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Renters' Rights

A co-employer can relieve you of a load of paperwork-but watch out for these legal traps.

This story appears in the March 2001 issue of Entrepreneur. Subscribe »

Interwest Insulation of had 16 employees-enough to require a raft of paperwork but not enough to justify a human resources manager to take care of it all. And like many small businesses, Interwest couldn't afford to offer its employees big-league benefits. So Interwest turned to an employee company.

Owner Scott Sonners entered into a contract with Barrett Services Inc. in which Barrett hired almost all of Interwest's employees, including Sonners himself, then leased them back to Interwest. The two companies became joint employers. The employee leasing agreement stated that the workers would be employees of Barrett for certain purposes, including hiring, discipline and firing, payroll, benefits, and workers' compensation insurance. Interwest would retain control of the business side of employee issues and follow Barrett's instructions on such matters as workplace safety. Under the new arrangement, safety improved and so did . Sonners was able to concentrate on the business of his company rather than on keeping track of employee paperwork.

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