How Your Small Business Can Share Employees With Another Employer

Can't afford to hire someone full time? Here's an option if other local businesses might be in the same situation.

Full-time employees cost more than just the hourly wage you pay them, thus making it prohibitive to hire one. But some of your best candidates may not want a part-time job. If you can arrange to share the employee's time and expense with another employer (or employers), you may have a solution. Obviously, it works best when all of the employers share the same physical space and the employee has just one work area.

How Will the Employee's Time Be Divided?

When you share an employee, you must decide how much time—or how much work—the employee will do for each employer. If both (or all) employers need the same type and amount of work from the employee, the division of labor is a lot easier. For example, if you share an office suite with other professionals, and you hire a receptionist to greet visitors, answer the phones, sort the mail, and handle deliveries, you can simply schedule the employee's hours and divide the cost equally.

However, if you need different types or amounts of work from the employee, or if your needs will vary depending on your work load (as is often the case), you have a couple of options for dividing the employee's time.

The simplest way is to divide the hours as you think you will use them—for example, the employee will work 30 hours per week, and each employer will pay for 15 of those hours and have the right to use half of the employee's time. If one employer doesn't have enough work to keep the employee busy for the full 15 hours in a given week, the other can take over some of the hours and reimburse the first employer for them—but if the second employer doesn't need those hours, the first is still responsible for paying the employee for all of them.

Alternatively, the employee can keep track of hours spent working for each employer on a time sheet or computer spreadsheet. The employers can divide the costs pro rata each pay period depending on the time the employee spent on each. If the employee spends administrative time that benefits everyone (such as sorting the mail or handling issues for the shared space, like scheduling janitorial services or stocking the office refrigerator), the employers can divide that time equally. This system requires good communication, because the employers and the employee must make sure the employee's time is used efficiently and that there isn't competition for hours. It works best if there's a general idea of how much time each employer will use, and a good system for communicating needs and expectations.

No matter how you divide the employee's time, make sure you respect the agreement and the employee. Try to anticipate problems prioritizing tasks and maintaining boundaries between jobs. If the employee devotes a particular amount of time each week to each employer, you'll need rules about whether and in what circumstances you may deviate from that schedule. If the employee doesn't have set hours for each employer, the employers must decide how they will prioritize work and then communicate those priorities to the employee, so that the employee doesn't have to make difficult decisions about whose work should be done first.

EXAMPLE: Two architects share work space and also split the cost of a part-time administrative assistant who answers the phone, processes mail, does filing, and takes on miscellaneous tasks as needed, including making the occasional delivery. It occasionally happens that one person has important correspondence that needs to go out the same day, while the other has a delivery that needs to be made—and it may not be possible for both things to happen in the time the assistant has. The first time it happened, she didn't stress, because her instructions were that in the event of a potential conflict, she was to inform both of her employers so that they could work it out between themselves. They did, and it also inspired them to start a simple system under which they used a white board to list "same-day projects." That way the employers could see what was going on and do the prioritizing, again without causing the employee to worry about whose work she should be doing.

How Will the Employee Be Paid?

You must also decide how to pay the employee. The easier method is to make one person responsible for payroll and issue one check, and have the other employer(s) reimburse that person for their share of the wages, taxes, and insurance. The challenge of doing it this way is that you must keep very clear records not only of the payroll checks issued, but also of the payments made by the unofficial employers, so that they can document and deduct those payments for tax purposes. If you're sharing hours in an irregular way (according to need, for example), calculating shares of taxes and other expenses can get cumbersome.

Other options are to have each employer set up a separate payroll account and pay the employee for time worked for that person, or to set up a joint account for payroll, as the employers in the agreement below do.

Agreement to Share Employee

Benjamin Coke and Suzanne Clarkson agree to hire an employee whose work time they will share, under the following terms.

  1. We will hire an administrative assistant for our shared office space at 2525 College Avenue. We'll find the employee together by posting an advertisement on Craigslist and any other list-serve we agree on, and mining our own contacts. Ben will draft the advertisement and Suzanne will review it and post it. Ben will arrange interviews with prospective employees.
  2. The assistant will work approximately 30 hours per week at our office (no telecommuting), from approximately 9:00 a.m. to 3:00 p.m. each day, with the exact hours to be determined in consultation with the employee when hired. The employee's duties will be to staff the reception desk and greet visitors who come to see any of the tenants in the suite, to receive packages and sort mail when it comes in, and to answer phones and do other work for each of us pursuant to our instructions. Our preference is to find someone with some experience in the financial services industry. Our intention is to split the assistant's work equally, so that we each use approximately 15 hours per week, with Suzanne's work done in the morning and Ben's in the afternoon, and we each will be responsible for half of the employee's pay. However, we don't want to be rigid about the schedule. If either of us has a need during hours that "belong" to the other, we'll discuss it and make adjustments. Likewise, if one of us has more work for the assistant to do during a given time period, the other may cede some time. If that happens a lot, we'll discuss the possibility of sharing the employee costs unequally and adjusting the amount of employee time each of us is entitled to use.
  3. The employee will be responsible for keeping track of time spent for each of us. At the end of the pay period the employee will submit a time sheet that will show total hours worked and the breakdown of hours spent for Suzanne, Ben, and for the suite as a whole (receptionist and mail duties).
  4. We'll pay the assistant $15 per hour, and will pay on the 15th and 30th of each month (or the business day before those dates if the pay date falls on a weekend or holiday) for hours worked during that time period. We'll deduct taxes and Social Security and pay our share of those taxes, and we'll pay for workers' compensation insurance. In addition, we'll contribute an additional $200 per month to individual insurance coverage or a Health Savings Account at the employee's election, if the employee doesn't have access to health insurance any other way. Suzanne will research how to do all of this, set up our account with the Workers' Compensation Board, and research what forms we need for paying other taxes. Other terms of employment, such as paid time off, holidays, and sick leave, will be negotiated with the employee and contained in a memorandum of understanding signed by both of us and the employee after hiring, and then attached to this agreement as an exhibit. We both agree that we'll be jointly and severally liable for all payments to the employee.
  5. We have set up a joint account at the Bank of America for the purpose of paying our employee. Each of us deposited $500 to start the account. Starting on August 1, 20xx, we each agree to deposit $1,500 on the first day of each month, to cover that month's expenses. We think this is more than we'll actually need, but we'll continue to put in this amount until we learn the cost of taxes and insurance. After six months, we'll decide whether we want to change the monthly contribution.
  6. If one person doesn't make the required contribution for the month, the other can make the contribution and it will be considered a loan to the one who didn't pay. The person who didn't pay must reimburse the other within fifteen days or forfeit the right to control any of the employee's time. At that point, the other person has the right to change the employment terms and make a separate agreement with the employee that doesn't include the non-paying party.
  7. We agree to meet once a month for lunch specifically for the purpose of discussing how this shared arrangement is working out.
  8. If disagreements arise between us that we can't work out ourselves, our preference is to try mediation (at our local community mediation center) before terminating this agreement. Each of us has the right to terminate this agreement at any time, but must provide at least three week's notice or pay for three weeks after the person's participation in the agreement ends.

_____________________ Benjamin Coke ________ Date
_____________________ Suzanne Clarkson ________ Date

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