Can a co-employment agreement be signed electronically?

Yes. Electronic signatures are generally enforceable under the ESIGN Act (15 U.S.C. ch. 96) and UETA where adopted, provided intent, consent, attribution, and retention requirements are met.

Do you need a notary to sign?

Most co-employment contracts do not legally require notarization, but state or counterparty requirements can vary; use a notary or RON where a record of identity verification is desired.

Who should review the agreement before signing?

Have tax counsel and employment counsel review allocation of payroll, tax obligations, and indemnity clauses to avoid unintended liability or misclassification risks.

What if payroll reporting is wrong?

Corrective filings and amended returns may be required; unresolved misreporting can trigger IRS penalties and unemployment or workers' comp audits.

How to prove who is the employer?

Maintain documentation of supervision, payroll records, benefit administration, and job control to demonstrate allocation of responsibilities during audits.

How long should records be kept?

Retain signed agreements and supporting payroll files per IRS and industry rules—at least three years for tax, six years for HIPAA-covered records, and longer where state law requires.

Electronic Signature
Templates
Legal
Co-Employment Partnership Agreement

Co-Employment Partnership Agreement

This template is fully customizable. Edit the text, fill out the fields, and send it for signature. Give it a try!

CO-EMPLOYMENT PARTNERSHIP AGREEMENT

This Co-Employment Partnership Agreement (the "Agreement") is made and entered into as of Effective Date: by and between Company A Name: , principal place of business at , and Company B Name: , principal place of business at (each a "Party" and collectively the "Parties").

RECITALS

WHEREAS, Company A provides workforce management, payroll and human resources services and maintains systems and processes for payroll, tax withholding, benefits administration, and workers' compensation coverage; and

WHEREAS, Company B requires certain personnel to be engaged to perform services for its business and desires to obtain such personnel while sharing certain employer responsibilities with Company A under a co-employment arrangement; and

WHEREAS, the Parties desire to set forth their respective rights and obligations with respect to the engagement, payroll, benefits, tax withholding, and related employment matters for personnel who provide services to Company B (the "Employees").

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Parties agree as follows:

1. DEFINITIONS

1.1 "Employee" means any individual employed under the co-employment arrangement described herein and assigned to perform services for Company B. "Employer of Record" means the Party designated in Section 4 to assume legal employer responsibilities for payroll and tax reporting. Capitalized terms used but not defined in this Agreement have the meanings given elsewhere in this Agreement.

2. TERM AND TERMINATION

2.1 Term. This Agreement commences on the Effective Date and continues for an initial period of (the "Initial Term") and thereafter shall renew automatically for successive one-year periods unless terminated as provided below.

2.2 Termination for Convenience. Either Party may terminate this Agreement for convenience upon days' prior written notice to the other Party.

2.3 Termination for Cause. Either Party may terminate this Agreement immediately upon written notice if the other Party materially breaches this Agreement and fails to cure such breach within days after receipt of written notice specifying the breach.

3. CO-EMPLOYMENT RELATIONSHIP; ALLOCATION OF RESPONSIBILITIES

3.1 Allocation of Employer Functions. The Parties acknowledge and agree that the co-employment relationship divides employer responsibilities between them. Company B retains direction and control over the Employee's day-to-day duties, work assignments, supervision, discipline, and termination of assignment. Company A shall serve as Employer of Record for the purposes of payroll administration, tax withholding and reporting, and benefits administration to the extent set forth in Section 4.

3.2 Hiring and Termination. Company B shall select and request the engagement of Employees. Company A will perform pre-employment background checks and eligibility verification as required by applicable law when requested by Company B. Termination of an Employee shall be effected as provided in Company B's written request to Company A; Company A shall process final wages and applicable benefits consistent with this Agreement and applicable law.

4. PAYROLL, TAXES AND BENEFITS

4.1 Employer of Record. Company A shall be designated as Employer of Record for payroll processing and tax reporting for Employees identified in writing by Company B. Company A shall withhold and remit federal, state and local payroll taxes, and shall prepare and file required payroll tax returns and year-end wage statements on behalf of the Employer of Record.

4.2 Benefit Administration. Company A shall administer any benefit plans agreed in writing by the Parties. Company B shall pay its share of benefit costs and any Employee-elected contributions as set forth in the applicable benefit plan materials or separate schedule of fees and charges provided to Company B.

