps can be tied to cost concerns as well as sheer overwhelm. Navigating complex regulations, rules, and mandates can quickly stretch small business owners beyond their expertise.
Fortunately, these are exactly the challenges that outsourcing compliance and risk management helps solve.
What does compliance outsourcing include?
One of the aspects of compliance that makes it so overwhelming is there’s so much to it. Regulations can come from federal, state, and local governments; and they can change rapidly. Altogether, it creates a confusing tangle of requirements. A PEO untangles that knot and handles each thread. Services can include:
• Wage and hour disputes
• Harassment claims
• Company policies
• Training standards
• Workers’ compensation
• Safety programs and OSHA requirements
• Insurance (like Employment Practices Liability Insurance)
• Employment law posters and notices
• And more
What can employers reasonably expect after outsourcing benefits?
Time: According to the 2025 National Small Business Association (NSBA) Regulations Survey of Small Business, 1-in-3 small businesses spend more than a full work week each year on federal regulations. In fact, majority of small business owners spend over 20 years annually just dealing with compliance requirements.
Many owners don't even realize how much time slips away. Long-standing rules and reporting requirements are often seen as "just the cost of doing business," rather than the regulatory burden they truly are.
All of that time could be better spent on what matters most, growing the business.
Peace of mind:
According to the State of Small Business in America report, which surveyed more than 1,800 respondents across the U.S., a large majority said that the business owner is primarily responsible for handling regulatory issues.
That responsibility takes more than just time away from running the business. It also places the full burden of accountability and responsibility on the owner. That's a heavy weight, and one that outsourcing can help lift.
Cost savings:
The cost of compliance and managing business risks are not insignificant. The NSBA report says the average small business owner spends $12,000 annually on compliance costs. The NRF survey found that many owners fear they will have to change or reduce benefits due to rising compliance costs. Making matters worse, it can be difficult for SMBs to access truly economical pricing. Here is where outsourcing as a means of cost reduction truly shines.
As CoAdvantage client Lori Anthony-Thomas says, outsourcing “offers me the security of knowing that I can obtain workers’ comp coverage for my employees at a better rate than I could provide. As a small company, there’s no way I could obtain those rates and that kind of savings.” Similarly, outsourcing partners can provide training and services to ensure regulations are being met and worker risks are being minimized.
Need more information on risk and regulations affecting your business? CoAdvantage, one of the nation’s largest Professional Employer Organizations (PEOs), helps small to mid-sized companies with risk management, compliance, workers’ comp, and HR administration. To learn more about our ability to create a strategic HR function in your business that drives business growth potential, contact us today.
