Co-employment is characterized as a partnership between an employer and a Professional Employer Organization (PEO) or a corporation that specializes in employee leasing, in which both parties share duty and obligation for the workers. Co-employment might well be considered by a firm to ensure that it has people with specialized capabilities, to make it simpler to hire industry specialists, and to refill declining workforces. The technique has a number of drawbacks, including the possibility of increased unemployment as a result of reduced labor demand, misunderstanding between two organizations working with the same staff, and employees not knowing who to contact when an issue develops.
Despite popular belief, co-employment does not imply that employers relinquish control or ownership of their company. Clients maintain control over their personnel and day-to-day operations, while the PEO handles HR-related activities, including payroll, compensation management, and compliance.