What is Co-Employment?
A Professional Employer Organization, or PEO, shares employer responsibilities with clients and assumes employer rights, responsibilities and risks. Under its contractual relationship, the PEO:
- Co-employs workers at client locations, and thereby assumes responsibility as an employer for specified purposes of the workers assigned to those locations
- Reserves a right of direction and control of the employees
- Shares or allocates with the client employer responsibilities in a manner consistent with maintaining the client's responsibility for its product or service
- Pays wages and employment taxes of the employee from its own accounts
- Reports, collects and deposits employment taxes with state and federal authorities
- Establishes and maintains an employment relationship with its employees that is intended to be long term and not temporary
- Retains a right to hire, reassign and fire the employees
Client Service Agreements: Defining the Profession Employer Organization - PEO Terms
A Profession Employer Organization - PEO uses a contract called a Client Services Agreement (CSA) to delineate the roles and responsibilities between the client company and the PEO. This is a critical document for all PEO customers to understand. View an example PEO Client Services Agreement. Please keep in mind that every PEO has different terms and provisions in their agreements. Contact StaffMarket if you have a question about the CSA.
Please note: Alternate HR Outsourcing options are available without PEO / Co-employment provisions.