You didn’t become a small business owner to become an HR specialist. And yet, here you are, losing sleep over payroll taxes, worrying over whether your employee handbook is up-to-date, and dreading that next unemployment claim. Wouldn’t it be great if you could share those burdens without giving up control of your business? That’s where co-employment comes in—a partnership solution that’s assisted over thousands of small businesses in outsourcing HR headaches without sacrificing control.
Imagine co-employment as having a business-savvy professional manage all the paperwork and legal red tape, while you do what you’re best at: building your company. It’s not outsourcing, and it’s not temp staffing—it’s a strategic partnership where a Professional Employer Organization (PEO) becomes your co-pilot for HR, compliance, and benefits. The best part? You remain in the driver’s seat for day-to-day activities.
But here’s the thing that most business owners get wrong: co-employment is not just about convenience. It’s a liability shield. If an angry employee threatens to sue or the state comes after your overtime compensation, your PEO acts as the employer of record, taking risks that could otherwise drown your business. Curious? Let’s walk through how this model works and why it’s changing small businesses in every industry.
Co-employment is a contract between your firm and a Professional Employer Organization (PEO), under which certain of the responsibilities of an employer are shared. It is the body of law whereby a PEO undertakes selected employer obligations under a client service agreement (CSA). Your workers practically have two employers:
Co-employment originated out of the “employee leasing” concepts of the 1960s and grew into the highly regulated PEO industry of today with more than 900 providers covering 3.7 million worksite employees. It satisfies small businesses’ demands for advanced HR services and compliance expertise that would otherwise necessitate an expensive in-house staff.
PEOs pool the employees of hundreds of client companies, leveraging economies of scale to negotiate robust health, dental, vision, and retirement plans typically reserved for large corporations.
PEOs process payroll under their own EIN, ensuring accurate withholdings, multi-state filings, and on-time tax deposits. This eliminates:
Thousands of federal, state, and local labor laws are updated every day. PEOs have specialized compliance teams to track updates, post required posters, deal with wage-hour audits, and reduce litigation risks. Co-employment businesses experience 32% fewer wage claims and 68% fewer OSHA recordables.
By aggregating risk among clients, PEOs achieve lower workers’ comp rates and centrally manage claims. They also offer:
This drives down premiums and reduces administrative burden on small staffs.
Co-employment provides you with a staff of HR professionals—recruiters, benefits consultants, compliance specialists, and trainers—without full-time employees. They work with your internal managers in:
All tailored to your unique goals and culture.
In reality, you have complete control over operations, changes in the workforce, and company culture. The PEO does administrative work only.
Co-employment complements your HR resources—it doesn’t replace current staff. Your team gets expert partners to outsource mundane tasks and tap into best practices.
Co-employment excels for small- to medium-sized businesses (10–250 employees) seeking to:
PEO use covers 17% of U.S. companies employing 10–99 workers, accounting for more than 4.5 million worksite employees.
Co-employment turns the HR burden into a strategic partner, providing Fortune 500 proficiency at small-company prices. You lower liability, unlock top benefits, and add a trusted companion in compliance and risk management through shared employer duty with a PEO.
Ready to experience co-employment? Let’s discuss—schedule a consultation with OEM America and find out how our PEO co-employment services can power your expansion and return time to your life.