Employee Leasing

Employee leasing is a contractual arrangement where a business engages a staffing firm to provide workers on a temporary or project-specific basis. These workers are officially employed by the leasing agency, which handles their salaries and all HR-related tasks.

Benefits of Leasing Employees

Employee leasing can be beneficial for businesses that experience seasonal fluctuations, lack recruitment capabilities, or require temporary specialized skills. Staffing agencies offer several advantages:

• Quick staffing solutions: With their extensive network, staffing agencies can quickly fill vacancies, often providing qualified candidates in just a few days.
• Access to specialized talent: Agencies specialize in sourcing candidates with expertise in niche fields, such as healthcare, which might be difficult to find independently.
• Reduced HR overhead: Leasing employees cut down on many HR tasks, including job advertising, resume screening, interviewing, and background checks.
• Opportunity to hire permanently: If a leased employee excels during their assignment, there is an option to hire them full-time at the end of the period.

Risks of Leasing Employees

While beneficial, employee leasing can also pose several risks:

• Control over employment: As the legal employer, the leasing agency might retain workers post-assignment who can then work with competitors, potentially risking the leakage of trade secrets and business practices.
• Loss of tax incentives: Employing workers through a staffing agency may disqualify the business from certain tax benefits aimed at direct employers, such as the Work Opportunity Tax Credit and the Employee Retention Credit.
• Challenges with employee benefits: Employers might face higher costs and complexities in providing competitive benefits due to a smaller direct workforce, which may necessitate reducing the scope or appeal of these benefits.