Co-Employment: What You Need to Know

You’re focused on growing your company and making it as competitive and successful as possible. This includes effectively recruiting and retaining top talent and the myriad responsibilities that go along with it.

You’d never want to lose control of the business you’re working so hard to build – yet those HR functions can be costly, time-consuming, and maybe even overwhelming at times. Employment laws change constantly; you need to right-size your workforce and protect your bottom line, and always have your employees’ health and well-being on your radar screen. Yikes! To put it simply, it’s a lot.

You’re not alone. And the good news is: For a growing number of companies facing similar challenges, the solution lies in a co-employment agreement, which you can enter into via a partnership with a professional employer organization, or PEO.

What Comes with Co-Employment

True Collaboration

Also called a client services agreement, a co-employment agreement distributes different responsibilities to each party according to mutually accepted terms. Your PEO becomes the employer of record for your employees, which means the PEO:

• May assume certain employment responsibilities and/or share others with you, freeing up your time to focus on business operations, growth, and strategic direction.
• Remits employee wages and withholdings.
• Issues W-2 forms for compensation under its Federal Employer Identification Number (FEIN).
• Reports, collects, and deposits all employment taxes with local, state, and federal authorities.

Your PEO focuses on HR tasks as you retain overall control of hiring and other high-level decisions.

Additional Advantages

If you want to reduce costs and liability related to being an employer, as well as sharpen your competitive hiring edge, then a co-employment agreement may be just what you need. The advantages of working with a PEO typically include:

• Access to Fortune 500 level benefits: PEOs combine employees from their various clients into a single pool, giving them the necessary group purchasing power to offer attractive benefits packages that may otherwise be inaccessible or unaffordable to you. These may include not only more comprehensive healthcare options but retirement plans, voluntary benefits, and other perks tailored to your team and its needs.

• Full-service payroll administration: Your PEO can assume all payroll operations, including calculating wages and deductions, paying employees, filing taxes, and handling timekeeping to eliminate the need for repetitive data entry while minimizing errors.

• Compliance management: PEOs have risk and compliance experts who will keep your business up to date with changing regulations and requirements. This can protect you from potential fines and penalties.

• Workers’ compensation coverage: PEOs offer workers’ comp insurance to their clients, and manage claims. They can also assist with safety audits and programs to minimize workplace hazards.

• HR support: You may or may not have an in-house HR team. Either way, your PEO will supply the needed resources and expertise to keep all your talent acquisition and management functions current and on track.

Want to Learn More About What Co-Employment Can Do for You?

Are you ready to learn more? Contact Key HR today to discuss PEO and other possible HR partnership options for your growing business.