When it comes to your company’s workforce there are many options and strategies from which to choose. These range from traditional in-house recruitment for permanent staffing to more flexible options such as temporary hiring or contract staffing. Another popular HR strategy many companies choose is employee payrolling through a third-party HR services company. If you’re not familiar with the concept of employee payrolling, a brief definition of terms might be in order.
What exactly is Employee Payrolling?
Employee payrolling is a process whereby an outside company serves as the “employer of record” for some or all of your company’s employees. In this way, you can recruit the specific employee you want to hire and then have the employee payrolling company take over from thereon. For the most part, this means that employee and employer liabilities attach to the payrolling company, not your company. All of the legal responsibilities that typically fall on the employer now fall on the employee payrolling company instead of your own. Companies often use employee payrolling to hire professional-level employees for some of their short-term assignments or for evaluation purposes.
Some examples would include:
- Individuals for specific/special projects
- Individuals who are being evaluated/considered for full-time work
Typical Responsibilities of the Employee Payrolling Company
- Payroll taxes such as FICA, FUTA, and SUTA
- Workers’ Compensation fees
- State and local taxes and fees
- Health Insurance
- 401K plans
- Flexible Spending Accounts
- General liability insurance
How Payrolling Employees Helps your Business
Many companies enjoy the flexibility of using a temporary on-demand workforce, enabling them to adjust quickly to an ever-changing economic landscape. However, creating such a workforce in-house carries with it a range of associated issues such as properly classifying your employees and protecting your company from potential liability and tax and regulation-related issues. By using an employee payrolling company, you can avoid many of these potentially costly headaches, saving you from the administrative cost, burden and risk of adding to your in-house payroll headcount. New state and federal laws and regulations concerning payrolling are frequently changed or added to every year. To help illustrate this point this link provides a very small sampling of some typical entry-level online courses for just a few of the functions involved with benefits & payrolling.
Some Benefits of Employee Payrolling
- Your company is protected from liability
- You save the administrative costs, burdens and risks of in-house hiring
- Government-mandated compliance and taxes are taken care of
- You can still personally identify, screen and select candidates
- Payrolling can be a temporary solution during a trial period of employment
- A specific component of your workforce may work best with this arrangement
Does Employee Payrolling Make Sense for your Business?
If you would like to know more about the unique advantages that employee payrolling can provide your company please contact our staff at TPG HR Services. We would be happy to walk you through the costs and benefits of this process and help you decide if employee payrolling is the right choice for some or all of your company’s workforce.