How the Co-Employment Model Really Works – Sheakley - The Human Resources People
Professional employer organizations (PEOs) began their rise after the This shared employment relationship is called co-employment. How Co-Employment Responsibilities are Shared: PEO Version of the benefits that a co-employment or employee leasing relationship might. Legally, referred to as a "Joint Employer" relationship, co-employment is often used to describe the relationship among two or more employers.
In the event of an employee lawsuit, the co-employers EPLI coverage extends to you, providing additional safeguards for your business.
Work Comp for PEOs and Their Client/ Employers
Finally, and perhaps most important to your employees and potential job candidates, your PEO will provide benefits administration for your company. By harnessing the buying power of their entire client pool, PEOs are able to offer you access to high-quality benefits packages that may otherwise be unaffordable to many small or mid-size businesses.
Your PEO will help with every aspect of the benefits administration, such as benefits onboarding, withholdings, claims management, and other related paperwork. Employer responsibilities in the co-employment model By alleviating the stress and time needed to perform the functions listed above, the co-employment model allows you to focus all of your attention on finding ways to grow your business and expand your profit margin.
While your co-employer will take on many employee-related tasks, you will still be responsible for the day-to-day business operations and activities of all employees. Additionally, you are responsible for providing the workspace and resources necessary for your employees to perform their duties on a daily basis.
- What is Co-Employment?
Ultimately, you as the business owner are also responsible for the delivery of services or products provided by your business — and working with a PEO makes that easier. Businesses that partner with a PEO grow seven to nine percent faster, have 10 to 14 percent lower employee turnover, and are 50 percent less likely to go out of business than other companies.
Co-employment misconceptions The co-employment arrangement between you and your PEO leaves you in charge of your staff. While pre-employment services help you to stay compliant and navigate talent acquisition and management, you maintain control of your staff, their assignments, and pay rates.
As co-employers with their client companies, PEOs contractually assume substantial employer rights, responsibilities, and risk through the establishment and maintenance of an employer relationship with the workers assigned to its clients. Co-employs workers at client locations, and thereby assumes responsibility as an employer for specified purposes of the workers assigned to the client locations.
Reserves a right of direction and control of the employees. Pays wages and employment taxes of the employee out of its own accounts. Reports, collects and deposits employment taxes with state and federal authorities. Establishes and maintains an employment relationship with its employees that is intended to be long term and not temporary.
Retains a right to hire, reassign and fire the employees. When evaluating the employer role of either the PEO or the client, the facts and circumstances of each employer obligation should be examined separately, because neither party alone is responsible for performing all of the obligations of employment.
Work Comp for PEOs and Their Client/ Employers
Each party will be solely responsible for certain obligations of employment, while both parties will share responsibility for other obligations. Most states require the PEO to individually monitor and report the claims experience of each individual client.
To choose the right agency for staffing, clients should evaluate the services that provider offers. Regular employee reviews Thorough pre-screening of potential employees, including criminal background checks and financial evaluations.
Complete recording, tracking, and submission of tax-related information, including end-of-year W-2s. Staffing Insurance in Risk Management With the unique risks associated with staffing agencies, specialized staffing insurance is critical in mitigating those risks. This type of insurance insurance serves to provide coverage against many aspects of co-employment practices; when HR and employee status duties are shared between organizations, liability risks can further complicate an already-challenging environment.
Our StaffPak staffing insurance provides a range of coverage types, including: Errors and omissions General liability Employment practices liability, particularly protection for violations of the Americans with Disabilities Act, Civil Rights Act, and Equal Pay Act, among others Excess coverage including employee benefits liability As a best practice when working with staffing clients, it is imperative that insurance agents speak frankly about the potential risks they face in taking on HR duties for their own clients.
While there are many types of staffing agencies and agreements between those agencies and their end clients, risk management is a vital part of the overall picture.