How Do You Start an Employee Leasing Company?

Employee Leasing Firms Assist with Temporary Hiring

Employee leasing is a similar process to that of hiring temporary workers. Companies wishing to investigate employee leasing engage professional employment organizations (PEOs) to review its specific employment requirements. The PEO or employment leasing company generally sets up interviews designed to recruit new staff or may handle existing staff. While the company may also participate in hiring processes, the personnel hired actually officially works for the employee leasing company.

Instructions

1. Check with the Department of Labor in your state to find out about specific requirements and regulations with regard to setting up an employee leasing company in your area. List out the requirements to begin the process of application and licensure. The State Commissioner of Labor office or web page in your state may be particularly helpful in ascertaining this information. Each state regulation establishes the rules that will govern the licensing and regulated activities of that state's employee leasing companies. The rules and employer leasing licensing requirements available through the state department of labor will ensure that you are in legal compliance for doing business.

2. Generally, an employee leasing firm will need to have a "controlling person" who is at least 18 years of age and will have the authority to direct authorized management and policies for the firm. This is necessary in order to enter into the necessary contractual relationships with client companies on the leasing firm's behalf. An example of those requirements is available in Section 21 V.S.A. §1034 of the Vermont Department of Labor. The regulation applies to anyone who transacts business in the state as an employee leasing company. Pay particular attention to each state's mandates, as the former regulation does not, however, apply to temporary help firms (21 V.S.A. §1031(8) and Section 2).

3. Obtain the appropriate form that has been approved by the commissioner. States generally require that an applicant file an application for a license in order to do business. For example, in Vermont, a one time, non-refundable application fee that generally begins at $100.00, according to Section 21 V.S.A. §1033(b) is also required.

4. Obtain all the necessary information and additional forms from the state labor department relating to becoming an Employee Leasing firm Apply for the license and submit the licensing fees (Vermont requires $1,000.00). Once licensed, note the expiration date of the license. In Vermont, the expiration is one year from the date shown on the license. Vermont requires that at least 60 days before the expiration date of the license, the business files a renewal application accompanied by the fee and documentation, according to Section. 21 V.S.A. §1033(c).

5. The employee leasing agreement will most likely be an operating document that your firm will use with regularity to conduct business. The agreement is executed between an employee leasing company and a client company. The document describes the parameters under which the employee leasing company will provide one or more individuals as required, to perform services for the client company on whatever basis is agreed upon.

Tips & Warnings

• Join your state's Chamber of Commerce to legitimize your business and for networking purposes.

• Prepare a business plan so that your firm has direction for establishment and growth.

• Have an employment lawyer or hiring professional review any documents or contracts to ensure that you comply with all mandated regulations.

References

• Employee Leasing Licensure
• Professional Employer Organizations
• Employee Leasing Companies- Final Rule