Co-employment is a contractual allocation of specific responsibilities between two companies -- the employer and the PEO. Both companies have rights and share responsibilities for employees. The employer maintains control over business decisions and operations, as well as the core job functions of its workers. The PEO takes care of specific HR-related responsibilities, such as payroll processing and benefits administration.
The co-employment partnership is designed to complement and protect your business -- not control it. Basically, both companies become co-employers of the employees. Here's how the responsibilities are shared:
Employer's role & responsibilities:
Maintains control of all business decisions and operations
Manages the day-to-day activities of its employees
Reports and collects local, state, and federal employment taxes
Provides access to a team of HR experts for guidance on employee relations and HR-related issues
Helps to prevents employee-related compliance risks
Provides access to better benefits and health insurance plans
What happens when something goes wrong?
A simple mistake or breach of trust can be devastating. Who is responsible for a missed tax deadline? Who pays the penalty for a compliance error? In a co-employment relationship, the risks are shared between the PEO and the employer. Because the employer reports its wages under the PEO's Federal Employer Identification Number (FEIN), PEOs are trusted with a body of sensitive information, such as employee data, Social Security numbers, and financial information. That’s why it’s important to work with a PEO certified by the IRS. If something goes wrong, the liability shifts to the certified PEO, not the employer.
What can co-employment do for your company?
A co-employment partnership allows small to mid-size businesses compete with larger businesses. PEOs are able to pool employees together in order to negotiate better benefits packages and gain access to top-rated health plans, which smaller employers may not get on their own. By taking over time-consuming HR-related tasks, an IRS-certified PEO can be a valuable partner to help a business grow.
To learn more, download our FREE E-guide, The Small Business Guide to Choosing the Right PEO. You’ll learn how to save time, money, and ways to offer your employees better benefits, such as health insurance.
The HR Division is made up of a team of professionals with a vast level of experience and HR expertise, assisting organizations of all sizes and within a wide variety of industries. They readily partner with clients to address strategic and compliance challenges surrounding the employment life-cycle and the ever-changing laws that regulate it. Inquire below about how they can help you!