What is Co-Employment Actually?

This is a term that sounds scary – are PEO’s your business partner, can they fire your people or tell you how to run your business? The answer is absolutely not.   

Well, the opposite is kind of true. Co-employment is actually another layer of protection for you under the SBE479 federal act! 

In a PEO the federal government defines only certain responsibilities (it is not joint employment) – basically pay your taxes, allow you to be in their group medical and Workers Comp buying consortium, and for some purposes look like they act as an employer of record.  This makes them liable for all these issues and therefore they have skin in the game – they will help make sure you are compliant because if something goes wrong and you get sued, so do they.  That is why they also provide you with EPLI coverage. 

Yes, it sounds unusual, and this is the term that your insurance broker will dwell on to scare you from even getting a quote.  Remember your broker makes a lot less (75%)  if you use a PEO.