The co-employment model is a partnership between a business and an outside organization, such as a staffing agency or PEO. It allows the company to outsource its payroll and HR functions without affecting employment law compliance. A CPEO takes on the role of employer of record for payroll taxes, compliance and risk management. They can also provide access to benefits that would be cost-prohibitive for smaller businesses.
Increases Employee Satisfaction
Employee satisfaction is an important factor in reducing turnover and fostering company growth. Studies show happy workers are likelier to stick with their present job than unhappy workers. It is why it’s important to take the time to make sure that your team is happy. One way to do this is to offer opportunities for advancement within the company. Providing your staff with room to grow helps to foster job satisfaction and increase productivity.
Another way to improve employee satisfaction is to ensure employees feel their voices are heard. It may be done in a variety of methods, for as, through regular employee surveys and one-on-one sessions with management. Giving your employees a voice in company decisions is important, such as choosing new technology or a new location. A co-employment model is a type of partnership where a business hires another entity to handle certain employer-related tasks, such as payroll and benefits administration. The other entity, often a PEO or a staffing agency, is considered a co-employer with the client business and has a contractual agreement called a client service agreement (CSA).
Saves Time
A co-employment model is one way small businesses can create operational efficiencies, minimize risk and save time by outsourcing certain HR support services. Many business owners are wary of entering into a co-employment relationship, however, because they worry that they will no longer have control over the day-to-day operations of their business. In reality, however, the opposite is true. Normally, a client firm and a professional employer organization (PEO) establish co-employment agreements in which the PEO serves as a “co-employer.” In this scenario, the PEO will assume employer responsibilities, such as payroll taxes, workers’ compensation, unemployment insurance, and compliance support. On the other hand, the client company will continue to manage all aspects of the employee’s day-to-day work and activities.
Business executives can concentrate on their organization’s core duties and make tactical choices to increase their bottom line thanks to the co-employer arrangement. The PEO will be responsible for processing payroll, filing tax forms and calculating W-2s, which can be complex and time-consuming for small businesses. It will free up many business owners’ time and allow them to focus on other aspects of their business. In addition, the PEO will likely be able to offer workers’ comp discounts and lower unemployment taxes for their clients.
Reduces Risk
A co-employment model is a form of HR outsourcing that involves sharing employer responsibilities with another party. It is usually a professional employer organization (PEO) or certified professional employment organization (CPEO). A PEO accepts responsibility for payroll tax filings, workers’ compensation, unemployment insurance, compliance monitoring, and other tasks as the employer of record. It frees company leaders to focus on more strategic decisions about hiring, firing and day-to-day employee management. It also allows small businesses to access high-quality benefits, such as health coverage, that they couldn’t afford alone. Business owners need to understand the risks of using a co-employment arrangement and choose a reputable provider that takes steps to minimize those risks for their clients.
One of the biggest risks of a co-employment arrangement is ensuring compliance with all employment and tax laws. A PEO that carries out payroll functions and compliance support can help reduce risk by ensuring all taxes are paid, exempt/non-exempt classifications are correct, and wages are properly reported and withheld. It is especially crucial for business leaders that need more time or resources to stay current with all employment laws and regulations. The right PEO can help reduce the risk of costly fines or lawsuits by meeting all compliance requirements.
Increases Profits
For many small businesses, creating operational efficiencies, minimizing risks and maximizing talent is a top priority. But the reality is that human resources-related management and administration can be complex, time-consuming and distracting. To help alleviate the burden, some business owners choose to outsource their HR responsibilities via a co-employment model. Under this arrangement, an employee is hired by your business. Still, the employer-of-record role and payroll taxes are assumed by a partner—typically a staffing agency or professional employer organization (PEO). A co-employment relationship is a contract between two organizations that assigns and divides specific employer-related responsibilities. The client business hires employees and manages performance and targets, while the PEO handles administrative HR services, benefits, risk and compliance and payroll processing. In addition, a PEO can provide access to employee benefit plans that may not be feasible or affordable on your own—including health insurance. Using a PEO as a co-employer can be a great way to get the most out of your workforce and maximize your profits. By focusing on your core business and relying on the PEO’s compliance expertise, you can achieve your growth goals without sacrificing the quality of your workforce.
