Only One Part-Time Employee? Maybe Consider Subcontracting Instead

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  • Sometimes, it's better to use an outside staffing agency for people you already want to hire

  • Often it costs the same and can save a manager time by hiring a person through a staffing agency (even when you have a person you want to hire) than it is to hire them directly

  • It's easier to dismiss people that are employees of a staffing agency than for people who are direct employees

On occasion, I talk to small business owners that has or wants to hire only one person for part-time work, and the hours are highly limited and amounts to less than 20 hours per week. Usually, it's because the employer wants workers' compensation insurance or payroll services from me. As much as I like to generate new revenue, my first objective is to serve the client and that means suggesting an alternative that doesn't include buying from me. While it may appear "dumb" to illustrate a strategy that eliminates the need to get workers compensation, unemployment insurance, or payroll processing software/service.

Sometimes, it makes more sense to not hire the person and have the person performing through a sub-contracted relationship using a third-party employer AKA staffing agency. Before you dismiss a staffing agency, hear me out on why it may make sense. For clarity, a temp agency, staffing agency, and employment agency all have the same meaning. While the terminology can differ, the important characteristic is they all hire people that are placed with other companies, and all are viable places to call to gain more information to decide from.

First things first. If you already have an employee selected, and you simply call staffing agencies asking what it will cost for a certain type of working that is receiving X amount of pay, they'll give you an amount that includes the pay, the federal, state, and local withholding, unemployment insurance and workers' compensation insurance all rolled up into one price. The best thing is, if you bring the employee to the agency, their only cost is the administration of the payroll.

Because one part-time employee won't (be definition) provide economy of scale for you, it's often about the same price as hiring someone directly after all hard and soft costs are factored in, albeit the amount of time saved along with penalties and fines for the ad nauseam regulations that must be followed make it very attractive for many.

This may come as a shock, albeit it's quite easy to ask an employment agency to add a designated employee for your part-time requirements. I recommend calling a few to get the best price and terms.

Another factor that usually isn't thought of, AND can make a massive impact on your bottom line is the type of retirement program you have. Many of the best options require that employees have access to the same program you and your spouse are using. By having even a full-time person subcontracted using an employment agency can make sense if you're trying to shift profits from payroll and payroll expense into retirement funds. If a person is a subcontracted staff member, they'll have access to the retirement funding from the employment agency and NOT access to one that you may want to be "overly" generous with because the money is flowing into your retirement.

The other advantage is you have greater flexibility in releasing the person. For example, if it doesn't work out for whatever reason down the road, fears of discrimination don't exist, or do they?  

Many companies contracting with staffing agencies believe they can hire "only females," or "only males," or any ____________(pick a class) because THEY'RE not the ones "hiring," they're simply contracting for staff through the actual employer (staffing agency). That's a mistake, and state and federal law can punish those that believe they found a workaround for discriminating against a protected class.

That said, as a general rule, it is easier to let dismiss someone that's from a staffing agency if for no other reason than you can call the staffing agency and let them know that so-and-so doesn't need to return, which for many managers is a whole lot easier than telling someone to their face that they're no longer needed.

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