Contractors often use workers other than their own employees. Common practices involve using leased workers or temporary staffing. Contractors have different obligations depending on who they hire.
What is worker leasing?
Worker leasing is an alternative for contractors (and other employers) to manage the administrative functions of their workforce. Contractors may enter into an arrangement with a worker leasing company that hires workers, perhaps even the same workers the contractor already had, and leases the workers to the contractor under a contract for a fee. Worker leasing companies take on the responsibility of payroll, employment taxes and assessments. They may also offer workers’ compensation insurance, retirement options and medical benefits.
What is the difference between worker leasing and temporary staffing?
Leased workers are provided by a worker leasing company. A worker leasing company is licensed by the Department of Consumer and Business Services (DCBS). It provides non-temporary workers under a contract and for a fee.
In contrast, a temporary service provider provides workers “on a temporary basis.” A temporary service provider is not licensed by DCBS.
Temporary workers are for special situations. These are the following.
- Employee absences.
- Employee leaves.
- Professional skill shortages.
- Seasonal workloads.
- Special assignments or projects.
- The positions terminate when the special situation ends.
Temporary staffing requires written documentation. It must do the following:
- Indicate the duration of the work.
- Establish that the work is for the special situation.
Without written documentation, all workers are presumed to be leased workers.
Who is responsible for providing workers’ compensation?
Worker leasing companies often provide workers’ compensation for both the leased workers and the contractor’s employees. Alternatively, the contractor may provide coverage for both. In either case, one policy must cover all workers.
A contractor using temporary staffing may have its own workers’ compensation policy to cover its regular employees. The temporary staffing provider usually provides workers’ compensation for the temporary workers.
Is a contractor with leased workers exempt or non-exempt?
The Construction Contractors Board (CCB) classifies contractors as “exempt” or “nonexempt.”he Construction Contractors Board (CCB) classifies contractors as “exempt” or “nonexempt.” A contractors that uses leased workers is nonexempt.
What information must a contractor with leased workers supply for its license?
Ordinarily, nonexempt contractors must supply the following information when applying for a license:
1. Workers’ compensation insurance carrier name and policy number or WCD compliance number (if self-insured);
2. Oregon Employment Department and Oregon Department of Revenue combined business identification number (BIN); and
3. Internal Revenue Service employer number or federal identification number (EIN).
Nonexempt contractors that use leased workers (and have no other reporting obligations) do not need to supply the BIN or EIN. The worker leasing company will handle the payroll reporting for the workers. The contractor may supply its own worker’s compensation insurance policy number or that of the leasing company, depending on which is providing coverage.
For more information about workers’ compensation policies, worker leasing and temporary staffing, contact the Workers’ Compensation Division at 503-947-7815. The division maintains a list of actively licensed worker leasing companies on its website.