There are simple ways to avoid risky scenarios with co-employers. Here’s how you can mitigate potential risks: Use a certified co-employer If you’re considering working with a co-employer, you must ensure they are certified by the IRS and the Employer Services Assurance Corporation (ESAC). These governing bodies run thorough background checks and set reporting requirements to ensure co-employers are reliable and worthy of certification. If the co-employer is certified, the company is secure in the following scenarios: Your company is not accountable if the co-employer fails to pay your federal employment taxes Your company can terminate the co-employment agreement at any time of the year and won’t face a wage-base tax restart Your company could continue to claim tax credits for which they would typically be eligible if they were not in a co-employment arrangement Be diligent about independent contractor classification Worker misclassification is the act of compensating a worker as an independent contractor (IC) when they perform the duties and responsibilities of an employee. Classifying new hires correctly can be challenging. However, knowing all the differences between types of workers is essential to avoid the penalties and legal consequences of misclassification. Misclassification is problematic because the company is not paying enough taxes or providing the correct worker benefits, compensations, and insurance. Misclassification has negative repercussions on workers, state and federal governments, and the company. Fortunately, certified co-employers are experts in worker classification and can help you avoid these employment issues.