Permanent Contract Staffing in Law Offices
| Publication year | 1985 |
| Pages | 1005 |
| Citation | Vol. 14 No. 6 Pg. 1005 |
1985, June, Pg. 1005. Permanent Contract Staffing in Law Offices
Employee leasing or contract staffing is not a new idea, but it is an emerging one. Employee leasing may provide better benefits for business owners and their workers.(fn1) It also may provide more freedom to design cash-heavy retirement plans for the owners and their top executives.(fn2) This article discusses the advantages of leasing employees for the law firm on a permanent or long-term basis.
Employee leasing refers to a situation in which persons are leased by a leasing company to a business. Internal Revenue Code ("Code") § 414(n)(2) defines a "leased employee" as one who is not an employee of the recipient but who provides services to the recipient. The services are provided pursuant to an agreement between the recipient and a leasing organization, and the person must have performed these services for the recipient on a substantially full-time basis for a period of one year. The services must be of a type historically performed by employees in the business field of the recipient. Most often, leased employees are already in place, performing duties required by the owner before they were hired by the leasing company.
Companies such as Pinkerton's began providing private security guards to businesses in the nineteenth century. Temporary employment agencies such as Kelly Girl, Manpower, Payday and Accountemps are quite popular today. However, these agencies generally provide help on a short-term rather than a long-term basis.
The growth of employee leasing arose from the enactment by Congress in 1982 of Code § 414(n). Essentially, that section provides a means by which a leased employee will not be regarded as an employee of the recipient of services (a law firm, for example) in connection with federal pension plan requirements. This non-law-firm employee status enables the law firm owners to establish defined contribution or benefit plans without having to make non-discriminatory contributions on behalf of non-owner personnel. The statutory prerequisites are discussed below.
Despite the origin of its emergence, contract staffing must be evaluated first from a non-tax standpoint. The majority of businesses go into employee leasing for non-tax reasons. Lawyers are seeking new opportunities to concentrate on performing legal services, uninterrupted by the challenges and irritations of payrolls, tax reporting, unemployment insurance and claims, recruiting non-lawyer personnel, terminations, and hunting for the right fringe benefit program.
Leasing companies use their own legal, accounting and claims departments to streamline personnel administration. As large employers, they can get much better group insurance rates than small businesses. Better benefits usually result in higher employee morale and lower staff turnover. The quality...
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