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Last Updated on January 20, 2024 by Work In My Pajamas
There are many benefits to co-employment. It protects people and reduces the burden on HR. It helps the business owners focus on growing the business while employees get better benefits. How does co-employment work?
Benefits of Co-Employment
While co-employment is a good option for any small business, it can also benefit individuals. In addition to reducing risk, co-employment allows a business owner to take on better employee benefits and focus on running the business. By hiring a co-employer, a business owner will be able to manage the business’s day-to-day operations without the added burden of HR responsibilities.
PEOs offer comprehensive benefits for small and mid-sized businesses, making co-employment an attractive option. For example, these PEOs often provide high-quality health insurance and administrative support for business owners. In addition, some offer benefits beyond medical insurance, including retirement savings plans, commuter benefits, and education reimbursement. Ultimately, co-employment benefits can save employers money.
Cost Savings
One of the critical benefits of co-employment is cost savings. By entering into a co-employment agreement with a PEO, your company becomes a part of a larger group, offering better group health insurance, dental insurance, and life insurance. Plus, your employees will have access to an Employee Assistance Program (EAP), and the PEO’s health insurance plans are negotiated on a scale. Ultimately, this helps you save money on healthcare premiums while providing your employees with Fortune 500 level benefits.
Another benefit to co-employment is risk reduction. Unlike a full-time employee, a contingent worker isn’t the same as a permanent employee, so it’s essential to understand all risks. Co-employment offers the flexibility to fill talent voids and cover absent team members. But this option also requires more cost-cutting in the form of benefits. It can be risky, but it’s a way to save money while maintaining a contingent workforce.
HR Burden Reduction
Co-employment is an arrangement whereby two or more employers share one employee’s legal and financial responsibilities. In this arrangement, the client-employer organization provides ongoing support to the client’s existing workforce while sharing the burden of managing payroll, benefits, and other HR-related requirements. This arrangement can be particularly beneficial for small and midsize companies that want to minimize their HR burdens while keeping the autonomy of managing their workforce.
While co-employment reduces administrative burdens and risks, it also enables businesses to attract better and retain top talent. By providing superior benefits to employees, co-employment allows companies to control the nature of the relationship between the two entities. Furthermore, the business owner can maintain control over the working relationship, minimizing the need for constant communication and fostering employee retention. Moreover, if both parties have agreed to cooperate in addressing common HR concerns, they will have more resources to focus on other pressing business issues.
Legality
One of the most critical questions regarding the legality of co-employment for businesses is the implications for both the workers and the organization. A joint employer can share legal responsibilities with a company, such as providing workspace and supervising employees. This can pose a risk to the business if one party fails to meet its obligations under the law. For example, a worker may complain against the organization that has the most contact with them or feels the party that is most responsible for the failure of the business has the most responsibility for the workers’ work.
In an ideal situation, both companies would hire people from both companies. However, many organizations fail to set up a proper classification process, leading to the misclassification of employees during an audit. It is therefore vital to carefully vet potential co-employees, and external staffing agencies should explain to the employees the requirements of the co-employer. If co-employment is inevitable, Multiplier is an Employer of Record solution that will help you meet these obligations.
Partnership with PEO
If your company employs several people, a partnership with a PEO may benefit you. A PEO serves as the employer of record for your business, handling payroll, benefits, etc. With economies of scale, PEOs can offer better benefits to their clients than you would be able to afford on your own. This can be a game-changer for a small or mid-sized business.
With a PEO, your company is no longer the employer of record for your employees. As a result, the PEO can aggregate all your employees for lower health care costs and workers’ compensation rates. The PEO can also offer your employees various benefits, including medical insurance, an attractive retirement plan, and educational assistance plans. A PEO can also help you protect your business and employees by sharing the burden of employment-related responsibilities.
