When you hear the term “co-employment,” what comes to mind?
A lot of employers think it means working with a staffing agency, leasing employees, or giving up control over their employees to an outside company. These common misconceptions couldn’t be further from the truth.
In this article, we’ll explain how co-employment actually works, and help you understand if it might be a good fit for your business.
“Co-employment” might sound complicated, but it’s just HR jargon. Co-employment refers to the legal arrangement that lets business owners share certain employer responsibilities (and risks) with an outside partner, called a Professional Employer Organization (PEO).
How does co-employment work?
In a co-employment arrangement, your workers actually have two employers: your business (or organization), and the PEO.
You’ll continue to be responsible for your employees’ daily work functions. Meanwhile, the PEO will take over most or all of the requirements related to keeping people employed, like securing and administering employee benefits, processing payroll, filing employment taxes, and even providing access to learning and development opportunities that help your team grow.
Your employees will see the PEO listed on their paycheck, but they’ll continue to report to you day-to-day.
What’s my role?
In a co-employment arrangement, you are what’s called the operating employer. As the operating employer, you retain full control over your employees and what they do at work. That includes hiring and firing, managing how employees do their jobs, assigning core job responsibilities, and making decisions about your organizational structure.
Co-employment doesn’t shift your employees to temp status either. Their position within the company will stay the same, and so does their working relationship with you.
What does a PEO do for me?
In a nutshell, the PEO, or administrative employer, takes on a behind-the-scenes role, handling the tasks involved in maintaining your workforce. This includes all the paperwork and responsibilities related to your employees, as well as a significant amount of the risk that comes with being an employer.
Let’s break down exactly what that entails.
Why should I choose co-employment?
There are many potential upsides to a co-employment arrangement with a PEO. Here’s just a few:
Did we mention? Companies that work with a PEO grow 7-9% faster, have 23-32% lower employee turnover, and are 50% more likely to stay in business, according to the National Association of PEOs.
If you’re ready to offload the administrative tasks and paperwork of being an employer, a co-employment solution might be right for you.
Want to learn more? Get our free e-book, The Employer’s Guide to HR Partnerships in Hawaii, for more info.