What is Co-Employment and How Can a PEO Help?

As a business leader, you want what’s best for your company and your people. HR management is critical, but with its many facets and responsibilities, it can consume a majority of your time before you know it. If yours is a small to mid-sized business, this may pose a concern that’s growing faster than your workforce. A co-employment relationship with a professional employer organization (PEO) may be the answer you’ve been searching for. 

How does it work? 

A PEO relationship is based on a contractual agreement and sharing of employment responsibilities between your company and your PEO. The agreement is known as a client service agreement (CSA). The specific roles of both parties depend on the details outlined in your CSA. 

  • You retain control of all business decisions, operations, and employees’ daily duties and job functions. Your PEO assumes and manages certain employment responsibilities and risks, and also provides a broader range of benefits to your team members based on its group purchasing power.  Employees at your worksite are employed by two separate entities: your company and your PEO. 
  • There is little to no disruption as you transition into a PEO partnership. It becomes a seamless change for the better, as employees appreciate improved benefit offerings, as well as ready access to the specialized HR expertise and online technology provided by your PEO. 
  • Your PEO doesn’t replace your existing HR staff. Rather, the two work side by side to offer greater knowledge, depth and breadth of services. Your HR team is freed up to focus on more core business and strategic initiatives, while your PEO staff handles time-consuming administrative functions. 

What are the benefits? 

HR planning and support, access to big-business benefits, simplified payroll, and workers’ compensation coverage and claims management are among the many benefits of partnering with a PEO. 

  • Let’s start with benefits. Because they pool all their client employees together, PEOs can offer your employees benefits typically only available to much larger companies. These include medical, dental and vision care, healthcare FSAs, retirement plans, life and personal accident, as well as short and long-term disability insurance, education assistance, and more. The risks associated with sponsoring benefit plans are shifted to your PEO, and you don’t have to worry about negotiating with providers, managing enrollments, or conducting nondiscrimination testing. 
  • Your PEO assumes responsibility for paying employees, as well as the payment and reporting of wage and payroll taxes under its Federal Employer Identification Number (FEIN.)  
  • Safety and workers’ compensation duties and risk also fit under the PEO service umbrella. Your PEO will investigate claims, communicate with injured workers and their healthcare providers, and assist with return-to-work plans. Their experts can also help keep people safe and injury free by providing safety training, conducting on-site evaluations, and offering recommendations for continuous improvement. 

Curious About PEO Services?

As an ESAC (Employer Services Assurance Corporation) accredited and IRS certified PEO, Lyons HR can partner with you to meet any or all your HR needs and make your company more efficient, compliant and profitable. Read our related posts or contact us today to learn more.