Small Business Glossary and Definitions

Co-Employment is defined by the National Association of Professional Employer Organizations as sharing of responsibilities between a “professional employer organization” and its client. The employee is employed by both the client employer and the PEO. The first controls daily work and job functions while the second deals with personnel functions.

The arrangement lets the PEO offer improved benefits; dealing with employment tax and wage responsibilities; freedom from collecting, reporting and depositing state and federal taxes; and help with coverage and claim management for workers’ compensation. The client business owners also shift a large amount of the responsibilities and risk for employees onto the co-employer.