Up until now, the user company has had to still operate the payroll for the employees that they leased. All that has changed, and the leasing company can take over payroll, deducting tax and meeting other obligations. But the client company will still control the employees and be their common law employer.
To be an approved leasing company, or CPEO, a company must obtain IRS approval. They must be open to inspection, pay a bond and report quarterly on their activities. There must also be a contract between the CPEO and their customer.
"Establishing a single, approved type of agency for handling staff leasing will," according to Robin Chater, Secretary-General of the Federation of International Employers (FedEE), "go a long way to driving out shady "middle-men" that often exploit immigrant workers on behalf of even major companies. It will now be down to HR professionals to ensure that their companies only lease workers through registered CPEOs."
Section 7705(f) of the regulations obliges the IRS to reveal details of all registered CPEOs and those that have had their licences revoked.
(Source: The Federation of International Employers)
