There is a lot written about leased employees, but I cannot find anything that addresses my specific question. I am looking for guidance on how leased employee service counts for benefit plan purposes when the former leased employee is subsequently hired by the organization. Anything you can point me to would be appreciated.

The ERISA Outline Book states that the employee's service as a leased employee IS counted by the "new" employer. The cite given by Sal is IRS Notice 84-11, Q & A -8.

Hope this helps.

Take a look at IRS Notice 84-11, Q&A-8. Although this deals with the opposite (common law employee becomes leased) my understanding is that this is applied to the reverse as well. It also seems to be common sense - if a "leased" employee is treated as an employee of the recipient while leased, then it would seem to follow that once hired as a common law employee, that service would still count.

Q-8. For purposes of determining if an employee has performed services for the recipient on a substantially full-time basis for at least one year,
does that one-year period include service of the employee prior to the effective date of section 414(n)?

A-8. Yes. For example, in the case of a recipient that is a calendar year taxpayer if, as of January 1, 1984, an individual has been performing
services for the recipient on a substantially full-time basis for one year or more and the other requirements of section 414(n)(2) are met, such
individual is a “leased employee” as of January 1, 1984. In addition, any period of service performed by the employee as a common law
employee of the recipient is taken into account for purposes of determining whether the employee has performed services on a substantially
full-time basis for a period of at least one year. For example, assume that Individual B has been a common law employee of Corporation X for a
period of 3 years. On April 1, 1984, B terminates his employment with X. On May 1, 1984, B is hired by and becomes a common law employee of
Leasing Company Z. Leasing Company Z is not related to Corporation X. Z enters into a contract with Corporation X to provide leased
employees. On May 2, 1984, Individual B is leased to Corporation X. Corporation X does not maintain direct control over Individual B's day to
day activities sufficient for B to be considered a common law employee of X. Individual B is considered to be a leased employee of X for
purposes of section 414(n) as of May 2, 1984, because prior service performed by Individual B for the recipient as a common law employee is
taken into account for purposes of determining whether an individual has performed services on a substantially full-time basis for a period of at
least one year.