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Who Technically ‘Employs’ Your Employee With Co-Employment?

Who Technically ‘Employs’ Your Employee With Co-Employment?


Einstein HR can help client businesses by providing outsourced human resources services or by working as a hired PEO (Professional Employer Organization). Part of using a PEO involves the business owner signing up for a co-employment arrangement whereby the PEO becomes an additional employer of record for all of the client company’s employees.

Understandably, some business owners may be a little uncomfortable with that idea at first. However, co-employment does not come with any increased risk, and employees remain primarily employed by their original employer. Simply put, owners do not lose control over their business or employees by hiring a PEO through the co-employment relationship.

How Co-Employment Works

Co-employment is a legal relationship that allows PEOs and HR outsourcing firms the ability to administer certain services to a business owner’s employees, such as payroll management or the provision of employee benefits packages. The relationship can be broken down into two primary roles.

The Business Owner/Executive

Known as the Executive, the owner of the client business retains all of their powers and abilities. They remain an employer of their employees and have the final say in all business-related and employee-related decisions. This puts the Executive in the driver’s seat of the co-employment relationship, with the PEO working for them and not the other way around. For example, business owners can stipulate which services they wish for a PEO to perform on a day-to-day basis.


In the co-employment arrangement, the PEO becomes an additional employer of record for the employees who work for the client company. Again, this does not mean that the PEO can supersede the wishes or directions of the Executive. Instead, it simply puts the PEO in a legal position to handle the sensitive information required to perform employee services.

The Benefits of Co-Employment

Once a PEO has been hired and a co-employment agreement has been signed, the PEO can begin performing a variety of useful services to the client company. Most business owners would rather spend time dealing with the ins and outs of their actual business rather than handling paperwork and doing accounting tasks. Luckily, recent data from the National Association of Professional Employer Organizations shows that there are more than 900 PEOs across the nation, full of experts in these exact areas.

Employee Benefits Packages

Given that PEOs sign co-employment arrangements with their client businesses, this gives the PEO a much larger employee pool than a single business—especially new and small businesses. By having this larger pool over which to spread benefits costs, the PEO can provide employees with better benefits at a lower price.

Lowered Risk Profile

As a fellow employer of record with the business owner, PEOs are incentivized to ensure that your business operates at the highest level. A PEO can work to lower your company’s overall risk and liability by making sure that you are in compliance with all federal and state regulations, including tax filing procedures with the IRS.

Renewed Business Focus

Running a business is difficult, but having a PEO handle the administration of employee services like payroll, orientation, development of workplace culture, and creation of harassment policies can free a business owner up to pursue the growth of their company.

Reduced Costs

Not only does hiring a PEO make sense due to all of the services they can offer your business, but it is actually more affordable to enter into a co-employment relationship than to hire a full-time, in-house accounting and HR staff. Most PEOs offer two payment plans:

  • A flat monthly fee per employee (usually between $40 and $160)
  • A percentage of overall payroll (usually between 2% and 12%)

Business owners can decide which payment option works best for their company’s budget and sign an appropriate co-employment agreement accordingly.

A PEO and HR Outsourcing Company That is Set Apart

At Einstein HR, we have the experience and expertise to offer your business the best possible services. Not only have we been named to the coveted Inc. 500 List of top United States businesses in 2017, but we also have won Atlanta Pacesetter Awards in both 2016 and 2017.

Einstein HR has worked with businesses that have as few as five employees as well as larger companies with more than 500 employees, and everything in between. Get in touch with us today to see why roughly 175,000 businesses nationwide choose to partner with PEOs like us through the co-employment arrangement.

To learn more about how Einstein HR can solve all of your human resources outsourcing problems, fill out the form on our contact page and a representative will be in touch with you within 24 to 48 hours. Alternatively, give us a call today at 770-962-1700.

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