Many people confuse an employee leasing agreement with the co-employment agreement that you sign when you partner with a PEO. After all, both arrangements can alter how you hire and retain employees. The difference lies with your responsibility to the employee under each type of agreement.
If you decide that partnering with a PEO is the right decision for your company, you don’t need to search for one alone. Call NetPEO at (678) 376-1212 to speak with one of our knowledgeable PEO brokers about your business needs and what you want out of a new PEO partnership.
Employee leasing is one form of temporarily hiring staff. This allows an employer to have employees on hand for a set amount of time or until a specific project is completed. Typically, a business will get in touch with a staffing agency in order to lease an employee.
The leased employees are employees of the staffing agency. This means that when the need for the employee is over, whether that’s the predetermined time or the completion of a project, they are returned to the staffing agency that leased them. At no time is the leased employee an employee of the client’s company. If you end your relationship with the staffing agency, even if the project or timeframe isn’t completed, the leased employees will not be showing up at your work site.
A PEO, or professional employer organization, has a different relationship with client companies. Instead of being a firm that leases employees to their clients, a PEO becomes an employer of record for the client’s employees. This is known as a co-employment agreement.
Under a co-employment agreement, your workers work for both you and the PEO under a legal framework. This legal framework allows the PEO to handle HR matters like benefits administration and payroll. However, as the employees work directly for the client company, severing a PEO partnership does not change the employee’s relationship to the employer. Once the partnership is severed, employees still report to the client’s work site to continue their jobs.
How PEOs Can Be Similar to Employee Leasing Agreements
According to the National Association of Professional Employer Organizations (NAPEO), PEOs can trace their origins to employee leasing arrangements. This is why some state and federal regulations can use the terms employee leasing and PEO interchangeably.
One other reason an individual might confuse a PEO agreement and an employee leasing agreement is that PEOs can help you hire new talent. While you maintain great latitude in your hiring and firing decisions when you partner with a PEO, your partner can assist you in the recruiting process. PEOs can devise hiring strategies, conduct initial phone screenings for prospective employees, and help with the on-boarding process.
Other Ways PEOs are Different from Employee Leasing
While PEOs can assist with hiring new employees for their clients, that is only a single aspect of the role a PEO takes on when it partners with a client. When you partner with a PEO, you may receive assistance with:
- Worker’s compensation
- Employee self-service functions
- Liability management
The specific functions of your partner are determined when you sign a co-employment agreement with the PEO. You can determine the extent to which the PEO is involved with your business’s administration when negotiating the terms of your agreement. If you are looking for a bit of help with certain key accounting or HR functions, or if you’re looking for a full-service solution, there’s a PEO option available for your business.
Finding the Right PEO Can Be Hard on Your Own
When looking for a PEO partner, you should understand what you need out of the partnership. Not all PEOs offer the same services or operate in every location, so you may need to devote substantial time finding the right PEO.
Rather than undertake the task yourself, you can turn to the PEO brokers at NetPEO. Our PEO brokers are trained to evaluate the business needs of company’s just like yours. Our brokers use these needs to find you the right PEO partner for your business. We rely on a trusted network of partner organizations to help ensure that you only receive the highest quality recommendations.
For your free initial needs analysis, connect with our PEO brokers by filling in your contact information on this website or by call NetPEO at (678) 376-1212.