If you have been looking to simplify your HR processes and responsibilities, you will probably have heard of co-employment. What does it mean, and how can it benefit you? We explore the implications of co-employment in the United States and look at the benefits of co-employment that so many businesses find attractive.
What is Co-employment?
Co-employment is a situation in which you are not the contractual employer of the people who work for you.
Yes, you are still “the boss”, and you control day-to-day activities, but in the eyes of the law, your employees are actually outsourced workers who have an employer other than you.
So, in other words, you provide the work, you say how it is to be done, and by whom, but somebody else handles all the human resource management and employment responsibilities, acting as the “official” employer.
So, how does this help you? Are there pitfalls you should look out for?
7 Benefits of Co-employment
Businesses may have concerns about not being the official employer of the people who work for them. We will address those later. To begin with, we will look at the benefits of co-employment. These are significant enough to have made using co-employment agencies or PEOs a very popular option for business owners.
1. Cost savings on employee benefits:
As an employer, you want to be able to offer your employees benefits. However, pension plans, medical insurance, and other benefits packages all come at a price. In a co-employment scenario, the companies who offer these plans also offer economies of scale. The more employees you sign up, the lower the price. Nevertheless, you are not a big corporation with thousands of employees. A PEO, on the other hand, is.
2. Co-employment Offers Complete legal compliance
There are many perils and pitfalls for those who are not familiar with employment law. In addition, if you are well acquainted with it, you will know that keeping all the necessary records and engaging with things like workplace compensation can be incredibly time-consuming. A co-employment relationship partners you with an organization whose business it is to take all this work off your shoulders and give you peace of mind.
3. HR admin isn’t your problem
Tracking vacation leave and sick leave, and putting together the payroll for the month takes a lot of work. In a co-employment relationship, this is not your problem. Just skipping that additional workload leading up to payday is a huge relief for small and medium enterprises.
4. You don’t pay top dollar for contracts, employee manuals, and other documentation
All the documents that go with HR such as contracts, codes of conduct, and employee manuals can cost thousands if you get a consultant to do them for you. However, a PEO has everything you need ready, and all you need to do is go through the documents and request any special provisions you would prefer.
5. Your staff has HR advice on tap
You know the scenario: somebody comes to you with a question, or some situation arises that requires attention, possibly through disciplinary action. What do you do now? In a co-working situation, HR experts know exactly how to answer those questions from employees. Moreover, they know how you should deal with employee errors or misconduct. Just pick up the phone, and you have experts on your side.
6. You attract better talent through co-employment
Recruiting can be a minefield! Apart from all the damage that a “poor fit” employee can do, your business deserves the best. Quality employees deliver better value faster. They also tend to be more likely to assume leadership roles in your organization. It’s worth it to put in the extra time to recruit higher quality employees.
How do you attract the best people? Well, great HR services and excellent benefits are a good start, and that is just what a co-employment agreement gives you. A well-run organization is attractive to productive employees. A PEO gives your company increased credibility through their experience and professionalism.
7. You free up time to do what you do best
This one has to be a biggie! All the work that goes into basic HR management could be your concern – or someone else’s. You are in business because you are great at what you do. Now, you and your staff are spending a lot of time on something outside your area of expertise: HR. To maximize your profits, you need to focus on your core business. With a co-employment relationship, you have the freedom to do just that.
Do You Face Risks In a Co-employment Relationships?
There are remarkably few risks for businesses entering a co-employment relationship. On the contrary, if handled correctly, a co-employment relationship represents a substantial risk reduction for any business. However, you should check out all the details of the agreement you are about to enter with a PEO. Clarify roles and responsibilities in detail, and look at what might happen in worst-case scenarios.
Remember, you are still the business owner, and the staff who work with you are still your subordinates. You have absolute control over day-to-day matters. You can select, develop, and train the people who work with you.
Even though you may not be the “official” employer, you are still the boss, and as the client of a PEO, you should expect good customer service. Your PEO will do everything its power to provide customer satisfaction.
