The Value of Co-Employment
What is Co-Employment?
Co-employment, which is sometimes referred to as employee leasing, is a relationship wherein the PEO acts as the Administrative employer and the client acts as the Worksite employer. It is these clearly structured employer roles that define the co-employment relationship.
What is the difference between the PEO/co-employment services model and the HRO model?
The co-employment services model is based on a commitment by the PEO company to share employment-related risk with clients, thereby reducing legal risk and financial exposure for clients. Human Resources Outsourcing (HRO) companies are not employers and therefore cannot share employment-related risk, which leaves clients open to increased legal risk and financial exposure.
How can a PEO/co-employment model assist me in navigating Healthcare Reform (Affordable Care Act/ACA)?
Navigating through the ever-changing and complex regulations associated with Healthcare Reform can feel like a full-time job. A PEO, as the administrative employer, can assist with many facets of this regulation and provide expert guidance, while you focus on running your business.
Specifically, Oasis, a Paychex® Company offers:
- A payroll system that complies with W-2 and mandated benefits provisions;
- Compliance with plan design regulations in Oasis®-sponsored medical plans;
- Required disclosures during enrollment/re-enrollment for clients in Oasis-sponsored medical plans;
- Assistance in calculating whether you are a large employer under the ACA, including determining measurement (look-back), stability and administrative periods.
How does the PEO/co-employment services model impact workers’ compensation?
The co-employment model allows for worksite employees to be included in insurance plans like group workers’ compensation insurance. It can be more difficult for a small- or medium-sized business to access cost-effective workers’ compensation insurance without the buying power of a well-managed larger group, which spreads the risk over a larger pool.
Additionally, the co-employment relationship requires the PEO to share responsibility for this risk in partnership with the client. The HRO model cannot share this risk since there is no employment relationship and therefore no legal basis for providing coverage to the employees. Well-managed PEOs, like Oasis, also provide support to reduce financial and legal exposure, including back-to-work and worksite employee safety training programs.
How does the PEO/co-employment services model offer my company protection from employee lawsuits if they arise?
The co-employment services model allows for worksite employees to be included in a Large Group Employment Practices Liability Insurance Policy. This policy helps protect the client in case of worksite employee lawsuits including discrimination, wrongful termination and harassment. At Oasis, this coverage is included with the PEO services that are provided.
Under the HRO model, a client must obtain this coverage on their own as a small business, which makes the cost of coverage (including policy premium costs and deductibles) much more expensive.