4.3 Payroll Fees and Reimbursement. Company B shall reimburse Company A for payroll and benefits administration fees, taxes, workers' compensation premiums, and other third-party costs as described in the Parties' fee schedule: Fee Schedule Reference:

5. WORKERS' COMPENSATION; INSURANCE

5.1 Workers' Compensation. Company A shall maintain workers' compensation insurance covering Employees for work performed in the scope of employment under the Employer of Record designation, unless otherwise agreed in writing. Premiums for such coverage shall be allocated between the Parties in accordance with the fee schedule.

5.2 Insurance. Each Party shall maintain commercial general liability and any other insurance required by law or reasonably necessary to perform its obligations under this Agreement. Upon request, a Party shall provide a certificate of insurance evidencing coverage.

6. CONFIDENTIALITY

6.1 Each Party shall maintain as confidential all proprietary information of the other Party and of Employees acquired in the course of performance of this Agreement, and shall not disclose such information except as required by law or as necessary to perform obligations under this Agreement. Confidential information excludes information that is or becomes public through no fault of the receiving Party.

7. INDEMNIFICATION; LIMITATION OF LIABILITY

7.1 Indemnification by Company B. Company B shall indemnify, defend and hold harmless Company A and its officers, directors and employees from and against any and all claims, liabilities, losses, damages, costs and expenses (including reasonable attorneys' fees) arising out of or relating to (a) Company B's direction, supervision or control of Employees, (b) any breach by Company B of this Agreement, and (c) acts or omissions of Employees while performing work under Company B's supervision.

7.2 Indemnification by Company A. Company A shall indemnify, defend and hold harmless Company B from and against any claims, liabilities, losses, damages, costs and expenses arising from Company A's failure to perform its payroll, tax reporting, or benefits administration obligations as set forth in this Agreement.

7.3 Limitation of Liability. Except for liability arising from a Party's willful misconduct or gross negligence or a Party's indemnification obligations, in no event shall either Party be liable to the other for consequential, incidental, special or punitive damages, and the Parties' aggregate liability shall be limited to direct damages not to exceed the fees paid or payable to Company A under this Agreement in the preceding twelve (12) months.

8. COMPLIANCE WITH LAWS

Each Party shall comply with all applicable federal, state and local laws and regulations in the performance of its obligations under this Agreement, including employment, tax, immigration and wage and hour laws. Each Party shall maintain accurate records necessary to demonstrate compliance and shall provide such records to the other Party upon reasonable request.

9. NOTICES

All notices, requests, consents and other communications required or permitted under this Agreement shall be in writing and delivered to the Parties at the addresses set forth below or to such other address as either Party may designate by written notice to the other.

Notices to Company A

Notices to Company B

10. AMENDMENT; WAIVER; ASSIGNMENT

10.1 Amendment. This Agreement may be amended only by a written instrument signed by authorized representatives of both Parties.

10.2 Waiver. No waiver of any provision of this Agreement shall be effective unless in writing and signed by the waiving Party. No waiver shall constitute a waiver of any other default or of the same default at any other time.

10.3 Assignment. Except as provided herein, neither Party may assign its rights or delegate its duties under this Agreement without the prior written consent of the other Party, which consent shall not be unreasonably withheld.

11. GOVERNING LAW; DISPUTE RESOLUTION

11.1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the state of without regard to conflict of laws principles.

11.2 Dispute Resolution. The Parties shall attempt in good faith to resolve any dispute arising out of or relating to this Agreement through negotiation between senior executives. If the dispute is not resolved within days, the Parties may pursue any remedies available at law or in equity in the courts of the state specified in Section 11.1.

12. ENTIRE AGREEMENT; SEVERABILITY; COUNTERPARTS

12.1 Entire Agreement. This Agreement, together with any exhibits and fee schedules attached hereto, constitutes the entire agreement between the Parties and supersedes all prior and contemporaneous agreements, proposals and communications, whether written or oral, relating to the subject matter hereof.

12.2 Severability. If any provision of this Agreement is held invalid or unenforceable by a court of competent jurisdiction, the remaining provisions shall remain in full force and effect and the Parties shall negotiate in good faith to replace the invalid or unenforceable provision with a valid provision accomplishing the original intent as nearly as possible.

