Leasing employees is different from using temporary workers in that it generally refers to a situation where a third-party business "employs" your staff — including doing payroll withholding, administering benefits, etc. — and you pay them a fee plus expenses to do it. In many cases the leasing agency simply takes over your existing staff of permanent employees, and there's little change in the actual makeup of your staff. Leasing is usually not an option for the one- or two-person shop, since most employee leasing companies aren't interested in such "small fry." But if you have at least a dozen employees and you don't have the time or expertise to be a human resource manager, leasing might work for you.

Leasing is not an "out." In many cases, a temporary worker or leased worker will be considered an employee for purposes of employment laws and benefits requirements, so it may not make sense to lease employees in hopes of avoiding or circumventing these requirements. Usually, if you have a great degree of control over a worker's work and how and when it is performed, you will be considered the worker's common law employer.

However, because the leasing companies aggregate the employees of many companies in negotiating for health insurance, pensions, etc., you can sometimes provide more benefits at a much lower cost. Also, the leasing company can achieve economies of scale in hiring, doing the payroll, and keeping records on all these workers, so their fees for performing these services might be lower than what you'd pay to do it yourself.

If you're interested in leasing your workforce, consider our steps to successful employee leasing.