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What are the Benefits of Co-Employment?

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They say that with great power comes great responsibilities. Similarly, as businesses grow, so do their responsibilities. In such circumstances, a business owner justifiably looks for a helping hand. This is where a strategic partnership with a Professional Employer Organization (PEO) can be advantageous. 

This is a viable solution to enable businesses to focus on their core aspects and activities and outsource non-revenue generating administrative tasks. Before we move on to discussing the number of benefits of co-employment, let’s start with the basics and understand what more about what it is, and, isn’t. 

 

The PEO Relationship 

When a business enters into a relationship with a PEO, a co-employment relationship is formed. This means that both the PEO and client companies “share” the employees of the company for different reasons. A formal arrangement is created where the two companies involved enjoy certain rights as an employer. The total employees of the business still belong to the client company, but the total headcount is shared, and the PEO processes payroll for the employees and handles all taxes, so, from the government’s perspective, the PEO is the ‘employer of record’. 

The client business remains responsible for maintaining the worker’s job duties and the normal operational day-to-day business functions as it always had.  In addition to handling payroll as mentioned, the PEO also provides services in the area of Human Resources support and complianceAs companies join the PEO and the headcount continues to increase, the PEO is able to secure and provide proprietary benefits at much better rates than the open market in areas that may include healthcare and 401k plans – making this a very compelling solution for startups and small to mid-sized companies. 

So, if you are in the same boat as most employers, you will definitely want to maximize operational efficiencies and reduce risk in order to make your business grow into a more profitable one. This is why partnership with a PEO may be the best solution. 

Let’s see how opting for a co-employment relationship can bring benefits to your business. The following are some major benefits of a co-employment relationship: 

 

1. Gain access to several business benefits 

When a business enters into co-employment, it makes way for the provision of a pool of benefits for its employees. The PEO acquires associated risks with sponsoring benefits. 

Additionally, the kind of benefits co-employment provides access to may not have been available to the workers previously. This includes retirement plans, and many types of insurance plans.  As a result, co-employment means that the business no longer has to fret about negotiating costs with the providers or managing typical tasks like employee enrollment. 

 

2. Simplified payroll-related services 

The PEO provides all payroll processing, pays all taxes, handles filings, reports, everything a normal payroll provider would perform.  PEO providers utilize a powerful software system that serves as the payroll processing engine, but also as the HRIS System, which will compliantly house employee files.  A major efficiency that is achieved is that new employees, through the automated onboarding process, actually add themselves into the payroll system as they complete their onboarding paperwork.  Employees have access to pay stubs and can make simple changes on their own. 

 

3. Creation and maintenance of the Employee Handbook 

One necessary document for every business with employees is a clearly written and compliant Employee Handbook.  This serves as the manual that represents the culture of the organization and features details of the available benefits and the guidelines for appropriate conduct while working on premises.  The handbook becomes very important when issues may arise in regard to employee behavior, and when employees need clarity on the benefits available to them and how and when they can access them.  Many businesses have created these manuals on their own, and others have paid attorneys or consultants to create their employee handbook.  The PEO provides this service automatically and makes sure that the handbook is updated at all times and compliant for the state the business is domiciled in. 

4. HR Support

One major benefit of partnering with a PEO has to do with immediate access to a team of HR experts.  This can be valuable to support an existing HR Manager that can use an extra set of hands for a large amount of transactional, day-to-day administration of Human Resources, or, can be utilized in place of employing someone for this purpose.  This can be a very strategic benefit to small but rapidly-growing businesses that makes sure as they are growing, they are maintaining compliance. 

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