What Is Co-employment?

  • What is Co-Employment? Co-employment is a contractual agreement between two companies - one being a Professional Employer Organization (PEO) and one being the “client company” - in which both companies share liability and responsibility for employees.
  • This contract is often known as a client service agreement (CSA).
  • Example of Co-Employment: A common cause of co-employment takes place when a recruitment agency arranges a work contract between an external company and one of their clients that were looking for a job.

How does Co-Employment work?

The client company - or business owner - has control over:

  • The business decisions
  • The operations that take place within the company
  • The daily duties and responsibilities of the employee

The PEO manages certain responsibilities - that are typical of employers and that have been previously stated and agreed upon in the CSA - such as:

  • Managing the Payrolls
  • Payroll Deductions
  • Paychecks
  • Preparation, filing and deposit of the Payroll Taxes
  • Provision of benefits to employees
  • Management of the worker’s claims and compensation coverage
  • They provide the client company with HR-related advice
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