What Is Co-Employment? A Brief Guide


What is co-employment? If you’re a small business owner, you’ve probably heard of it before, but you may not be sure of what exactly it entails. So, what is it, and could it be beneficial for your business?

As a business owner, you’re doubtless familiar with the thousands of arduous and mundane tasks that fall under your responsibility every day. They’re the less glamorous side of running a business. Filing payroll, taking care of taxes, and hiring and firing employees.

These are all things that are necessary, but perhaps not the best use of your time. But imagine if you could find an organization that would take care of all of these types of tasks for you, so you could focus on running and building your business? That’s exactly what a co-employer does—read on to find out more.

The Co-Employment Model

Many companies choose to outsource their administrative functions to contractors. It allows them to easier scale and grow their business and gives them more time to focus on managing their employees and overseeing operations.

However, this can have some disadvantages. You have less control over the functions you choose to outsource and employees often struggle under outsourced HR, for example. As well as this, with different organizations taking care of different functions, there’s a greater chance of miscommunications and mistakes.

Co-employment can be seen as a sort of best of both worlds in this regard. It rids you of the responsibility of time-consuming administrative tasks and allows you to easily scale your business. But unlike outsourcing, still offers a level of understanding on the co-employers part and control on yours.

How Does Co-Employment Work?

In essence, co-employment means two or more parties sharing legal employer responsibilities of an employee. Usually, the two parties in question will be a professional employer organization (or PEO) and their client (often a small business).

The PEO becomes what is called the employer of record. This means it takes much of the legal responsibility for your employees, thus mitigating your risk as an employer. As well as this, it also takes care of things like your payroll functions, tax compliance, HR, and benefits administration.

Benefits of Co-Employment

Co-employment is a popular option for many businesses, especially those that are small to medium-sized. As is mentioned above, it allows for easy scalability, but it also has a number of other advantages.

For example, because a PEO is a larger organization, it will be able to offer your employees better benefits, which will help you to attract top talent. It also gives you access to expert advice on payroll, HR, and tax issues. Finally, when these functions are all being taken care of in one place, communication tends to run much smoother.

There’s a reason why companies who work with PEOs tend to have better retention rates than those who don’t. If you’re in California and you think you’d like to work with one, go here now.

What Is Co-Employment? A Guide

Co-employment is an employment model that works well for many companies. Hopefully, this guide has answered the question of “what is co-employment?” and helped you to decide if it could work well for yours. If you’re looking for more business tips and tricks, check out the rest of our content.