Co-employment is a contractual relationship, in which a business and a professional employer organization (PEO) share certain employment responsibilities. This arrangement is advantageous to organizations that want to mitigate some of the costs and liability associated with being an employer. Outsourcing with a co-employer also allows owners and executive leaders to focus more of their efforts on growing their business and less on HR. Show
How does co-employment work?Despite some misconceptions, co-employment does not mean employers cede ownership or lose control of their business. In actuality, clients continue to manage their employees and day-to-day operations, while the PEO focuses on HR-related tasks, such as payroll, benefits administration and regulatory compliance. What are the benefits of a co-employment relationship?High-quality, forward-thinking PEOs use data insights, evolving technology and skilled advisors to help clients respond strategically to regulatory changes and workforce trends, thereby allowing them to remain competitive and maximize growth. Other benefits of co-employment include:
Are there potential risks to co-employment?The benefits of co-employment – compliance support, HR administration, growth opportunities, etc. – generally outweigh any potential risks. However, if a PEO is not certified by the IRS and it fails to pay taxes on behalf of a client, the client can be held responsible and penalized. This is true even if the business already paid the money for the taxes to the PEO as part of the service contract. And in the event that a business joins or leaves a co-employment arrangement mid-year, it may be subject to a wage-base restart for certain payroll taxes. How can you avoid co-employment risks?Employers can avoid co-employment risks by partnering with PEOs that meets the rigorous background, financial and reporting requirements necessary for certification with the IRS and the Employer Services Assurance Corporation (ESAC). Certified (CPEOs) offer these advantages:
What is not co-employment?Co-employment is sometimes mistaken for employee leasing and joint employment, but they are not one in the same. They key distinction between them lies in how the employer responsibilities are allocated. What does employee leasing mean?Employee leasing is an arrangement where a staffing firm provides a business with employees for a temporary assignment and when it’s completed, they return to the agency. Co-employment is different because PEOs don’t supplement a client’s workforce with additional labor and should the relationship between the PEO and the employer end, the employees remain with the client. What does joint employment mean?Joint employment means that two distinct employers govern the same employees. In a typical example, both parties would have input on employee supervision, wages, schedules, performance and disciplinary action or termination. With co-employment, on the other hand, only the client business, not the PEO, manages hiring decisions and the daily activities of the workforce. Why choose ADP for co-employment?ADP TotalSource® is the largest PEO in the United States and has proven expertise in all areas of human resources. Our products and services are designed to help businesses adapt to changing workplace trends and improve their bottom line. Some of the strategic solutions that sets TotalSource apart from the competition include:
Frequently asked questions about co-employmentWhat is the definition of co-employment?Co-employment exists when a business shares employment responsibilities with a PEO, but still maintains full control of its daily operations and its employees. Is co-employment the same as joint employment?Co-employment and joint employment are not the same, largely because of workforce management. In a co-employment arrangement, only one party makes labor-related decisions, but in joint employment, both parties have input on wages, hours, new hires, terminations, etc. What is a PEO relationship?PEOs serve as the employer of record for a business for tax purposes. This type of relationship also helps employers manage payroll, HR, benefits, workers’ compensation and regulatory compliance so they have more time to pursue other business goals. What is a co-employment agreement?A co-employment agreement is a shared risk platform that helps insulate PEO clients from the complexities of employment regulations. Is co-employment illegal?Co-employment is legal. In fact, the IRS supports the PEO community with a certification process that helps businesses find a PEO that meets its strict standards. Business owners who want the utmost reliability and security often partner with an IRS-certified CPEO.1 1The IRS does not endorse any particular certified professional employer organization. For more information on certified professional employer organizations, go to https://www.irs.gov/. This article provides practical information concerning the subject matter and is provided with the understanding that ADP is not rendering legal or tax advice or other professional services. Which is true of a professional employer organization?The correct option is A) PEOs have the right to hire and fire the client company's employees. PEO or the Professional Employer Organization is an external organization that provides essential services to the client company. They provide temporary service to the organizations that hired them.
Which of the following employer task does a professional employer organization normally handle?PEOs manage payroll, benefits, and other HR responsibilities for the employees of a client company. Typically, a PEO has a staff with extensive experience in HR, legal, tax, client services, and accounting.
What is the advantage of using a professional employer organization PEO for recruiting quizlet?provides a service under which an employer can outsource employee management tasks, such as employee benefits, payroll and workers' compensation, recruiting, risk/safety management, and training and development.
Which of the following is a formal approach used by the organization to ensure that people with the proper qualifications and experiences are available when needed?In an organization, career development is identified as a formal approach utilized by many businesses to guarantee that the individuals with proper abilities, skills, knowledge, expertise and qualification are available when needed.
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