Employee leasing arrangements keep your business productive

Written by ShawnTe Pierce

Employee leasing arrangements allow a company to concentrate on the nuts and bolts of running a business while a third party takes over its human resources and workforce-related administrative duties. The provider may become the employer of record for the client's existing employees and take over the hiring of new ones. At other times, the provider is contracted to take over payroll, benefits, and worker's compensation duties. The level of service is dependent on the needs of the client and is either agreed upon with an employee leasing agreement form or an employee leasing contract.

Types of employee leasing arrangements

An administrative service organization (ASO) provides payroll, insurance, benefits, and other HR services to employers. This model retains you as the employer of record for W-2s, worker's compensation claims, benefits, and more. In addition, the ASO performs the services while you assume the liability. This type of agreement is not by contract, but rather executed with an employee leasing agreement form.

A human resources organization is another model that uses an employment leasing agreement form instead of a contract to provide management services. Such services include drug testing, employee bonding, discipline and termination, as well as benefits processing duties. You, as the client, are responsible for administrative tasks like payroll and taxes.

A professional employer organization (PEO) takes over the administrative tasks for another business or client. Through an employee leasing contract, PEOs assume the administrative and human resources responsibilities of your business. The PEO is liable for adhering to any and all laws, regulations, and other compliance issues. Even though you’re still in charge of the business, the PEO handles the human resources role so you can focus more on operations, production, and revenue-earning endeavors.

What to look for

A few items to consider before agreeing to employee leasing arrangements or contracts:

1. Determine what model fits your needs by comparing services.
2. Look for a demonstrated history of professionalism and competency.
3. Learn how employee benefits are funded, if the company is insured and at what level, who its third-party administrator is, and if it’s licensed for your state.
4. Research how benefits are set up and if they fit the needs of your workers.
5. In the case of PEOs, check to see if all government requirements were met for it to operate as a PEO.

After you have done this individual research, set up a meeting with each prospective company. During your meeting, ask for personal and professional references. In addition, request a copy of the service agreement or employee leasing contract.

Employee leasing arrangements are a big step for your business: Make sure every detail is clearly defined, and understand all provisions and guarantees to make sure they fit your needs.

To get matched to multiple PEOs and ASOs, submit a free BuyerZone request for employee leasing arrangements price quotes.