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What is Joint Employment?

What is Joint Employment?


Joint employment refers to the services offered by a Professional Employer Organization, or PEO. The PEO takes over as your employees’ employer of record for certain tasks, enabling the PEO to handle W-2s, payroll, compliance and regulations. The biggest advantage, however, is joining together with the PEO to act as a much larger organization for the purposes of negotiating prices on employee benefits.

Joint employment is also known as co-employment or employee leasing.

How does joint employment work?

When you outsource to a PEO, your outward relationship with your employees doesn’t change. You still decide who to hire and promote, how much to pay, and what your employees’ job responsibilities are. In other words, you have total control.

From a legal standpoint, however, your PEO becomes your employees’ official employer for certain purposes, like payroll, taxes, workers compensation and benefits. The PEO handles some or all of these administrative duties for you, and can also act as your agent in dealing with employee disputes, regulatory and compliance issues, workers compensation and unemployment claims.

A typical PEO acts as the employer of record for dozens companies (or more), giving the PEO a large workforce on paper. Because it is a large employer, the PEO has far better bargaining power than a typical small or mid-sized business when negotiating benefit packages. A PEO can often get you better benefits at a lower cost than you would be able to negotiate on your own.

How does a PEO/joint employment arrangement benefit me?

A PEO can give smaller businesses a level of human resources expertise that’s usually only available to large corporations. Some of the major benefits of using a PEO include:

  • Being able to compete for top talent on an equal footing with larger companies.A PEO can enable you to offer top-tier benefits at a cost you can afford, and PEOs can also offer recruiting services. This helps you identify and attract the kind of employees you want most.
  • Cost savings. A PEO can perform many tasks more efficiently than you and your staff, and you don’t have to provide work space or pay your PEO employee benefits. And the PEO may be able to negotiate benefit packages that are more advantageous and less expensive than what you’re currently offering.
  • Reduced risk.Employment laws are complicated and often changing, and violations put you at risk for fines or an expensive lawsuit. A compliance mistake is easy to make and hard to undo. A PEO is staffed by experienced professionals who deal with HR, payroll and taxes every day. Their expertise helps to keep you in compliance with laws and avoid liability.
  • More time to focus on building your business.The administrative side of being an employer can take a lot of time and effort. By turning it over to a PEO, you free up time and energy to better manage the day to day aspects of your business and plan for the future.

Joint employment doesn’t take away any of your authority over your business or your employees. But it can save you money, free up your time, and give your employees better benefits. At EinsteinHR, we offer a full package of PEO services, with immediate, live customer support. 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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