Over the years I’ve dealt with many business owners who confuse Employee Leasing (a.k.a. PEO services) with staffing or temporary labor companies. In many cases those same business owners have had experience with one or the other services, but really aren’t familiar with the differences. So what are they, and how do each benefit employers?
To begin with, an Employee Leasing company’s main benefit to an employer is to relieve the non-profit producing tasks of dealing with employee administrative hassles- such as payroll, employee benefits, human resources and workers’ compensation. By outsourcing these to an Employee Leasing company, the employer can focus on what they do best and grow their bottom line.
Throughout the years, business owners have faced increasingly escalated government rules regarding employment. Employee Leasing companies assume many of these responsibilities and provide expertise in human resource management.
An Employee Leasing company is typically the most cost-effective option for an employer when the business owner has five or more full-time employees. Costs related to workers’ compensation, unemployment tax and payroll administration are much less in comparison to a staffing or short-term employment arrangement. As you can imagine the more employees as a business has, the more time has to be devoted to employee issues- therefore the value of outsourcing this work becomes a more profitable decision.
A business can benefit by using a staffing or temporary help service in variety of ways, as well. The obvious advantage is the ability to access short-term help immediately. Whether it is a construction project with a timeline that requires temporary labor, or a secretary who takes a leave of absence for an extended period of time; accessing pre-qualified help at a moment’s notice is when these services can be an employer’s best friend.
The administrative costs such as payroll, unemployment taxes and workers’ compensation are handled by the staffing company. The employer also relieves themselves of any benefit requirements like health care, vacation, sick or holiday pay. But, there is a premium to pay for these short-term employment services. The overall employee-related costs will be much higher including fees that are added for using staffing companies. The added risks and administrative costs for the services they’re providing is exactly why staffing companies are to be used as a temporary solution.
Just as convenience and grocery stores fill a specific need, the services that Employee Leasing and staffing companies provide (although different) are an invaluable resource for businesses.