Are they Leased or are they Temporary?

[CTipper]

I have a potential prospect (yes, potential prospect, not potential client) that I've just been made aware of through a referral source. The potential prospect is referring to a good portion of his staff as temporary leased employees.

Anybody have a good place to look at that clearly helps them understand the difference between the two?

I guess a question I could ask is -- "Do new employees go to the Agency first or to them first and then sent to the Agency?"

Thanks. I know I should know the answer.

Christopher

[Guest Kevin1]

Who's the Employer?

by Derrin Watson (805) 683-0707

www.employerbook.com

watson@employerbook.com

Good luck.

[John Feldt ERPA CPC QPA]

You will enjoy the book and find it fascinating. If you're a Harry Potter reader, "Who's the Employer" is far beyond Potter (well, uh, it is to geeks like me anyway).

[Steelerfan]

If they don't meet the definition of leased employee in the statute, you have to determine whether they are the common law employees of the termporary agency or the client. There is a long list of factors to consider. The likely story is that the client thinks they are employees of the temp agency because they cut the checks and has not considered whether these people might be determined by the irs or a court to be his common law employees. they should hire an attorney to make a proper determination.

The IRS has extensive guidance on this, can't remember if they are rev procs or what. Sorry for the lack of specificity, but if you have the capability to research IRS guidance, you should do that.

[Guest mjb]

I have a potential prospect (yes, potential prospect, not potential client) that I've just been made aware of through a referral source. The potential prospect is referring to a good portion of his staff as temporary leased employees.

Anybody have a good place to look at that clearly helps them understand the difference between the two?

I guess a question I could ask is -- "Do new employees go to the Agency first or to them first and then sent to the Agency?"

Thanks. I know I should know the answer.

Christopher

How long do the employees work for the prospect? If they dont work for more than a yr then thcy can be excluded from participating in the plan. Or the employer can limit them to less than 1500 hrs a year. They can also be excluded as a class as long as the plan meets the participation rules under IRC 410b for all the other employees.

Its also possible the employer is ignoring the rules for counting leased employees. You can also try the IRS web site under leased employees or IRC 414(n).