Winter, 2008 Newsletter

Payrolling Contract Staff

If your business uses contract or temporary staff, you may wish to consider payrolling these contractors through a staffing agency. Most businesses are familiar with using a staffing agency to recruit contract staff; however, less well known are the benefits of having a staffing firm payroll a contractor that you have found on your own. With companies today focusing closely on the bottom line, payrolling contract or temporary staff can be an appealing option to minimize recruiting expenses while maintaining optimal staffing levels..

Payrolling Opportunities

Does your company lack the in-house expertise to complete important projects under tight deadlines? Does your firm need talented staff to cover an employee’s extended leave? Regardless of the staffing challenge you face, if you have identified — through employee referrals, prior employees, networking or other sources — a great candidate who can help you meet this challenge, payrolling this candidate can be advantageous.

Retired or retiring staff present another opportunity for payrolling. In many instances companies are finding that they still need the technical expertise that retiring employees provide, and retirees are finding that they would like to remain working, even on a part-time basis.

In each of these situations — and many others like them — you don’t need a staffing firm to recruit for you; however, you would like to avoid the administrative burden as well as the tax and insurance liabilities of bringing this candidate directly onto your payroll.

Benefits of Payrolling Temporary Staff

There are several compelling reasons to consider payrolling temporary staff through a staffing agency:

• Protect against the risk of misclassifying temporary workers. The IRS has been examining 1099 relationships with increased scrutiny for several years now. If the IRS determines that a worker was treated as a 1099 contractor but is truly a common-law employee, your business potentially faces stiff fines. As there is only a very narrow set of circumstances wherein a worker may correctly be classified as a 1099 contractor, you may wish to consider payrolling as an alternative. Here, the agency is the Employer of Record and therefore the risk of misclassifying the worker is mitigated. The agency is responsible for calculating, deducting, and paying all federal and state taxes; paying the employer portion of FICA and Medicare; paying worker’s compensation insurance; and paying unemployment insurance.
• Avoid insurance claims. As a W-2 employee of the agency, the temporary worker is covered by the agency’s workers compensation policy and unemployment insurance (UI). Any claims for benefits under either category are handled by the agency, not your company. Also, unemployment claims adversely affect the agency’s UI tax rate, with no affect whatsoever on your company’s UI tax rate.
• Reduce administrative and overhead costs. Add temporary staff without the paperwork burden and overhead factors that hinder profitability.
• No fee for converting the worker to your payroll at any time. If you decide to extend an offer of direct employment to the temporary worker, there is no fee due to the agency. (This is Triad Engineering’s policy — if working with another agency, please inquire as to whether this is also their policy).

Triad Engineering Corp has specialized for almost 40 years in helping our clients fill their technical staffing needs on a contract, contract-to-direct and direct hire basis. We also have more than 15 years experience payrolling contract staff for our clients. Triad is locally owned and operated, with a large network of qualified engineering professionals throughout New England. Please contact us at 781-273-1880 or visit www.triad-eng.com for more information on how we can help you achieve your technical hiring goals.