Employee leasing

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According to the Division of Unemployment Assistance (DUA), "Employee Leasing Company" is defined as:

"an employing unit that contract with a client company to supply workers to perform services for the client company, provided, that the term "employee leasing company" does not include private employment agencies that provide workers to employers on a temporary basis or entities such as driver-leasing companies which lease employees to an employing unit to perform a specific service." Source: Mintz.com

The DUA defines "Client Company" as:

"an individual, association, partnership, corporation or other business entity that agrees to lease or is leasing its employees through an employee leasing company on a long term basis." Source: Mintz.com

The difference between a staffing firm (finds customers and supplies them with staff) and a PEO (professional employer organization) or an employee leasing company is that (outsources the HR-department for that customer sometimes including the staff). An other definition found at eHow.com, "...temporary employees are by definition only assigned to a specific firm for a specific period of time." and "Leased employees perform their jobs at a particular company for an open-ended period of time and do not move around to difference work assignments." <Definition of a Leased Employee, by Chris Blank>

A third category is the "rent-an-employer"-form where an individual with a clinet finds an employer to act as middle man, providing an employment and salary to the person and an invoice to the client. This is called Umbrella company in the United Kingdom and Self-Employment in Sweden.

Essentially employee leasing combines all your employment fees (FUTA, FICA, etc.) into a single, monthly fee. The employee leasing company offers a plan to reduce HR/employee related costs to a lower rate than the employer currently has them.

By using an "umbrella" method, the employee leasing company takes on a large amount of small businesses and consolidates them to offer a lower medical cost than the employer currently has. As you can see the services provided by an employee leasing company is a recurring theme, as they take under control many costs of the small business (medical, employment taxes) and when working correctly, offers them at a lower cost. Employee leasing companies also help with understanding government rules and regulations and maintaining and reducing risk (reducing claims, improving workplace safety). However in the various jurisdictions in the United States, even though a staffing contract may state that the business is not the employer of the temporary workers, it may be liable under various employment laws as a “joint employer” with the leasing company, despite the fact that the worker is paid by the leasing company and is not on the contracting business’ payroll. Source: "Leasing Employees – Not a Risk Free Arrangement". The National Law Review. Dykema Gossett PLLC. 2011-02-07. Retrieved 2012-01-03.

References:

Peocompare.com

Mintz.com

Rent an Employer Portal