Sign a written lease agreement with a leasing company. Among other things, such an agreement should provide that:
- the leased workers are the leasing company’s employees
- the leasing company is responsible for paying the leased workers’ wages and withholding and paying all state and federal payroll taxes, including unemployment compensation
- the leasing company will provide the leased workers with workers’ compensation insurance, and
- the leasing company will indemnify you—that is, repay you—for all losses you might suffer as a result of its failure to comply with any legal requirements, including the costs of defending against charges of alleged violations. For example, if the leasing company fails to withhold and pay employment taxes, it will pay any IRS assessments and penalties and your legal fees incurred in defending yourself against the IRS.
The agreement should also provide that the leasing company has the sole authority to hire, fire, schedule, supervise and discipline the leased workers. (See Leased Workers’ Employment Status, above.)
Most leasing companies have their own lease agreements. It’s wise to have an attorney review any leasing agreement before you sign it.