17/04/2020
Benefits of Leasing
The two most widely cited benefits ascribed to employee leasing are reduced administrative costs and access to improved (and/or lower cost) benefits. Listed below are some potential advantages and disadvantages for employers and employees, which are discussed further in this article.
Advantages to Employer
Reduced administrative costs
Human resources expertise
Lower cost/higher quality employee benefits
Safety and loss control services
Advice on compliance with employment-related laws
Potentially lower cost workers compensation insurance
Disadvantages to Employer
Liability for leasing company's failure to file taxes, deliver promised benefits, etc.
Loss of control (may be minimal in some cases)
Possible "shock impact" on employee relations
Advantages to Employee
Improved benefits
Protection under federal laws
Disadvantages to Employee
Must be fired and rehired to implement plan
Potential for uncollectible benefits
Red tape
Reduced Administrative Costs
Many employers like the leasing arrangement because it frees up their time and relieves them of the need to stay current on a multitude of employment-related laws, file onerous reports and paperwork, and make quarterly tax deposits. (Most leasing companies make tax deposits on at least a weekly basis, and some do so on almost a daily basis. Therefore, even Uncle Sam derives a cash-flow benefit from the leasing arrangement.) Employee leasing companies generally assume most of the responsibilities associated with payroll, including all employment-related tax filings, procurement of employee benefits, and ensuring compliance with a multitude of requirements, such as ERISA and COBRA. The client usually remains responsible for providing and maintaining a safe workplace and for supervision of employees.