Third Party Payroll: a great idea for Summer Interns
It’s summer time and the livin’ is easy. Yes, those are the lyrics to the famous Ella Fitzgerald song, but it’s also a common theme among employees that want take a summer vacation from their job. In fact, many companies bring on summer interns to share the workload and provide a work-life education.
Summer interns are a great tool to maintain office productivity to let you take that vacation. One thing many companies don’t realize is that summer interns must be paid an hourly wage according to federal and state payroll tax guidelines. You can’t get something for nothing.
Other employers hesitate to use summer interns because when they do decide to pay to play and comply with the law, they hire the intern and on board them on the company’s full time staff payroll. This scenario can frustrate the CFO and Human Resources department. Summer interns who are directly employed will add to the overall company headcount. The employment of interns can also complicate monthly full time employee (FTE) census reports. The impact could cost throw off discrimination testing for retirement plans, add additional payroll processing costs, and simply just increase employee risks and exposure with regards to workers compensation insurance premiums.
A popular tool to alleviate such employer risks is to offload or outsource the summer interns to an employment agency that provides third party payroll solutions. With this remedy, the summer interns can still be retained, but the intern becomes the employee of the employment agency. The employee or intern is simply transferred to the employment agency and the agency takes on the official employer of record. The employment agency also act as a W-2 employer and deduct state and federal taxes as well as insure the employee (workers compensation and liability).
A good employment agency will understand compliance issues, co-employment, workers compensation risks, and payroll laws. When selecting a third party payroll solutions partner, make sure the company is financial solvent. After all, they are extending payroll on your behalf. Also, inquire about the employment agency’s employee benefits offerings. Health benefits and 401k retirement plans will increase summer intern retention if applicable.
Overall, summer interns are a great way to maintain productivity. An easy way to get the process going smoothly and quickly is to partner with an employment agency. Why not let your trusted staffing adviser handle the compliance?