By entering into a co-employment arrangement with a PEO, business owners will have access to a wider range of benefits for their employees. This is because a PEO often serves many different businesses, with the pool of employees that are paying into those benefits encompassing all of those disparate companies.
In other words, PEOs have more employees paying into the benefit pool than merely one company. This means that they can offer benefits at a lower individual price as well as offering more benefits than the average small business can provide on its own. Though outsourcing HR services through a co-employment agreement has become increasingly common among businesses of all sizes, the fact that it creates a larger pool of benefits makes co-employment especially useful for smaller companies with between five and 100 employees.
Are There Risks to Co-Employment?
If you are the owner of a new or small business, you may be asking yourself if co-employment is right for your company. You may be worried about potential risks. After all, the word “co-employment” sounds as if someone is taking away your employees! However, a co-employment arrangement can be a very beneficial relationship for your business.
The only true risk involved in a co-employment relationship occurs when the written co-employment agreement is poorly constructed. This can muddy the waters regarding your business’ responsibilities and the responsibilities of the PEO. An example of this is a recent court case in which Microsoft was found to have overstepped its bounds with its independent contractors and was ordered to pay out almost $100 million as a result.
Fortunately, at NetPEO the co-employment agreements are drafted ahead of time, approved by both you and the PEO of your choice, and do not go into effect until they are signed. We keep in contact with you throughout the duration of your co-employment relationship with the PEO and track your satisfaction. This dedication to client satisfaction has provided us with the highest customer satisfaction rate in the industry.
Does Co-Employment Have an Impact on Employees?
By outsourcing your company’s HR needs via a co-employment relationship, you can have a significant positive impact on your employees in a number of ways.
- Better employee benefits means happier employees who stay with the company longer.
- Better employee benefits means more interested recruits.
- PEOs are experts at creating employee handbooks, which equates to a less-confusing workspace.
- PEOs are able to take much of the workload off of the owner, allowing you to focus on your business and your employees.
Being in a co-employment relationship with a PEO does not mean that your employees will have an additional burden or workload. It simply means that they are legally considered “employees” of the PEO so that the PEO can then provide services like benefit management and payroll accounting.
Hallmarks of a Good Co-Employment Agreement
Every co-employment agreement will be different, since each business is unique and has unique needs. But there are a few guidelines that should be considered when drafting and signing a co-employment agreement.
Clarity of Roles
The agreement should clearly state how both the business and the PEO are supposed to function, and what services are the responsibility of each entity.
Defined Duration
The agreement should last for a short period of time, such as one year, with options for renewal if both parties desire in the future.
Dispute Resolution Options
The agreement should dictate how any disputes ought to be handled and resolved in order to protect both you and the PEO.
At NetPEO, our high rate of client retention can be traced back to our emphasis on client satisfaction. This means that we not only assess your company’s specific needs and find a handful of PEOs for you to choose from, but we also regularly check in with you to make sure that you are happy with your co-employment arrangement.
Begin Your PEO Co-Employment Search Today
Hiring a PEO to provide either wholesale HR department services or solutions on an a la carte basis is one of the best decisions you can make for your business. Though any company can benefit from having a larger pool of employee benefits, co-employment is especially important for businesses with five to 100 employees. And using a PEO is more common than you might think.
To start the process, contact NetPEO today so that we can search through our nationwide network of PEOs to find the perfect match for your company’s needs. Either fill out the form on our contact page or call us at (678) 376-1212.
