Glossary · Compliance
What is Co-employment
Definition
A situation where both the staffing agency and the client are treated as employers of the same worker, sharing legal obligations and liabilities.
Applies to: US · Reviewed by James Doyle
In practice
Co-employment is normal in US staffing — it is not something to avoid, it is something to control. The agency handles payroll, taxes and employment paperwork; the client directs the day-to-day work.
Risk comes from blurred lines: client-run performance reviews, client-issued discipline, or long assignments with no tenure policy. Contract language and a tenure limit keep the relationship clean.
Related terms
Worker classification
Whether a worker is an employee or an independent contractor in law. Getting it wrong creates back taxes, penalties and client indemnity claims.
ReadEOR
An employer of record legally employs a worker on your behalf in a jurisdiction where you have no entity, handling payroll, tax and compliance.
ReadPEO
A professional employer organisation co-employs your internal staff, providing payroll, benefits and HR infrastructure under a shared-employment model.
Read
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