Staffing Management

Essay samples




Thompsonand PEO should come up with an agreement for transferring regularemployees to contract labor. Firstly, before transferring a regularemployee to a PEO, the agreement should clearly define the entireexpectations and responsibilities for both parties. In addition,Thompson should understand that the employees are no longer hisemployees, but PEO employees after the transfer (Chalmers and Kalb,2001). He should also conduct intensive research about the PEOs toensure it abides with the state regulations. Currently, many statesrequire PEOs to be registered and licensed by the state. Secondly,Thompson and PEO should agree on the circumstances in which they canhire or fire an employee. They should agree on their ownresponsibility when such a situation arises. The other agreement thatthey should make, is the right to control and direct employees.Thompson should deal with the contract management of employeesrelating to manufacturing, production, and delivery of products andservices. On the other hand, the PEO should handle the HR managementand compliance that deals with employment laws.

Itis also prudent for Thompson to allow PEO to handle all the Humanresource functions for the leased employees. For instance, PEO shoulddeal with issues of tax withholding, workers, compensation insurance,payroll, and benefits, and issues of unemployment (Myrna, 2012). ThePEO should have the mandate to pay employees their salaries andwages, as well as deduct taxes from their accounts. It should also beresponsible for reporting, depositing, and collecting employmenttaxes with the federal agencies and state government. Further, thePEO should be given the responsibility to maintain records of its ownfunctions and notify employees of their changed status from Thompsonemployees to PEO employees.

Further,the Thompson should ensure PEO compliance and safety standards are inalignment with the Thompson requirements. Thompson should have theresponsibility to manage any training conducted by PEO that isrelated to the Thompson or to the leased employees. On the otherhand, the PEO should be mandated to produce employee manuals.However, Thompsons should come up with the information to beincluded in the manuals such as the company information,communication systems, building access, dress codes, parking areas,safety policies, dress codes, company culture and conduct, andnon-disclosure agreements (Chalmers et al. 2001).

Finally,the agreement should clearly define how the PEO would compensate forthe services surrendered by the Thompson employees. In some nations,some PEOs charge according to the payroll whereby they charge a smallamount of the payroll while others deduct a flat fee per employee inregardless of their salary (Myrna, 2012). Therefore, Thompson and PEOshould reach an agreement that will favor the two parties.Additionally, the agreement should clearly outline the responsibilityaspect since the leased employees do not belong to one agency.Accordingly, every agency should have responsibility over theemployees and their working conditions.


Althoughthe engineering employees were told they are independent and theycall themselves independents, they are not as independent as they maythink (Myrna, 2012). However, there are advantages for Thompsontransferring some of his employees to PEO. Unfortunately, theengineering staff are referred as independent contractors while theyare ordinary employees. Thompson uses the word independent eventhough he is sure that those employees do not fall under independentcontractor’s criteria. On the contrary, the PEO is stillresponsible for their payroll taxes. Most of employees go unpaid fora long duration of time, even up to three years.

Further,employees do lose their independence after the loss of control duringtransition by their employers. This occurs when the employees fromengineering department are shifted from Thompson employees to theleased employee of PEO. Eventually, the employees are managed by twoindependent parties. Thompson loses the ability to control theirtotal compensation because of the process of transferring theemployees. Unluckily, only the PEO can decide the amount that theleased employees can be paid (Chalmers et al., 2001). Thompson doesnot have any control over the benefits his employees receives. Inother words, the leased employees are not eligible for the samebenefits that they enjoyed when they were just regular employees.

Inaddition, the leased employees’ status cannot trigger theiremployer’s obligations under the state and federal law as itapplies to independent contractors (Myrna, 2012). This is a sign toprove that leased employees are dependent. The responsibility ofclassifying an employee only falls on the hands of their employers.There is no definite law that defines a worker as dependent orindependent contractor, since employment conditions are alwaysvariable. Unfortunately, the more an employer has control over his orher work, the more the possibility that the worker is a dependentemployee as opposed to being an independent contractor. Similarly,when an employer has both employees and independent contractorsworking together, it is challenging to classify them either asdependent or independent.

Somerisks are associated with the change in employee classification whenThompson transfers them under the power of PEO. At first, it wascomplicated for Thompson to outline the employees that are eligiblefor the change and those who are ineligible. Thompson ended upregarding the regular and permanent employees as eligible whereas thetemporary, part-time and seasonal employees as ineligible (Myrna,2012). To minimize this risk, Montgomery should make sure that thecontract agreement between Thompson and PEO clearly outline theresponsibility of each party.


Chalmers,J., &amp Kalb, G. (2001). Moving from unemployment to permanentemployment: could a casual job accelerate the transition? AustralianEconomic Review,34(4),415-436.

MyrnaL. G. (2012). Thompson Technology: A Case Study in Controlling LaborCosts Scenario: Moving Employees to a PEO. Societyfor human Resource management.