What Is Co-Employment and How Can It Benefit Your Business? Part 1

Employers encounter a wide range of business jargon and terms throughout their day. Some are less common than the next. “Co-employment” is one such term. What exactly is co-employment, and how can it benefit your business?The term co-employment loosely refers to any relationship in which an employee is employed by more than one employer. While this may sound strange or uncommon, it in fact happens more than one might expect. This relationship typically falls into one of three categories:
Joint-Employer
Employer-of-Record
Professional Employer Outsourcing (or Organization)
1) Joint-EmployerWhen an employee works for two employers simultaneously, and in the best of interest of both employers, these businesses are known as joint-employers.An example of this type of relationship made the news recently when a manager for two small regional airlines sued one of his employers for FMLA violations. This employer only had 30 employees and therefor fell below the minimum FMLA threshold of 50 employees. The employer denied the claim on these grounds. However, the litigant simultaneously worked for another airline, which employed over 300 employees – well over the FMLA limit. The courts determined that the employee was co-employed equally by both businesses – both logos appeared on his business card, he represented both companies in negotiations, and his name appeared on both business directories. The court found the employee’s FMLA rights were indeed violated as the co-employer relationship between the businesses pushed their total over the 50 employee limit.This type of relationship may in fact pose more of a risk to one employer or the other, as their combined employee size may expose them certain employment regulations that only apply to higher employee thresholds. Employers who co-employ workers should weigh the benefits of this type of relationship against some of the increased risks they may face.2) Employer-of-RecordAnother co-employment relationship can found with temporary staffing or contingent workforce relationships. This is also known as Employer-of-Record (EOR).In these relationships, the staffing or contingent workforce firm acts as the EOR which legally employs their clients’ temporary or contingent workforce. The EOR hires and provides temporary staff to their clients, usually for short-term projects or seasonal work. In so doing, the EOR assumes all the core employment responsibilities typically shouldered by the business. This includes administering much of the IRS and HR regulatory compliance related to employees. The EOR issues their pay-checks, pays the associated payroll taxes, files the relevant quarterly and year-end taxes, covers the employees with workers’ compensation insurance, manages the employee benefits and administers unemployment claims and insurance.Through this type employment relationship, the EOR protects its clients from a wide range of employment regulations and risks. The EOR manages workers’ compensation claims, hires, on-boards and terminates employees, performs background checks, and handles general employee relations activities for the contingent workforce.For employers who need short-term staff but don’t want the hassle of recruiting, hiring and managing these employees, the Employer-of-Record route may be the perfect solution.3) Professional Employer OutsourcingThe third and most beneficial co-employment relationship falls under the category of Professional Employer Organizations, or PEOs, which we will discuss in our next article.

How Employment Agencies Work

If you have any misunderstandings about the working of employment agencies, then it is time you cleared any misgivings you might have in your mind regarding their working. The little fee that you may or may not pay is really worth every penny and even more. Here is how a typical recruitment agency goes about with its chores.

Big staffing agencies employ dozens of calling agents who have expert knowledge in locating talents around the world. Their principal sources of information are social media, news paper advertisements and people who contact them by word of mouth. The second source of information is applicants who approach the agency directly. Though it was the norm several years before to send in a CV by post, things have changed vastly nowadays with the advent of computers, internet and email.

The second element in the working of any employment agency is maintaining a cordial relationship with employers, for which purpose agencies appoint agents too. They liaise with the employer and begin to study their requirements. Once a detailed study has been completed, the agency takes the permission of the employer to publicise their requirement to go on a head hunting spree on their behalf.

The first place that recruiters look for information is the office database. Though most of the matching is done automatically by computers, it is not uncommon to tweak the final match manually. It is normal for agencies to recommend more than one applicant to the employer. The employer after receipt of information shortlists candidates they find fit. Now the deck is cleared for the agency to arrange a meeting between the employer and a prospective employee.

Sometimes the process may become more complex, especially if the skills set expected of the candidate are very special. It can take several days or even weeks if a match is not available in the agency’s database. In such situation, the agency turns to the social media. They will list out applicants in job portals and even in social media like LinkedIn for example.

The climax is the culmination of a meeting between the employer and applicant. During such meetings the agency represents itself through a report detailing the applicant’s claims and the documents he or she has presented before it.

The crowing of the effort is the employer issuing a letter of appointment by the employer. Employment agencies take an active role in the preparation of contracts and other peripheral activities connected with it.