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How Can Co-Employment Lower Costs For Your Business?

How Can Co-Employment Lower Costs For Your Business?


Co-employment is a relationship between a business and a Professional Employer Organization (PEO). When a co-employment agreement is signed, the PEO becomes a legal co-employer of the employees of the client business. While this may seem worrisome to some business owners, in fact the owner does not lose any control over the company and has the final say over all decisions. The co-employment relationship actually tends to lower the company’s risk profile, decrease costs, and provide numerous benefits to the business owner.

At Einstein HR, we can provide companies with a wide variety of services as a PEO. Backed by decades of industry experience, our experts are knowledgeable in every area of accounting and human resources needs.

The Cost of Using a PEO

One major way that Co-employment reduces overall costs for a company is by being less expensive than a full-time, in-house accounting and HR staff. Typically, PEO payment methods come in two distinct options.

Percentage of Payroll

The first payment method is to pay the PEO a percentage of the client company’s overall payroll. This can be a useful tool in that the overall cost of the PEO will grow in direct proportion to the growth of your business.

Flat Monthly Fee

The second option is to pay the PEO a flat fee per employee each month. Since this method is not tied to employee salaries, it can be useful for companies trying to attract highly paid employees. However, the percentage of payroll option may be best for companies with lots of employees on lower wages.

Both of these options can reduce the overall costs associated with a client business and should be considered in order to select the most appropriate payment method.

The Cost of Employee Benefits

Not only does a PEO control costs for your business by being less expensive than in-house solutions, but the services of a PEO also work to lower costs. For example, the co-employment relationship can greatly reduce costs associated with providing employee benefits packages.

PEOs can be signed to co-employment arrangements with multiple businesses at the same time. This means that the PEO’s overall employee pool can be exponentially larger than that of any single business. The result is that the cost of employee benefits can be spread out over a larger employee pool, with top-tier benefits packages being available for lower individual prices. Plus, companies with better benefits see a reduction in costly employee turnover, according to information gathered by the National Association of Professional Employer Organizations.

The Cost of Compliance Violations

There are numerous federal and local labor regulations, and failing to comply with these laws can mean that companies are fined or suffer other severe penalties. Luckily, Einstein HR has decades of experience understanding the ins and outs of laws like COBRA, the Affordable Care Act, and more. By entering into a co-employment relationship, companies can avoid costly mistakes in these areas.

The Cost of Liability

Another way in which co-employment can help reduce your company’s overall costs is by putting some of the liability and risk onto the PEO. Since the PEO in a co-employment relationship is a co-employer of your employees, it takes on some of the risks involved with the services it provides. This is an extra incentive for the PEO to reduce risk and lower liability, which can help reduce costs.

For example, PEOs in a co-employment relationship may be tasked with developing employee safety manuals or harassment policies. These services can cut down on costly Workers’ Compensation claims and lawsuits.

Choosing a PEO You Can Trust

Of course, every business relationship is risky in some way, and business owners should make sure that they partner with a PEO that is trustworthy. At Einstein HR, we have decades of experience handling HR and accounting matters for companies with as few as five employees and as many as 500. Recently named to the Inc. 5000 list of fastest-growing private companies in the nation, we are dedicated to providing tailored solutions to all of your HR outsourcing needs. Some of the businesses that we have helped were in industries such as:

  • Retail
  • Law
  • Health Care
  • Construction
  • Real Estate

No matter how big or small your company is, or what industry you are involved in, Einstein HR is an industry veteran that can help you reduce costs, improve employee benefits, provide high-quality services, and grow your business.

Start Working on a Co-Employment Agreement Now

Einstein HR is available now to start helping your company lower costs. If you are a business owner looking for the best HR and accounting solutions, look no further than a co-employment relationship with us. To learn more about the services we can provide, call us today at 770-962-1700 or fill out the form on our contact page. One of our representatives will be in touch with you within 48 hours, and you can start saving!

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