Employee leasing is a contract signed between a professional leasing organization and the business owner, where the leasing company leases employees to businesses, who help attend to all the personnel-related activities most commonly associated with the human resource department. Employment responsibilities are shared between the two parties, where the business owner has the essential management control over the work executed by the leased employees or dedicated offshore resources. On the other hand, the leasing company holds responsibility for work such as reporting wages and employment taxes. The business owner simply needs to write a check to the leasing company, covering the payroll, taxes and administrative fees. And the leasing company handles the rest.
Why is employee leasing beneficial for you?
Employee leasing saves you from administrative complexity and makes it easy to hire dedicated resources. You can simply add workers to your workforce, while the leasing organization handles all the administrative intricacies like ensuring compliance with state and federal regulations, payroll, unemployment insurance, W-2 forms claim processing and other paperwork.
By combining the employees of several companies into one large pool, PEOs can also offer business owners better rates on health-care and workers’ compensation coverage. The net effect can be significant savings of your time and money.
Your business organization still holds ultimate control over how things are run. Leasing companies take care of payroll and benefits administration functions, but this does not give them a voice in their clients’ other business decisions.
Leasing companies can also provide legal assistance to their clients in various aspects of personnel law. There is some self-interest involved here since, in the event of a lawsuit, both the leasing company and its client could be targeted as co-employers.
Furthermore, now that you have better benefits and stronger HR policies, you will be easily able to grab the very top talent in your department. Whenever you need help hiring, onboarding, or even terminating an employee, the leasing firm offer services to help you deal with the procedure. They also provide other resources for posting job openings online and managing the interview process.
Employee leasing can help small businesses enjoy a lot of benefits. Your dedicated employees will often have access to health plans at lower costs compared to dealing directly with insurance companies. This means better health care, retirement and workers’ compensation coverage for your business and its employees.