Leased Employees

[LauraERPA]

Dr X has an arrangement with Company A in which Dr X pays Co A a Y% of his revenue for staff supplied by Co A.

Co A leases their employees from Company B.

Dr X maintains a 401K and DB plan.

All employees meet the regulation requirements regarding leased employees with the exception of primary control; Co A maintains control of employees. However, the regulations specifically name job functions that satisfy the control test; such as, receptionist, wordprocessing personnel, and nurses. The regulations go on to say that professionals that regularly use their own judgement and discretion in the performance of their services and are guided by professional, legal or industry standards do not satisfy the control test. Dr X utilizes Co A's staff to fulfill both clerical and professional positions.

Should the clerical employees be treated as leased under Dr X's plans? Does the payment arrangement (% of revenue) make this more of an outsourcing arrangement in which all staff are disregarded under Dr X's Plan? Or do we just have a clever attempt at skirting the issue?

Any input is appreciated!

[masteff]

Given your reference to word processing personnel and nurses, I assume that rather than regulations, you're referring to the Committee Report on SBJPA96 http://thomas.loc.gov/cgi-bin/cpquery/?&sid=cp104ncvda&r_n=hr737.104&dbname=cp104&&sel=TOC_792542& otherwise, please provide a cite for the regulation you're referring to as I'm not aware of a reg on 414(n).

Since it's a Committee Report, you should not apply it as a bright line test.

You state that Co A maintains control of the employees. Do you have any basis to contest this other than trying to be diligent? Does Co A agree that it controls the employees? It's entirely reasonable that the doctor is not in primary control of the employees, having assigned such primary control over to Company A who probably exercises that control via someone such as an office manager. Don't overanalyze to the point that you throw out perfectly good facts.