Co-Employment is simply the sharing of employer responsibilities between a PEO and its client.
Through co-employment, workers are technically employed by two separate entities, you the business owner, and a PEO.
Under a co-employment arrangement the PEO carries primary responsibility for traditional Human Resources functions. The exact mix of tasks handled by the PEO can vary, but a PEO typically manages payroll, compliance, benefit administration, workers’ compensation, unemployment claims & the pre-employment process (hiring, onboarding, etc.).
Co-employment also allows PEOs to significantly reduce a business owner’s liability by staying ahead of regulatory changes and by handling compliance issues, including workers’ compensation claims, unemployment claims, mediation, reporting and many other concerns. While PEOs utilize their unique skillset to manage those tasks, the business owner is still responsible for coordinating daily work, making hiring/firing decisions, setting pay rates, and completing the other tasks necessary to run a business.
Now that we have clearly outlined what co-employment is and what it means for your business, read on to hear exactly what co-employment is not. In the following, we will clear up a few common misconceptions concerning co-employment and answer some frequently asked questions. Similar to many other topics, information on the internet is not always reasoned and informative. So business owners may become misinformed through no fault of their own.
If I partner with a PEO, will I lose control over my company?
Far from it. By outsourcing tasks that owners spend on non-revenue generating tasks, control of their business increases. With fewer distractions, owners can focus on what’s important to their business’ success and take greater control over those factors.
Can I fire a co-employee?
Of course. An owner is absolutely able to dismiss an employee. However, dismissing an employee is a delicate situation that carries with it a series of risks. In order to protect owners and their businesses, we encourage them to reach out to their PEO representatives before dismissing a member of staff. That way their dedicated HR support team can provide guidance and coaching on how to minimize any negative fallout.
What are the risks of co-employment?
Under some laws, both parties in a co-employment relationship can be held responsible for some regulations. The Fair Labor Standards Act is the most prominent of these. If a worker is not paid properly, the Department of Labor can hold both co-employers responsible.
Co-Employment is at the heart of the PEO model – the legal construct that allows Simploy to provide amazing results. We recognize that deciding to partner with a PEO is not a small decision. We developed this article because it is important that you understand co-employment.
Co-employment is a partnership, not unlike a pilot and co-pilot. Both work with each other to complete their mission. Furthermore, both have different responsibilities; while the pilot steers the co-pilot navigates. To take this example further, the business owner is the pilot, driving crucial day-to-day activities. And the PEO serves as the co-pilot, completing specialized tasks and supporting the overall mission. Both are invested in achieving a common goal and working toward that end. But ultimately, the pilot is in the driver’s seat, while the co-pilot provides assistance no matter where the pilot decides to go!
Interested in learning more about the PEO concept? – visit our PEO 101 Hub for additional insights.
On the other hand, if you have seen enough and want to get in touch with a member of the Simploy team, submit a contact request and a Simploy associate will reach out to you shortly.