Considerations

• The leasing company is the legal employer; the firm that needs workers is its client. The leasing company is responsible for paying salaries, withholding income and payroll taxes, paying for worker's compensation insurance, and providing benefits such as health and life insurance. It reports the worker as an employee to the IRS and furnishes a W-2 form every year to its workers.
  
  

Agreements

• The worker is leased to a client organization that needs staff. This company signs a contract with the leasing company, setting the terms of the agreement, and pays a fee for each period the employee works -- whether hourly, weekly, or monthly. The client company sets the hours and conditions of the job, provides the equipment, and is also responsible for any specialized training.
  
  

Conditions

• Leasing arrangements can be temporary or (in effect) permanent. Doctors, lawyers, accountants and other professionals commonly lease most of their permanent support staff. The client company interview candidates, sets work hours and salary, offers promotions and bonuses, and does any firing. The fee to the leasing company depends on the salary that is paid. The employee keeps the job as long as it is available and she fulfills the job duties.
  
  

Responsibilities

• The company using the leased workers remains responsible under the law for meeting safe workplace standards, avoiding discrimination and wrongful termination, paying a legal wage under the Fair Labor Standards Act, and bargaining with any union that represents the worker. The leasing company and its client may agree to indemnify one or the other in case of the employee's negligence or in case of any civil action on the part of the employee against the client.