Leased Employees

[justatester]

I have a company that has 2500 regular payroll employees. They also have 1200 "leased" employees. These "leased" employees have been working for them for years and the turnover rate is very low. So they meet the definition of "substantially full-time for at least one year".

The leasing company provides benefits to these employees. The leasing company has its own plan.

I am trying to determine whether or not they need to be considered for our coverage test. If I count them as non-excludable, not benefiting, my plan fails the ratio test. My plan is on a prototype document which has "fail-safe" language so the Average Benefits tests is out.

I know the definition of leased ees is tricky, but they sure seem like leased to me. Does the fact that the leasing company has its own plan make a difference.

Any guidance would be greatly appreciated!

[Belgarath]

Your prototype, under the definition of "leased" employee, will almost certainly answer some of your questions. I'd start there.

It is likely (almost a certainty...) that the plan of the leasing company will not satisfy the requirements for them to not be consider "leased" employees. So, you would have to count them as non-excludable. However, your definition probably also specifies that contributions or benefits provided a leased employee by the leasing organization that are attributable to services performed for the recipient employer shall be treated as provided by the recipient employer. So depending upon the level of benefits and coverage, you may be fine anyway.

[ETA Consulting LLC]

However, your definition probably also specifies that contributions or benefits provided a leased employee by the leasing organization that are attributable to services performed for the recipient employer shall be treated as provided by the recipient employer.

"Like". I think this is actually driven by the Regulations and not reduced to language in the documents.