How Co-Employment Relationships Benefit Businesses

By: Insperity Staff
January 18th, 2012

In today’s competitive marketplace, deciding to outsource a portion or all of your human resource (HR) responsibilities could go a long way toward boosting your bottom line. By entering into a co-employment relationship with a professional employer organization (PEO), you will be free to focus on what really matters—growing your business.

A  PEO relationship involves contractual allocation and sharing of employer rights, responsibilities and risks with its client companies and their workforce. Business owners who outsource HR tasks via a co-employment relationship benefit from the following:

Access to better health and retirement benefits. A PEO is able to offer large company benefits to small companies. Such a scenario often means business owners can offer a wider range of benefits to workers at a much better price.

Freedom to focus on core business issues. A business owner’s time is valuable and better spent attending to tasks related to growth and profitability.

Reduced payroll and accounting costs. Companies that enter into a co-employment relationship benefit from a decrease in the cost of employer payroll processing and related accounting costs.

Monitored compliance of federal and state regulations. State and federal regulations change and are re-interpreted regularly. A co-employer helps monitor compliance and frees business owners from constant vigilance.

Professional employee handbooks and internal employee communications. A company’s employee handbook is a resource outlining expected and unacceptable behaviors for its staff. A poorly compiled and/or incomplete handbook is not only unprofessional, it can create legal liabilities as well.

Workers’ compensation management. Many small business owners fear workers’ compensation claims and lack the knowledge to navigate the process. Often small business owners are notorious for wrong reactions. After John Doe gets hurt and files a claim, John’s boss decides that John is lazy and should’ve been fired three years ago, thus firing him. But firing John doesn’t stop the claim. And now John may now file a lawsuit against the company for unlawful retaliation.

Professional benefits administration. Employee benefits are complicated, and staying in compliance with federal laws such as the Health Insurance Portability and Accountability Act (HIPAA) adds to the challenge. Professionals who work with benefits on a daily basis are familiar with best practices and can help you remain in compliance.

Access to employee and management training programs. Well-trained workers are a boost to your business. Training programs help business owners maximize their human capital. Many PEO’s offer such training programs that may not be otherwise available to client companies.

Recruiting assistance. Finding job candidates who fit both the position and company culture is extremely important. Professional recruiters are experienced in identifying and selecting the ideal hire the first time.

Ability to compete with larger firms for employees and business. With co-employment, business owners have access to benefits typically only offered by large companies.

Risk management for employers. There will always be inherent risks in entrepreneurship. A co-employment scenario best mitigates human capital risks by providing a way for employee-related issues to be handled appropriately.

Assistance with employment-related liabilities. A co-employer has a vested interest in keeping your business compliant and assisting with the defense of employment related claims that may arise.

Access to seasoned HR professionals. Expecting one person to understand all of the laws and intricacies associated with HR is unrealistic. A  good PEO is made up of knowledgeable professionals who deal with HR-related issues on a daily basis.

Reduced employee turnover. Employees who are happy with their work environment, pay and benefits are likely to remain with their employer long-term.

How Can Your Business Benefit?

The decision to enter into a co-employment relationship is not one to be taken lightly and there are many factors that must first be considered. We invite you to learn more by downloading our free guide, Human Resource (HR) Outsourcing: Co-Employment Explained, today.

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