12.3 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Signatures transmitted electronically or by facsimile shall be binding.

13. MISCELLANEOUS PROVISIONS

13.1 Relationship of the Parties. Except as expressly provided in this Agreement, nothing in this Agreement shall be construed to create a partnership, joint venture or employer-employee relationship other than the co-employment allocation described herein. Neither Party shall have authority to bind the other except as expressly provided in this Agreement.

13.2 Records. Each Party shall maintain accurate records related to Employees and employment matters and shall allow the other Party reasonable access to such records to the extent necessary to perform obligations under this Agreement or to comply with applicable law.

SIGNATURES

Company A Printed Name:

By:

Date:

Company B Printed Name:

By:

Date:

What a Co-Employment Partnership Agreement Is

A Co-Employment Partnership Agreement is a written contract that allocates employer responsibilities between a client company and a professional employer organization (PEO) or staffing provider. It defines which party handles payroll, tax withholding, benefits administration, workers' compensation, hiring and termination processes, and compliance obligations. The agreement clarifies who is the common law employer for wage-and-hour, tax, and liability purposes versus who maintains day-to-day supervision of workers. Clear allocation of duties reduces regulatory risk and supports consistent HR operations while preserving the operational control necessary for the client business.

Why a Formal Co-Employment Agreement Matters

Documenting co-employment terms protects both parties by assigning payroll, tax, benefits, and liability tasks and creating an auditable record for regulators and auditors. It reduces ambiguity in worker classification, ensures consistent benefits administration, and helps manage OSHA, IRS, and state labor compliance exposure under federal statutes like ESIGN and UETA when executed electronically.

Who Typically Enters a Co-Employment Partnership

Legal, finance, and operations leaders should review the final agreement to confirm tax treatment, indemnities, and termination provisions before signing.

Human resources teams and benefits managers who need centralized payroll and benefits administration for employees
Small and mid-sized businesses outsourcing HR functions to gain administrative scale without changing operational control
PEOs, staffing firms, and payroll providers defining service scope, fees, and regulatory responsibilities

Core Clauses to Include in a Co-Employment Partnership Agreement

A well-drafted agreement organizes responsibilities, risk allocation, and operational details so both co-employers know what each party will deliver and who bears legal exposures.

Parties

Identify full legal names, entity types, addresses, and authorized signatories for the client and the PEO or staffing provider.

Scope of Services

Describe personnel categories covered, HR services provided, payroll processing, tax filings, benefits administration, and any excluded services or locations.

Payroll and Taxes

Allocate responsibility for payroll execution, tax withholding, federal and state filings, employer tax contributions, and tax reporting to employees.

Benefits and Insurance

Specify benefit programs administered, plan sponsors, enrollment processes, workers' compensation carrier, premium payments, and claims handling.

Liability and Indemnification

Define indemnity obligations for employment-related claims, third-party liability, and who controls defense and settlement authority.

Term and Termination

State initial term, renewal mechanics, termination for convenience or cause, notice periods, transition assistance, and final payroll reconciliation procedures.

Stepwise Process to Complete and Execute the Agreement

Follow these steps in order to gather information, finalize terms, and obtain valid signatures from authorized representatives.

01

Prepare Draft: Collect party details, scope, and payroll allocations before drafting the agreement.
02

Legal Review: Have counsel review tax allocation, indemnities, and termination clauses for state-specific compliance.
03

Operational Signoff: Confirm payroll, HR, and benefits teams accept service levels and transition tasks.
04

Execute and Archive: Obtain signatures and retain fully executed copies with audit trails and proof of consent.

How to Configure an Online Signing Workflow

Set up a digital workflow that matches the agreement's signer order, authentication level, and required fields to ensure legal validity and an auditable record.

Field	Configuration
Signer Order	Client signatory then PEO signatory
Authentication	Email link plus optional SMS code
Required Fields	Signatures, dates, printed names, FEINs
Audit Settings	Enable IP, timestamp, and certificate capture

Digital Signing and Integration Considerations

Confirm the platform meets HIPAA or other industry compliance and that you can export signed copies and audit logs for regulatory or internal needs.

