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Co-employment sounds more complex than it is. At its core, it’s a shared relationship between a business and a Professional Employer Organization (PEO) where each party plays a defined role in managing employees. While the PEO handles payroll, taxes, and benefits, the business controls daily operations and workplace decisions. This setup allows you to outsource time-consuming admin tasks without giving up authority.
What Is Co-Employment?
In a co-employment model, your business remains in charge of the workplace. You direct job duties, manage performance, and oversee daily operations. The PEO takes on administrative employment tasks. This includes payroll, tax fillings, benefits admin, and compliance with employment regulations.
This division helps you focus on strategy and growth, while the PEO handles back-office duties that typically require time and expertise. Co-employment is not outsourcing. It is a shared model that helps businesses operate more efficiently while staying compliant with labor laws. The PEO supports the employer core business operations.
Common Misconceptions About Co-Employment
Co-Employment can raise several questions. Here are a few of the most common.
Do I Lose Control of My Employees?
No, partnering with a PEO does not mean relinquishing control over your employees. You retain full authority over business operations and employment decisions, including hiring, promotions, and terminations.
Does the PEO make business decisions for me?
No, A PEO does not make business decisions on your behalf. While they provide guidance on HR best practices, all strategic and operational decisions remain in your hands.
Are my employees now PEO employees?
No, your employees do not become employees of the PEO. In a co-employment arrangement, both your company and the PEO share certain employer responsibilities. You still direct your employees’ daily activities.
My Business Is Too Small for a PEO
PEOs are designed to assist small and medium-sized businesses. Companies with as few as four employees can access comprehensive benefits through a PEO. PEOs negotiate rates for health insurance and retirement plans by pooling employees from multiple businesses, giving small businesses an advantage typically reserved for larger companies.
Key Benefits of Co-Employment
Co-employment offers several benefits for employers.
Streamlined HR Processes
PEO manages essential HR tasks, allowing you to concentrate on core operations. This reduces admin burdens and increases your business’s efficiency. Businesses utilizing PEO services experience a 27% reduction in HR-related costs.
Access to Comprehensive Benefits
Working with a PEO gives your company access to benefits typically only available to larger corporations. This helps you attract and retain better talent, leading to more engaged, more loyal employees. In fact, businesses that use a PEO have over 7% less turnover.
Risk Mitigation and Compliance Support
PEOs help you navigate complex employment laws and regulations. This allows your business to remain compliant and reduces exposure to legal risks.
Is Co-Employment the Right Fit for Your Business?
Here are a few questions you should ask before engaging a PEO.
What Services Does the PEO Offer?
Ensure the PEO provides the specific HR functions your business needs, such as payroll processing, benefits administration, and compliance assistance.
What Are the Costs Involved?
Ensure you understand the fee structure, including setup fees and ongoing costs. PEO may charge a flat fee per employee or a percentage of total payroll.
Does the PEO Have Experience in Your Region?
Regional experience can be beneficial for understanding unique compliance requirements and challenges.
How does the PEO handle compliance and risk management?
Assess their expertise in managing employment-related regulations and mitigating risks associated with HR functions.
Co-employment gives you the best of both worlds. You get expert HR support without giving up control of your business. It’s a practical, proven way to lighten your administrative load while keeping your team and operations firmly in your hands. With the PEO focused on complex, time-consuming tasks behind the scenes, you can stay focused on growth, leadership, and day-to-day decisions.
If you’re spending more time on paperwork than planning your next move, co-employment could be exactly what you need to grow your business. With the right partner, you can operate with more confidence, less stress, and fewer headaches.
Ready to grow your business? Pinnacle can help! We’re here to take care of all your HR needs so you can focus on growing your business. Contact us for your HR Review and Needs Analysis today!