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How to Choose a Staff-Leasing Firm

Many companies are leasing their security guards and other employees. Here's a checklist of questions to consider before you do.

November 1, 1999
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Related Topics: Contingent Staffing
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The good news: Leasing employees can remove a lot of paperwork and other hassles from your desk.

The bad news: You guessed it ... legal issues. Your legal liability may be unclear, and if there's a discrimination suit, you could be liable. And some states, such as Florida, California and Texas, are making their own regulations in this area.

If you do decide you may want to go the leasing route, the following checklist will help you deal with staff-leasing firms. It will also be helpful in determining whether you want to deal with more than one staff-leasing company.

  • Will the firm be the sole employer, or a joint employer with you?

  • Does the firm certify that it conforms to IRS, federal and state regulations?

  • Does the firm furnish quarterly audit letters from an independent accounting firm certifying that payroll taxes, insurance premiums and pension fund contributions are paid in full and in a timely manner?

  • Does the firm provide bank references to verify its financial stability?

  • Does the firm provide an opinion letter from a legal firm that states that the staff-leasing firm and any affiliates are in compliance with labor and pension laws?

  • Does a major insurance company underwrite the firm’s employee health insurance policy? (You should call the carrier to verify that the staff-leasing firm pays its premiums and claims on time.)

  • Does the firm’s benefits package meet your needs? (If you are in a highly competitive business, you need to be sure the leased workers’ benefits package is generous enough to attract the best workers.)

  • Does the firm provide at least three client references?

  • Are the firm’s fees guaranteed for at least one year?

  • Do you want to deal with just one company or would you like to have two or three to call on?

  • Do you want a staffing firm that specializes in one or two industries (such as home healthcare aides or accountants) or do you want one that can provide workers for all departments in your organization?

  • In a multi-specialty firm, are there staff members who specialize in a particular field—e.g., technical, legal, secretarial or administrative?

  • Is the person who will fill your orders willing to meet with you personally to become better acquainted with your needs?

  • Will the firm’s representative visit your facility?

  • Can you visit the firm’s offices? Looking around the firm’s offices will give you an idea of how professional and well established they are.

  • What is the firm’s reputation in the community? Have any complaints been filed with the Better Business Bureau or any state agencies, such as the state department of labor?

  • Are the firm’s rates competitive for your area and your particular skill requirements? (You should call several companies to determine an average rate for particular skill requirements.)

  • What do they pay leased employees who will fill your assignments? (You want to be sure that the employees are being paid well in relation to the amount that you are charged. If they are underpaid, they will not do the job as well as you expect them to. While you want to keep costs down, you would do well to remember the old adage that "you get what you pay for.")

  • What kind of training does the staffing firm provide?

  • Will the firm provide specialized training to meet your company’s needs?

  • What testing process does the staffing firm use?

  • Are employees tested for their proficiency with the most common computer software programs, such as word processing and spreadsheets?

  • Does the staffing firm test for production and manufacturing skills?

  • Does the firm use personality profiles and are the results available to potential clients?

  • Does the staffing firm do background checks on employees? Does it verify professional credentials?

  • Are employees tested for basic math and spelling aptitude?

  • Can the firm meet your needs for special, customized testing?

  • Will the staffing firm provide an on-site manager or supervisor? This may depend on how many employees you will need at your workplace and for how long. The staffing firm may be willing to provide an on-site manager at no extra cost if the volume of business it will derive from your company, and the profit to be made, warrant it.

  • Who pays for advertising if the staffing firm doesn’t already have an employee on its roster who will fit your needs?

SOURCE: Excerpted with permission from "Managing a Flexible Workforce," Copyright 1998 by the Bureau of Business Practice, a division of Aspen Publishers, Inc., Waterford, CT (800/243-0876, ext. 236).

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