Modern business owners are able to meet the needs of their companies in more ways than ever before. There are a variety of different solutions to human resources, administration, and financial problems available to everyone from small business owners to mega-corporations. Though temporary staffing or employee leasing are valid options, these are distinctly different from the way that a PEO operates.
The main difference is that, through the co-employment relationship, businesses that use PEOs like the ones in the nationwide network of NetPEO continue to employ their employees even after the relationship with the PEO has ended.
How Employee Leasing Works
You are a business owner who is overwhelmed by the time and expenses that you are devoting to handling paperwork, administering employee benefits, overseeing payroll management, and numerous other tasks. One solution is to use employee leasing.
Though an employee leasing company, a small business owner can bring in temporary employees to accomplish similar solutions as are provided by PEOs. For example, these new employees (who are employed by the leasing company and temporarily leased to the client business owner) can provide such services as:
- Handling of payroll
- Benefits administration
- Handling of workers’ compensation claims
- Human Resources administration
The client business owner employs these HR workers until the relationship between the client business and the leasing company ends. When that happens, these employees typically leave with the leasing company to pursue other projects.
When a client business works with a PEO, on the other hand, the PEO’s experts handle the provision of services. That is, the client business does not lease these employees from the PEO. Instead, the client business pays the PEO to provide specific services, and this usually involves the co-employment relationship.
How the Co-Employment Relationship Functions
When a client business hires a PEO, the two entities sign a co-employment agreement. This is a legal relationship that distinguishes the PEO as a co-employer of the client business’ employees, which in turn allows the PEO to provide services to those employees. At NetPEO, we have a nationwide network of partner PEOs, allowing us to match clients with the perfect PEO for their specific needs.
Defining the Relationship
The co-employment relationship does not mean that the client business loses control over their company or employees. They still employ their employees and are considered the primary employer. Often referred to as the worksite employer, the client business owner has the final say over hiring and firing decisions and retains control over the direction of their company.
A PEO in a co-employment relationship acts as a secondary employer to the client business’ employees. However, the PEO’s authority is limited in scope and is spelled out in the co-employment agreement. When the co-employment agreement ends, the PEO is no longer a co-employer of the client company’s employees.
Services Provided Through Co-Employment
PEOs can provide a wide array of services to client businesses, similar to those obtained through employee leasing. However, there are some significant advantages to using a PEO. For starters, PEOs often employ seasoned experts in the areas of:
- Risk management
- Compliance with local and federal regulations
- Creation of employee handbooks
- Organizational development
- And much more!
But perhaps the most significant way in which a co-employment arrangement with a PEO is better than employee leasing is the administration and provision of employee benefits packages.
How Co-Employment Improves Employee Benefits
By entering into a co-employment arrangement with a client company, the PEO becomes a co-employer of that company’s employees. Since PEOs often have many different client businesses that they serve at the same time, their employee pool has the potential to be exponentially larger than that of a single business. With this larger employee pool, the PEO can provide higher-tier benefits for a lower cost, as the cost of those benefits packages are spread among the entire employee pool.
Entering into a co-employment relationship also has a significant indirect benefit. Not only can PEOs help client companies with their recruitment processes, but having access to these better benefits packages can help the client businesses to attract top talent.
Solve Your Staffing and HR Problems Today!
If you are a small business owner looking for sustainable solutions to your growing paperwork, human resources, administration, staffing, and compliance issues, NetPEO can help. As a PEO brokerage service, we can connect you with several candidate PEOs from our nationwide network. We have an industry-leading client retention rate of 95% and client satisfaction rate of 100%.
Though PEOs in our network can help businesses of any size, our services are especially important for companies with between five and 100 employees. If that matches a description of you and your business, start finding your solutions today. Fill out the form on our contact page or call us at (678) 376-1212.