Answer: You are correct in noting that common law employees of the recipient cannot be leased employees. If they are your company’s common law employees (which is a reasonably safe bet), then you must treat them as you would any other common law employee (in the absence of plan provisions to the contrary).
If they are not common law employees, then they probably have most of the attributes of leased employees. They are provided to you under an agreement with the staffing firm, and you give them their primary direction and control (although not enough control to make them common law employees). There is just one other rule that stands in the way of their being treated as leased employees.
Under IRC 414(n), a leased employee must provide services to the recipient on a substantially full-time basis for at least a year. IRS Notice 84-11 defines substantially full-time as meaning 1,500 hours (or 3/4 of the time that your common law employees in that job work, if less). Any 12-month period can be used to satisfy the substantially full-time requirement. You don't have to limit it to plan years or eligibility computation periods. Hours as a direct employee are added together with hours worked under the leasing arrangement.
Until a worker satisfies the substantially full-time standard, the worker is not a leased employee. That means the worker is not deemed to be an employee of your company, because it is the status of leased employee that causes them to be treated as an employee. If the worker is neither an employee nor deemed to be an employee, then it is a violation of the exclusive benefit rule of IRC 401 to cover the worker under your plan.
Fortunately, IRS Notice 84-11, on which we can rely unless and until the IRS finalizes leased employee regulations (and none are even proposed at the moment), provides an easy way out. A plan is given the option of covering people even though they have not met the substantially full-time standard. (See Q&A 9.) Effectively, this allows you to waive the requirement. However, such a waiver would need to be in the plan document. Most prototype documents do not include a clause, so you would likely need to amend to an individually designed plan to accomplish this.
Having done so, you can still limit coverage by the standard "one year of service" eligibility requirement. You would not need to worry about whether the worker is a common law employee of your company. As soon as a worker satisfies the year of service requirement, he or she would enter the plan, even if the more stringent substantially full-time standard had not yet been satisfied.
For an in-depth discussion of the leased employee rules, including considerations of whether a worker is a common law employee of the recipient and the application of the substantially full-time standard, see chapter 4 of my book Who's the Employer?.