Why Hire an Employment Leasing Company

Posted March 28, 2023

Hiring an employment leasing company can help businesses focus on their core activities and achieve their strategic goals, while reducing administrative burden, cost, and risk. Here are the reasons why you should turn to one.

members of an employment leasing company

Benefits Offered by an Employment Leasing Company

Reduced Liability

By outsourcing HR functions to an employee leasing company, businesses can reduce their liability and risk exposure. These companies assume some of the risk associated with employment, such as workers’ compensation claims and lawsuits, freeing businesses from potential legal and financial liabilities.

HR Support: Employee leasing companies can provide businesses with HR support, including assistance with employee relations, disciplinary actions, and terminations. By following best practices and providing consistent, fair treatment to all employees, businesses can reduce their risk of legal disputes and liability.
Risk Management: They can help businesses identify and manage risk in their workforce. For example, they may provide safety training and other resources to reduce the risk of workplace injuries or accidents, or conduct background checks and drug testing to screen potential hires.
Compliance: Employee leasing companies can help businesses stay compliant with federal and state labor laws and regulations, reducing the risk of legal penalties and fines. They have specialized knowledge and expertise in employment law, and can provide guidance on issues such as employee classification, minimum wage, and overtime pay.
Workers’ Compensation Insurance: Employee leasing companies typically provide workers’ compensation insurance, which covers lost wages and medical expenses for employees who are injured on the job. By assuming responsibility for workers’ compensation claims, they can help businesses avoid costly legal disputes and financial liabilities.

Access to Benefits

Employee leasing companies often provide access to a range of benefits, including retirement plans, health insurance, and other employee benefits. This can help enterprises attract and retain top talent, even if they are not able to offer these benefits directly.

Compliance: Employee leasing companies can help businesses stay compliant with state and federal laws and regulations related to benefits. They can provide guidance on issues such as the Affordable Care Act (ACA), the Employee Retirement Income Security Act (ERISA), and the Family and Medical Leave Act (FMLA).
Administration: They can handle the administrative tasks associated with benefits, such as enrollment, claims processing, and billing. This can save businesses time and resources, as well as ensure that employees receive the benefits they are entitled to.
Customized Benefit Plans: Employee leasing companies can offer customized benefit plans that meet the needs of the business and its employees. They can provide a range of options and help businesses select the right benefits for their workforce.
Group Purchasing Power: They typically offer access to a range of benefits, such as health insurance, retirement plans, and disability insurance, that may be more affordable than what a small or medium-sized business could obtain on their own. This is because the employee leasing company can leverage their size and purchasing power to negotiate better rates with insurance providers.

Flexibility

Employee leasing companies can provide businesses with greater flexibility in managing their workforce. They can help businesses scale up or down quickly in response to changes in demand, without the need for costly layoffs or severance packages.

Staffing: They can provide businesses with access to a flexible workforce. This means that businesses can quickly ramp up or down their staffing levels in response to changes in demand, without the need to hire or lay off employees. They can also provide temporary or seasonal workers, as well as help businesses find and hire permanent staff.
Scalability: They can help businesses scale their operations quickly and efficiently. This means that businesses can expand their operations or enter new markets without the need to invest in additional infrastructure or resources.

members of an employee leasing company talking

Expertise

Employee leasing companies have specialized knowledge and experience in HR management, compliance, and regulatory issues. By leveraging their expertise, businesses can ensure they are in compliance with all applicable rules and regulations and avoid costly penalties.

Training and Development: Employee leasing companies can provide businesses with training and development programs to help employees develop new skills and improve their performance. This can help businesses stay competitive and adapt to changes in the marketplace.
Recruitment: They can help businesses find and hire top talent. They have access to a large pool of candidates, as well as the expertise to screen and assess candidates to ensure they are a good fit for the business.

Cost Savings

Employee leasing companies can help businesses save money by reducing the cost of payroll processing, benefits administration, and workers’ compensation insurance. By outsourcing these functions, companies can reduce their administrative burden and focus on their core business activities.

Legal and Regulatory Issues in Employment Leasing Company

One of the primary concerns for employment leasing companies is compliance with employment laws. PEOs and staffing agencies must ensure that they are in compliance with all relevant labor laws, including the Fair Labor Standards Act (FLSA), the Americans with Disabilities Act (ADA), and the Occupational Safety and Health Act (OSHA). Failure to comply with these laws can result in legal action, fines, and damage to the company’s reputation.

Another area of concern is workers’ compensation. PEOs and staffing agencies are responsible for ensuring that their employees are covered by workers’ compensation insurance, which can be a complex and expensive process. In addition, if an employee is injured on the job, the employment leasing company may be held liable for medical expenses and lost wages.

Tax implications are also a significant concern for employee leasing companies. PEOs and staffing agencies must navigate a complex web of federal, state, and local taxes, including income tax, Social Security tax, and unemployment tax. Failure to properly withhold and remit these taxes can result in legal action and penalties.

Finally, there are regulatory issues related to data privacy and security. Employment leasing companies often collect and store sensitive personal and financial information about their employees, which must be protected in accordance with relevant laws and regulations. Failure to adequately safeguard this information can result in legal action and damage to the company’s reputation.

To mitigate these legal and regulatory risks, these companies must have a robust compliance program in place. This program should include regular audits of employment practices, ongoing training for employees, and a focus on risk management and mitigation.

By prioritizing compliance and staying up-to-date on relevant laws and regulations, they can minimize their legal and regulatory risks and continue to provide valuable staffing solutions to businesses.

Learn More About What an Employment Leasing Company Can Do for You

While these companies can provide valuable staffing solutions for businesses, they are also subject to a variety of factors. Schedule an appointment with us for more information!