Nova 401(k) Associates
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Compass Retirement Consulting Group, Inc.
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Central Pension Fund of the IUOE
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Retirement Plan Legal Specialist Pentegra
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Bates & Company
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Defined Benefit Calculation Specialist/Actuary The Angell Pension Group, Inc.
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United 401(k) Plans, Inc.
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Carpenter Morse Group
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Retirement Plan Relationship Manager ERISA Services, Inc.
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Central Pension Fund of the IUOE
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Nicholas Pension Consultants
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Trucker Huss, A Professional Corporation
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Retirement, LLC
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Prime Pensions, Inc.
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Question 4: In the typical staffing firm arrangement, what is the likelihood that the staffing firm is the common law employer of the workers on its payroll? | |
Answer: Virtually every case and revenue ruling that has considered this issue, going all the way back to pre-ERISA cases, has held that the recipient is the true common law employer, and not the staffing firm. There are exceptions, but they are rare.
In any event, the worker is a common law employee of the recipient (client) under most staffing firm arrangements, whether you use the Microsoft analysis or the traditional common law analysis. There are notable exceptions, such as a traditional "temp" agency that sends people to a variety of short-term assignments or a nurses registry. However, the average situation in which an employer leases most of his staff from a staffing firm almost always leaves that employer as the common law employer, not the staffing firm. "Couldn't you have a situation in which both the staffing firm and its client are common law employers?" No court and no regulation recognizes such an arrangement. It is true that for payroll tax purposes, a paymaster may be regarded as an employer, but that does not make the paymaster the common law employer for plan purposes. |
Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner or to readers. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of this and similar situations.
The law in this area changes frequently. Answers are believed to be correct as of the posting dates shown. The completeness or accuracy of a particular answer may be affected by changes in the law (statutes, regulations, rulings, court decisions, etc.) that occur after the date on which a particular Q&A is posted.
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