PEOs & Co-Employment
“Co-employment” and “professional employer organization” are often used interchangeably in conversation. This leads to some confusion when trying to learn about a PEO and what it can do for you. The two terms seem to suggest the same type of arrangement, so is there a difference? If so, what is that difference? Behold:
Co-employment is the contractual agreement between an employer and professional employment organization (PEO) stating that the PEO will be sharing employment responsibilities with the employer. In this arrangement, employers are outsourcing their employee management tasks, but NOT outsourcing the employees. The PEO becomes the employer of record for tax and insurance matters and handles a variety of human resources duties.
These duties include:
- Pays wages and employment taxes of employees
- Negotiates employee group insurance benefits
- Handles health benefits, workers’ compensation and unemployment insurance claims
- Reports, collects and deposits employment taxes with state and federal agencies
In a co-employment arrangement, employees are technically employed by both the business owner (the PEO client), who controls daily duties and core job functions, and the PEO (or co-employer). The PEO client keeps control of all business decisions and operations, and the PEO provides expert advice and performs many administrative functions.
Business owners that enter into a co-employment relationship with a PEO shift a big portion of the responsibilities (and let’s not forget risk) associated with managing employees to the co-employer (PEO). Overall, co-employment is designed to allow the PEO to align with a small business to provide expertise and administrative assistance.
Want to learn more?
If entering into a co-employment relationship with Optimum Employer Solutions sounds beneficial to your company, feel free to reach out to us. Here at Optimum, we pride ourselves on helping you be your best. It’s time to focus on your business and leave all the administrative functions to us.