What is employee leasing?

Question: What is employee leasing?

Answer: The term “Employee Leasing” refers to an employment outsourcing arrangement where many of the employer related responsibilities and liabilities are outsourced to a specialist. This fundamentally means that one company manages the HR responsibilities, while the other manages the product or service.

Employee leasing has been around for a long time, but many employers still need clarity regarding “what is employee leasing?” Employee leasing is an outsourcing service that enables clients to cost-effectively delegate the management of human resources, payroll administration, employee benefits and workers’ compensation. Clients can typically reduce their cost of revenue, while also re-directing time and energy towards the operational and revenue-producing side of its operations. Some key points of the employee leasing arrangement include:

• Two legally separate employers who share some or all of the employer responsibilities with the same employees.
• Leased employed are employed by the staff leasing provider, which pays their wages and benefits, but whose employees report to (and work for) the client company.
• Client companies write a check to the leasing company to cover payroll, taxes, benefits, and administrative fees, typically for less than if they did it themselves.
• The employee leasing company manages compliance with state and federal regulations, payroll, unemployment insurance, W-2 forms, claims processing, etc.

If this is your first introduction to the concept of employee leasing, it probably won’t be your last! There is a growing burden of employment, and our industry is growing right alongside of it! Take a look at some of our other articles to see if the employee leasing solution is right for you.

What is Employee Leasing? | By Mike Smith