Premier Distribution Service, a Richmond-based vending company that offers a snack and beverage service from Charlottesville to Hampton Roads. The company has a staff of 10 and $800,000 in annual sales.

The Players

Dave Scheffler, owner of Premier Distribution, a 2-year-old company. Robert McRaney, owner of the Richmond franchise of CheckMate, a professional employer organization, also known as an employee-leasing company.

The Problem

Scheffler wanted to add more benefits offerings for employees, but he didn’t want to add administrative headaches.

The Background

Workers have come to expect, not only competitive salaries, but retirement plans, disability coverage and other benefits traditionally only available through big companies. "You have Capital One that promises everything," McRaney says. "For the small-business employer to compete against that is really tough."

Premier is in a tight market — particularly with today’s low unemployment rate. While Scheffler has only nine employees, his benefits package has to stack up against those of corporate giants.

But Scheffler didn’t want to add a bunch of new administrative tasks to his operations. He didn’t want to have to deal with workers compensation and claims, payroll, tax deposits, risk and safety policies. He wanted to focus on the business of vending, not the business of benefits administration.

Scheffler went to McRaney after reading about CheckMate in a local newspaper. He’d heard of the concept of employee leasing from colleagues in other parts of the country. "Before, we handled the benefits ourselves and used a payroll service" for paychecks, Scheffler says. "McRaney’s service allows us to offer more benefits ... and it was easier to set up." Now his staff can access disability insurance, group life insurance and a 401(k) retirement plan, among other options.

Under the arrangement, Premier’s employees technically become Check-Mate’s employees — paychecks even come signed by McRaney. The employees are then leased back to the company. Through CheckMate, they can get a cafeteria-style plan much like those offered by big business. Seven of Premier’s staff enrolled in the 401(k) in just one month, at a cost of about $40 annually per participant. And they can get group discounts for local services, such as dry cleaning and health club memberships.

"Government has required so much of small business — paperwork, government regulation, record keeping, ADA, EEOC. Our industry formed in response to that," McRaney says. Now CheckMate has competition, not only from traditional benefits companies, but from others in the growing industry of employee leasing.

CheckMate is technically the employer, but it also functions as a human resources office for a collection of businesses. By combining their small and midsize work forces, the employee-leasing company gives them all better purchasing power and offers economies of scale in administration.