Employee Leasing

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Employee Leasing

Today’s Employee Leasing Companies Are Better Than Ever

Many business owners believe that employee leasing is simply outsourcing your HR department or payroll department. However, most small- or medium-sized businesses probably don’t have the luxury of ”departments” to handle these functions. That’s why so many of these companies turn to employee leasing.

Today’s employee leasing companies are different from employee leasing companies of the past because they offer a wider variety of employee leasing services to clients, and the services offered are more in-depth. They are able to do this because of the co-employment relationship that exists. Through this relationship, employee leasing companies can better help small- and medium-sized businesses provide affordable benefits, attract and retain the most talented employees, and have access to enhanced technology they could not get from employee leasing companies in the past, including:

• A broad range of health and other insurance benefits
• Enhanced payroll services including web-based employee self service
• Complete risk management support and training
• Unemployment claims management
• Employee training and development
• Employee discount programs
• And much, much more

An employee leasing company is a business, which by agreement and for a fee, places employees of a client company on the leasing company's payroll. In turn, the leasing company "leases" these employees back to their original employer, usually for an unlimited period of time.
In 1996, the Vermont Legislature passed a law (21 V.S.A. Secs. 1031-1043) to regulate the employee leasing industry. This law, which originated through an industry request for regulation of leasing companies requires the employee leasing companies doing business in Vermont to be licensed by the Vermont Department of Labor, which is the state department responsible for administering both the unemployment insurance and worker's compensation programs.
Regulation of the employee leasing industry was enacted in part as a response to some situations, most of which occurred outside of Vermont, where an employee leasing company went bankrupt after having collected from its clients money which was to be used to pay wages, benefits, worker compensation premiums and unemployment insurance contributions, but without first making those payments to the appropriate agencies. In those situations, the client companies bore the responsibility of paying those wages, premiums and taxes twice. The financial responsibility and bonding provisions of the employee leasing law are intended to reduce or eliminate the exposure of the client companies should their leasing company suddenly go out of business. By helping ensure that only stable employee leasing companies do business in the state, Vermont's employee leasing law provides protections to workers, client companies and the leasing industry itself. It also helps to ensure that the cost of unemployment insurance and workers' compensation is borne by the client company, and not spread amongst all other employers.
Employee leasing companies provide a number of valuable services to their clients. Typically, an employee leasing company will provide payroll services and assist companies in managing their human resources by providing employee manuals and other services, which are sometimes difficult for smaller companies to provide on their own. Better management of workplace safety can help control the cost of worker compensation. Improved hiring practices and experienced representation in unemployment insurance benefit and tax matters can help keep the cost of unemployment compensation down. Because leasing companies represent a number of employers, and therefore a larger pool of workers, the cost of benefits can sometimes be lowered. In some cases, client employers, which could not afford to provide certain benefits such as health insurance, find it affordable to do so when taking advantage of the buying power of an employee leasing company.

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