One concern that comes up about PEO arrangements: does co-employment change my relationship with employees? The honest answer: very little operationally. Employees still report to you, work for your business, do your work. The PEO becomes the employer of record for payroll and benefits administration.
| Co-employment | Direct hire | |
|---|---|---|
| Day-to-day work direction | Client (you) — unchanged | You — unchanged |
| Hiring/firing decisions | Client (you) — unchanged | You — unchanged |
| Performance management | Client (you) — unchanged | You — unchanged |
| Payroll/tax filing | PEO handles | You/your vendor |
| Employer of record on W-2 | PEO | You |
| Workers comp policyholder | PEO master policy | You |
Co-employment wins when: you want HR/benefits/comp offload, you want bundled simplicity.
Direct-hire wins when: you want full employer-of-record control, your business model requires direct employer status.
Co-employment is operationally transparent. Employees see the PEO name on their W-2 and benefits enrollment, but their day-to-day experience is unchanged. The arrangement only affects who handles administrative back-end.
Co-employment wins when: you want HR/benefits/comp offload, you want bundled simplicity.
Direct-hire wins when: you want full employer-of-record control, your business model requires direct employer status.
Co-employment is operationally transparent. Employees see the PEO name on their W-2 and benefits enrollment, but their day-to-day experience is unchanged. The arrangement only affects who handles administrative back-end.
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