Supported Formats: PDF, DOCX, and fillable forms
Integrations: Connects with HRIS, payroll, and CRM systems
Authentication Options: Email, SMS, KBA, or advanced methods

Where to Send and How to Store Executed Agreements

After execution, route the signed agreement to stakeholders and store copies in secure systems to support payroll, benefits, and compliance audits.

HRIS Upload: Store executed agreement in the HR system or personnel file
Payroll Provider: Share signed allocations with payroll processing team
Legal Repository: Archive final version in contract management
Regulatory Records: Retain copies for tax and labor audits

Key Dates and Filing Expectations to Track

Monitor effective dates, payroll cutoffs, tax filing schedules, and renewal or termination notice windows to avoid penalties and service disruptions.

Effective Date:

Contract start date determines payroll and benefits onset

Payroll Cutoffs:

Coordinate pay-period deadlines to align provider processing

Tax Filing Responsibilities:

Confirm which party files federal and state returns

Renewal Notice:

Observe contract renewal notice periods to avoid auto-renewal

Termination Notice:

Follow the contract's stated days or months for termination

Typical Implementation Milestones

A sequential milestone plan helps coordinate client, provider, and vendor tasks during onboarding and after termination.

01

Contract Finalization

Agree on terms, scope, and fees before the effective date

02

Data Transfer

Exchange employee lists, payroll histories, and benefit elections

03

Systems Setup

Configure payroll, benefits, and HRIS integrations

04

Go-Live

Start provider payroll runs and benefits administration

Common Mistakes to Avoid When Preparing the Agreement

Vague scope language that fails to specify which employee groups are covered, causing disputes over responsibility and cost allocation.
Failing to confirm which entity is the employer of record for tax withholding and unemployment insurance, which can trigger audits.
Overlooking state-specific labor and insurance registration obligations, leading to penalties or cancelled coverage.
Not specifying data transfer and privacy controls, which can create compliance gaps for employee personal information.

Potential Penalties and Legal Risks

Tax Liability: Shared audit exposure

Unemployment Charges: Misassigned claims and cost shifts

Workers' Comp Gaps: Coverage denials or premium adjustments

Regulatory Fines: State labor or tax penalties

Breach Claims: Contract damages and litigation costs

Data Privacy: HIPAA or state privacy violations

Essential Data Elements and Security Considerations

Legal Names: Full legal entity names required

Tax IDs: FEINs for payroll reporting

Authorized Signers: Name and title of signatory

Employee Lists: Accurate SSNs and job classifications

Benefit Plans: Plan IDs and carrier names

Retention Policy: Securely store executed copies

eSignature Pricing and Feature Snapshot

Basic plan and capability differences among common eSignature vendors; signNow appears first as the reference column per platform comparisons.

	signNow	DocuSign	Adobe Sign	PandaDoc	HelloSign
Starting Price	$8/user/mo	$15/user/mo	$14/user/mo	$19/user/mo	$15/user/mo
Free Trial	Yes, 7-day trial	Varies	Varies	Varies	Varies
Bulk Send	Yes	Yes	Yes	Yes	No
Audit Trail	Yes	Yes	Yes	Yes	Yes
HIPAA Compliant	Yes	Yes	Yes	No	No

Frequently Asked Questions About Co-Employment Agreements

Answers to common questions about execution, enforceability, signatures, and recordkeeping for co-employment arrangements.

Need help? Contact support

Can a co-employment agreement be signed electronically?
Yes. Electronic signatures are generally enforceable under the ESIGN Act (15 U.S.C. ch. 96) and UETA where adopted, provided intent, consent, attribution, and retention requirements are met.
Do you need a notary to sign?
Most co-employment contracts do not legally require notarization, but state or counterparty requirements can vary; use a notary or RON where a record of identity verification is desired.
Who should review the agreement before signing?
Have tax counsel and employment counsel review allocation of payroll, tax obligations, and indemnity clauses to avoid unintended liability or misclassification risks.
What if payroll reporting is wrong?
Corrective filings and amended returns may be required; unresolved misreporting can trigger IRS penalties and unemployment or workers' comp audits.
How to prove who is the employer?
Maintain documentation of supervision, payroll records, benefit administration, and job control to demonstrate allocation of responsibilities during audits.
How long should records be kept?
Retain signed agreements and supporting payroll files per IRS and industry rules—at least three years for tax, six years for HIPAA-covered records, and longer where state law requires.

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