Co-employment refers to a business relationship in which two or more employers share responsibility and liability for a group of employees. In this arrangement, the employees work for one employer, but another employer (usually a professional employer organization or PEO) also shares certain employer functions.
Co-employment can be beneficial for businesses that want to outsource certain HR functions while still maintaining control and direction over the employees' day-to-day work. It allows companies to focus on their core activities while relying on a PEO to handle HR administration and compliance matters.
In a co-employment relationship, the primary employer (also known as the client employer) maintains control over the essential aspects of the employees' work, such as job duties, performance evaluation, and compensation decisions. The secondary employer (typically the PEO) assumes responsibility for HR-related tasks, including payroll, benefits administration, compliance, and risk management.
Here's an example to illustrate how co-employment works:
With co-employment, the primary employer can take advantage of the PEO's expertise and infrastructure, leading to cost savings and improved HR efficiency. Meanwhile, the secondary employer (PEO) assumes liability for HR-related risks, sharing responsibility for compliance and legal matters with the primary employer.
Co-employment offers several benefits for businesses:
While co-employment offers advantages, it's essential for businesses to consider the potential risks:
Overall, co-employment can be a valuable solution for businesses looking to streamline HR processes and focus on their core operations. Before entering into a co-employment relationship, it's important to thoroughly assess the benefits, risks, and specific needs of your organization.
