The Co-Employment Relationship

A reputable PEO offers a variety of professional HR and business services. Typically, when you join a PEO, it’s an opportunity for you to outsource the bulk of your responsibilities, including:

  • Employment administration
  • Government compliance management
  • Employee benefits
  • Workers’ compensation
  • Payroll and payroll tax administration
  • Recruiting and hiring
  • Policies and best practices
  • Performance management
  • Training and development

As a PEO client, you don’t have to devote your valuable time tracking payroll or negotiating rates with benefit providers. Nor do you have to hire additional staff to manage it for you.

The separation of HR responsibilities and liabilities that occurs when you work with a PEO is called co-employment. In this type of business relationship, your employees work for both your company and the PEO. While you maintain direct control of the day-to-day work activities of your employees, the PEO assumes the administrative functions of HR and absorbs or shares many employer-related liabilities. The PEO can also provide advice and guidance on all issues related to HR, such as creating employee and workplace policies and procedures as well as staying current on government compliance requirements.

One common misconception is that companies that hire a PEO no longer have control over HR and employee-related decisions. But the truth of the matter is that PEO client companies aren’t required to consult with the PEO before making a decision about an employee. So instead of losing control, employers often find that working with a PEO gives them more time to concentrate on the nuts and bolts of their company. Think of it this way: Just like your employees, the PEO works for you, not the other way around.

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