What Co-Employment Means for Small Businesses

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We at Atlantic Payroll Partners have been providing PEO solutions to businesses in Florida and beyond for 10 years. We know that PEOs are sometimes referred to as, employee leasing or co-employment. Below is a breakdown of “co-employment”.

Co-employment refers to a legally binding agreement between a Professional Employer Organization (PEO) and an employer. According to the National Association of Professional Employer Organizations (NAPEO), “[The PEO relationship] involves a contractual allocation and sharing of certain employer responsibilities between the PEO and the client.” Basically, the PEO handles their clients’ HR and employment obligations.

PEOs Work Mostly With Small Businesses

According to NAPEO, the average PEO client has 19 worksite employees. For many PEOs, the clientele sweet spot is a small business with 10-150 employees.

However, as NAPEO points out, larger businesses (including those with 500 or more employees) are increasingly turning to PEOs. In these cases, the client typically has their own HR team. The PEO simply works in conjunction with the client’s HR team to optimize the client’s human resource function.

What PEOs Do for Small Businesses

PEOs help small businesses manage their HR and employment responsibilities while allowing the client to retain control over their business and its operations.

Many PEOs offer full-scale HR solutions to small businesses, including:

  • Onboarding and new-hire processing.
  • Worker classification.
  • Access to employee benefits.
  • Time and labor management.
  • Payroll management.
  • Performance management.
  • Leadership development.
  • Employee engagement tools.
  • Compensation and HR planning.
  • Manager and employee self-service technology.
  • Workers’ compensation management.
  • Unemployment insurance management.
  • Employee relations.
  • HR, benefits and payroll compliance.
  • Employment cost control.

Top PEO Value Drivers for Small Businesses

Access to competitive benefits

Small businesses often struggle to secure affordable, competitive benefits on their own, which can put them at a disadvantage when it comes to talent attraction and retention.

PEOs deliver cost-effective benefits to client employees that rival those offered by Fortune 500 companies. They provide medical, dental, vision and life insurance; retirement savings plan; educational benefits; adoption assistance; flexible spending accounts; and ancillary benefits such as critical illness insurance and pet insurance.

Per NAPEO, businesses that use a PEO and have fewer than 10 employees receive more than three times greater participation in their retirement plans than do businesses that do not use a PEO.

Payroll administration

Small businesses tend to outsource payroll, if nothing else, because it is time-consuming and compliance-driven.

PEOs usually assume responsibility for their client’s payroll, using their own Employer Identification Number instead of the client’s. This means the PEO is responsible for paying client employees accurately and on time and for handling other critical payroll duties, such as wage garnishment and payroll tax administration.

Workers’ compensation cost management

PEOs help their clients implement strong safety protocols to reduce workers’ compensation costs.

Administrative cost savings

According to NAPEO, “Administrative costs are around $450 lower per employee for businesses that use a PEO.”

Single vendor

By serving as a one-stop shop, PEOs save small businesses from having to find and maintain different vendors for their HR, benefits and payroll needs.

In the end, the specifics of a PEO relationship will vary based on the employer’s needs and the PEO’s offerings.

If you’re interested in reaping the benefits of working with a PEO, you can get a quote from us here or give us a call at 772-466-0440.

Why Atlantic Payroll Partners

The biggest payroll companies probably won’t have time for your business. It’s that simple, you’ll be a number. At Atlantic Payroll Partners, you’ll be the opposite. We’ll know more than your name; we’ll know the names of your children and their birthday’s as well. We will know you.

We’ve been helping Florida business by managing their payroll and providing workers compensation quotes for ten years. We help keep payroll cost affordable by provided transparent PEO payroll quotes that allow you to plan your budget accordingly. Like the big payroll companies, you can manage your payroll and payroll timekeeping with us, while reaping the benefits of PEO risk management.

Thinking about payroll outsourcing can be scary. Make sure you know what to expect from payroll outsourcing providers; to make the best decision for your business. In addition to offering payroll, and workers' compensation we offer: Human Resource consultations and benefits such as, 401ks and Healthcare plans.

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