The Value of Co-Employment

What is Co-Employment?

Co-employment, which is sometimes referred to as employee leasing, is a relationship wherein the PEO acts as the Administrative employer and the client acts as the Worksite employer.

What is the difference between the PEO/co-employment services model and the HRO model?

The co-employment services model is based on a commitment by the PEO company to share employment-related risk with clients, thereby reducing legal risk and financial exposure for clients. Human Resources Outsourcing (HRO) companies are not employers and therefore cannot share employment-related risk which leaves clients open to increased legal risk and financial exposure.

How can a PEO/co-employment services model improve my financial exposure to healthcare costs?

Oasis Outsourcing is committed to the co-employment services model, which allows for worksite employees to be included in key insurance plans such as Large Group Medical Insurance plans. The HRO model cannot provide access to Large Group Medical Insurance because they are not a recognized employer of the client.s worksite employees. Participation in a Large Group Medical Insurance plan offered under the co-employment services model can provide extra protection for the client when facing, for example, the impact of a serious worksite employee medical condition. A client participating in a Large Group Medical Plan would not experience the same level of rate increase as the result of an expensive worksite employee medical condition that a client with their own Small Group coverage would experience because the impact would be spread across or absorbed by the large number of employees in the Large Group Plan. This is not available with the HRO model, which does not provide co-employment and therefore cannot offer access or protection from a Large Group Medical plan. Clients under an HRO model would have to obtain medical insurance as a Small Group based solely on the medical experience of their employees. This could result in financial exposure that can last for years if a worksite employee has serious and costly medical condition.

How does the PEO/co-employment services model impact workers' compensation?

In addition to Large Group medical Insurance plans, the co-employment services model allows for worksite employees to be included in insurance plans like Group Workers' Compensation Insurance. It can be more difficult for a small- or medium-sized business to access cost-effective workers' compensation insurance without the buying power of a well-managed larger group, which spreads the risk over a larger pool. Additionally, the co-employment relationship requires the PEO to share responsibility for this risk in partnership with the client. The HRO model cannot share this risk since there is no employment relationship and therefore no legal basis for providing coverage to the employees. Well-managed PEOs like Oasis Outsourcing also provide support to reduce financial and legal exposure, including back-to-work and worksite employee safety training programs.

How does the PEO/co-employment services model offer my company protection from employee lawsuits if they arise?

The co-employment services model allows for worksite employees to be included in a large group Employment Practices Liability Insurance Policy. This policy helps protect the client in case of worksite employee lawsuits including discrimination, wrongful termination and harassment. At Oasis Outsourcing, this coverage is included with the PEO services that are provided.

Under the HRO model, a client must obtain this coverage on their own as a small business, which makes the cost of coverage (including policy premium costs and deductibles) would be much more expensive.