The PEO relationship with a client is called co-employment. And, yes, the business owner is still in charge.
Most professional employer organizations, or PEOs, follow a business model known as co-employment. Until you understand it, that term can seem confusing to the very small and mid-sized employers that can benefit from a PEO relationship.
Co-employment is actually pretty simple. All it is … is a contractual agreement between a company and a PEO like Axcet HR Solutions. The agreement takes the most complex and time-consuming HR tasks – like payroll processing, tax filings, workers’ compensation, unemployment claims and regulatory compliance – off the business owner’s plate and puts them in the PEO’s hands. For a lot of small business owners, that’s a huge relief.
Another major benefit of co-employment is that the small company’s workers can be included in the PEO’s employee group. The PEO takes that much larger group to the health care marketplace and brings back broader and more affordable health and disability insurance options than the small business could ever get on its own. Companies with as few as 10 employees can participate in most PEOs’ large-group health insurance plans. That can be a powerful employee recruitment and retention tool.
Business owners sometimes think working with a PEO means they’ll have to give up some control over their companies. But that’s absolutely not the case. PEOs have no ownership in their clients’ companies and no power to make operational decisions. Business owners retain full control … but they gain a PEO’s HR expertise so their companies can run more smoothly.
The bottom line is that the small business directs the PEO, not the other way around.
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