few years ago, as our business expanded and covered multiple states and locations, we started struggling to manage our payroll and benefits administration. As we evaluated opening remote offices and offering comparable benefits among employees, we realized that between our health insurance and pension plan, we needed some assistance. Early in this process, we investigated using a payroll service which manages all of the administration related to payroll. While this addressed the issues with multiple offices and multiple state rules, we were still left to pick and choose among benefit packages. After much discussion among employees, we decided that we would use the services of an employee leasing company. Since this decision was made over a year ago, I have become a supporter of the idea behind permanent leased employees. In a nutshell, here is
why I chose an employee leasing company:
All of my employees (including me - the owner) are employees of the leasing company. I still make all hiring, firing and compensation related decisions although, now I have the access to a Fortune 500 Human Resource and legal department for advice on employment issues. This is helpful in getting advice on tricky employee related issues. Employees who are terminated are encouraged to access the employee leasing company's out-placement services which offers unemployment related information. In the event of claims for unemployment or garnishment of employees wages, the employee leasing company is the employer and manages the entire process. When we first looked at this service, all of my employees were cool to the idea and wondered why they were going to have to "work for someone else?". Since we have been with the employee leasing company for over a year, the employee reaction has been very positive and they welcome the benefits otherwise unavailable at a start-up company.
My payroll is either mailed Fed-X, or wired into an employee's bank on the pre-established payroll dates. When you have employees scattered over a large area, this alone becomes a management nightmare.
My company's benefits are designed by me and managed by the employee leasing company. All of my employees are allowed to choose either an HMO (when available) or PPO paid for by my company. They are also allowed to add dental, disability, or life insurance as they would like. Employees can participate in a 401K that is designed by me but managed by the employee leasing company. Sick days, vacation days and other employment related tracking is done by the employee leasing company.
I write one check per pay period which includes the payroll, FICA, health insurance premium and workers compensation premium. And since I now have no employees, it is not my responsibility to make sure that all of these assorted checks are received and correctly posted.
An employee leasing company can be cost justified using your fully loaded payroll costs, and then comparing those costs to the proposal that the employee leasing company provides. In my case, allowing for a reduction in employees needed to process the payroll, I actually spend less overall money using the employee leasing company. Individual employer situations specific to the risks and workers compensation will impact the typical proposal provided by an employee leasing company. My fully loaded employee cost increased by only two per cent. However, this amount will vary by leasing company. Compared to the headache, liability and salary costs of managing this process internally, I feel that this has been a wise decision for my company. I now have the flexibility and capability to move my company in new directions without the issues related to overall employee administration management.
Adding new employees and offices are a breeze administratively and we can offer benefits usually only seen in a much larger company.
At some point, we may decide that we have grown to the point of allowing an internal human resources person, but until that time, I expect to continue to use and promote the services offered by the employee leasing company.
All of my employees (including me - the owner) are employees of the leasing company. I still make all hiring, firing and compensation related decisions although, now I have the access to a Fortune 500 Human Resource and legal department for advice on employment issues. This is helpful in getting advice on tricky employee related issues. Employees who are terminated are encouraged to access the employee leasing company's out-placement services which offers unemployment related information. In the event of claims for unemployment or garnishment of employees wages, the employee leasing company is the employer and manages the entire process. When we first looked at this service, all of my employees were cool to the idea and wondered why they were going to have to "work for someone else?". Since we have been with the employee leasing company for over a year, the employee reaction has been very positive and they welcome the benefits otherwise unavailable at a start-up company.
My payroll is either mailed Fed-X, or wired into an employee's bank on the pre-established payroll dates. When you have employees scattered over a large area, this alone becomes a management nightmare.
My company's benefits are designed by me and managed by the employee leasing company. All of my employees are allowed to choose either an HMO (when available) or PPO paid for by my company. They are also allowed to add dental, disability, or life insurance as they would like. Employees can participate in a 401K that is designed by me but managed by the employee leasing company. Sick days, vacation days and other employment related tracking is done by the employee leasing company.
I write one check per pay period which includes the payroll, FICA, health insurance premium and workers compensation premium. And since I now have no employees, it is not my responsibility to make sure that all of these assorted checks are received and correctly posted.
An employee leasing company can be cost justified using your fully loaded payroll costs, and then comparing those costs to the proposal that the employee leasing company provides. In my case, allowing for a reduction in employees needed to process the payroll, I actually spend less overall money using the employee leasing company. Individual employer situations specific to the risks and workers compensation will impact the typical proposal provided by an employee leasing company. My fully loaded employee cost increased by only two per cent. However, this amount will vary by leasing company. Compared to the headache, liability and salary costs of managing this process internally, I feel that this has been a wise decision for my company. I now have the flexibility and capability to move my company in new directions without the issues related to overall employee administration management.
Adding new employees and offices are a breeze administratively and we can offer benefits usually only seen in a much larger company.
At some point, we may decide that we have grown to the point of allowing an internal human resources person, but until that time, I expect to continue to use and promote the services offered by the employee leasing company.
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