Ordinarily, the employer of a worker is the organization for which the employee performs services. However, there are situations where the organization receiving the benefit of the worker's services is not considered to be the employer for Colorado unemployment insurance tax purposes. This includes an employee who performs services through a temporary-help-contracting firm, employee leasing company, or an agricultural crew leader. There could also be situations where it is unclear who is employing a worker.

Employee Leasing Company, Co-employers, or Temporary-Help-Contracting Firm

A worker can have two employers for the same services when paid by a temporary-help-contracting firm or employee leasing company and performing services for a worksite employer. The temporary-help-contracting firm or employee leasing company and the worksite employer are called coemployers.

An employee leasing company or a portion of any business that meets the following two conditions is considered to be in the business of employee leasing:

1. Provide services to a worksite employer under a written contract which provides that it will procure or receive responsibilities for specified employees of a worksite employer.

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2. Designates itself as the employer of such employees and retains the right of direction and control of such employees with regard to such responsibilities with the intent to employ the specified employees on a long-term basis and not assign the employees to a series of limited-term assignments.

Such responsibilities include the right to:

Assign employees to the worksite employer's locations.

Set the employee's rate of pay.

Pay the employee from its own accounts.

Discharge, reassign, or hire employees for the worksite and itself.

Report, withhold, and pay any applicable taxes with respect to the employees wages.

Aggregate all employees for the purpose of sponsoring and administering workers' compensation plans, and any employee benefit plan.

Maintain employees' records.

Provide programs such as professional guidance including employment training, safety, and compliance matters.

Address complaints, claims, or requests related to the employees.

Such specified employees must know and consent to the staffing contract.

Since temporary-help contracting is characterized by a series of limited-term assignments of an employee to other organizations, it is not considered to be employee leasing. However, a portion of a temporary-help-contracting firm's business can be considered as employee-leasing activity if that portion of the business meets the above two conditions.

If a business engages in employee-leasing activity and fails to file the reports or taxes due to the Division, the worksite employer becomes liable for the reports and taxes due for the employees who performed service for them. The worksite employer is not liable when contracting for temporary help. For this reason, it is important for worksite employers to be aware of potential liability for unemployment taxes when contracting for leased employe