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Are There Any Risks, Issues, or Liabilities with Co-Employment?

Are There Any Risks, Issues, or Liabilities with Co-Employment?


Co-employment is a common arrangement that companies use to outsource HR, save money and improve the benefits they offer employees. It’s an arrangement that has been used in different forms since the 1960s and is carefully regulated. If you work with a reputable PEO (professional employer organization) and review your co-employment contract before signing, you will be protected with no extra liabilities or risks beyond any other HR provider.

However, because co-employment is so different than other outsourcing arrangements, many businesses have questions when first considering it. Below, we’ll look at the biggest questions and give in-depth answers.

Who do my employees work for under co-employment?

The employees are still “your” employees. The PEO is only the employer of record for certain legal purposes, and has no say in what your employees do.

That means that all work plans are still decided by you, your management team or the supervisors.

Does my company lose any control because of co-employment?

No. Your contract ensures that the co-employer acts only as directed by you. PEOs are in the businesses of administering HR and benefits, and entering into co-employment does not change anything about the day-to-day running of your company.

Under co-employment, you retain all the power:

  • Your company is the executive in the relationship
  • Your leadership team still controls the business
  • You have the power to hire and fire
  • The PEO has no ownership or stake in the company

In fact, the PEO’s main job is to get out of the way (along with all the paperwork) and let you keep growing the business.

Are there any liability issues with a PEO?

Most PEOs will help you reduce your liability. They do this through:

  • Risk assessment and risk management
  • Experienced handling of employee claims and disputes
  • Establishing strong HR policies and procedures
  • Offering training (such as safety training) where needed
  • Improved compliance with government regulations

In terms of the co-employment relationship itself, there are no extra liabilities beyond what you would expect in any contractor situation.

Will I really save money with a PEO?

PEOs have the ability to save your organization money, but it depends on your situation and how you use the PEO. Most savings come from:

  • Savings on benefits
  • Fewer claims against the company from workers/former workers
  • Better government compliance
  • Savings over the cost of hiring internal HR staff

At Einstein HR, we’re proud to say that many of our clients see savings right out of the gate because of reduced employee turnover. Long-term savings tend to come from reduced risk/liability and lower benefits costs.

Would co-employment help your company?

Einstein HR offers more than just our expertise—we offer the best service in the PEO industry. Let us give you a free consultation on your PEO needs. Fill out the form to your right or contact us and get your free consultation today.

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