Co-Employment: What Is It and How Does it Work?

Co-employment in independent contracting is expected when staffing agencies hire independent contractors for their clients. While the company handles the work agreement, the staffing firm primarily handles HR tasks like hiring, payroll, and recruiting. In this case, the staffing agency and the client can be regarded as employers because they have duties to the contractor.

Worker Risk

You may wonder, what is co-employment? A co-employment is a type of employment that involves two people working for one company. This employment model protects both parties’ rights and allows business owners to focus on growing their businesses. It also provides benefits for both the employer and the employee. This type of employment will enable people to get better benefits and the business owner to focus on running the business.

Contingent workers pose a unique set of risks for organizations. To mitigate this risk, companies may adopt a policy that stipulates the primary employer of contingent workers. These policies may restrict the use of subcontractor-like relationships or independent contractors. However, these guidelines do not preclude the use of contingent workers in certain circumstances.

In addition to managing the risks associated with co-employment, companies should also consider the legal implications of a misclassification claim. This can result in significant penalties for the company and back payments for the worker. While most organizations focus on independent contractor classification, other classification-influencing factors exist. These include position classification for workers’ compensation insurance and overtime eligibility.


The primary difference between contingent and regular employees is how the worker is paid. Contingent workers do not have an employment contract and are not salaried. As such, they are responsible for their taxes and national insurance contributions. They also are not entitled to any statutory or contractual benefits. Regardless, they can save a business a great deal of money by reducing their payroll costs.

As labor costs continue to rise, businesses are looking for ways to increase their agility and lower costs. Contingent workers can be an excellent fit for this situation. This type of workforce is open to change and is more likely to be flexible. However, there are specific challenges to working with contingent workers.

Worker Relationship

There are several advantages and disadvantages to employing a contingent worker. Depending on the type of work involved, a contingent worker can have a high degree of flexibility. Many workers enjoy this freedom because they can set their schedules and work at a pace that suits their personal and professional needs. It’s beautiful for people with family responsibilities or preparing for retirement. Contingent workers also have the opportunity to participate in various projects and associations and may even learn new skills that can enhance their marketability.


A contingent worker is a worker that works for one company while employed by another. Typically, these workers are operated by a company or agency. Employers can minimize co-employment risk by hiring temps through a staffing agency. First, however, they must ensure that their workers are correctly classified.

This type of arrangement can be expensive. However, PEOs can leverage their scale to negotiate better terms with contingent workers. Outsourcing tactical work to a PEO can save companies money. In addition, contingent workers are temporary and may not be the best succession plan for a business.

Worker Contract

Contingent workers are self-employed professionals hired to perform a specific task or project for a company, client, or organization. Their compensation is based on a per-project basis, and they may be called back for additional projects. As such, they do not receive a regular salary and must pay their taxes and benefits. In addition, they do not receive employer-provided insurance, health insurance, or other uses. However, because they work for themselves, these workers have more freedom and flexibility than in a traditional employer-employee relationship. As such, they can be easily scaled up or down depending on their needs, which can be an advantage for companies looking to expand their services.

However, this type of employment is less secure than a permanent job, as your job security will depend on your performance and whether you’re still needed. Contingent workers also typically have shorter commitments than permanent employees. While some contracts last for several months, others are for only a week or two.