The different types of companies using wage portage agencies
Currently, approximately 180,000 small and medium-sized enterprises use wage portage. They are responsible for the employment of approximately 3.4 million people. About 15% of small businesses, with between 10 and 99 employees, also work with such agencies.
Small and medium sized businesses use wage porting agencies so that they do not have to deal with all the legal complications of having their own employees. However, large companies also use wage portage agencies to manage their administrative tasks. These agencies can work with the company's internal human resources department.
Various industries use wage porting agencies, including small manufacturers and small service providers. High-tech companies, mechanics, engineers, plumbers, retailers and even doctors also work with them.
What services are provided by wage portage agencies?
Wage portage agencies provide a host of services. These services are included in the agreement between the agency and the host organization. The services offered may include :
- Benefits Administration
- Human Resources Services
- Tax administration
- Regulatory Compliance
- Legal Support
Wage portage agencies may offer additional services, such as recruitment services and immigration assistance for international employees.
How does a wage portage agency work?
A host company uses the services of a wage portage agency, often entering into a written contract with the agency detailing the scope of services provided.
The agency employs workers on the site of the host company. It is the official employer, recognized in the United States at the national and federal levels and recognized in other countries as the legal employer.
As a legal employer, it is generally responsible for withholding taxes, paying unemployment insurance taxes and workers' compensation coverage.
The wage portage agency is generally responsible for paying employees' wages, collecting employment taxes and filing taxes with the relevant tax authorities. In addition, it often provides human resource services and benefits administration.
During this time, the host company takes care of the day-to-day management of the employee. The employee may work in production, manufacturing, product development, sales, marketing or other positions. In this arrangement, the agency focuses on employment-related issues, while the host company is responsible for business operations.
Why do companies use wage portage agencies?
Companies are turning to agencies to outsource their human resources services. Many small and medium sized companies want to focus on their business rather than on regulatory compliance or tedious administrative tasks.
As businesses grow, their owners often don't have the time to focus on training, payroll, accounting and regulatory compliance. Agencies are proficient in these tasks and can employ cost-effective methods to save time and money. In addition, they can help businesses minimize risk.
The use of an agency can replace or augment an internal human resources department. In addition, some agencies provide a technology or service infrastructure.
Advantages of using a wage portage agency
The use of a wage portage agency provides a myriad of benefits to employees and employers. Businesses use wage portage agencies for the following benefits:
The employment index for small businesses shows that since the end of 2004, small businesses using wage porting agencies have grown by more than 7% more than small businesses that do not use agencies.
Lower employee turnover rate
Firms that used wage portals for at least four quarters had employee turnover rates 10 to 14% below average.
More likely to stay afloat
Small businesses that face significant challenges go bankrupt. Firms that used agencies were 50% less likely to fail.
Wage portage agencies focus on the administrative tasks of a company. They are familiar with local laws and can therefore help the company stay in compliance and avoid bureaucratic hassles. This allows the host company to devote more time to its activities and to improving its productivity and profitability.
Because the wage portage agency is the employer of record and tends to hire many more employees than small businesses, it can generally offer employees better benefits, such as health, dental and life insurance, dependant care and retirement. Depending on the agency and the host employer, additional benefits may be available. These include dependent care, adoption assistance, educational benefits and employment counselling.
Agencies apply best practice in managing administrative costs, which reduces employment costs. In addition, lower turnover prevents employers from spending more money on training and recruitment efforts. Administrative costs are about $450 less for each employee when using an agency. In addition, they are familiar with federal and national requirements and can keep a company in compliance and can help the company avoid fines and other penalties resulting from a violation of the regulations.
How do I find an agency?
Many companies rely on an agency to cover their human resources needs. They recognize the many benefits that an arrangement with an agency can offer. If you are interested in looking for an agency, do this:
- Evaluate your business and determine your human resources needs.
- Ask for references from other companies or other players in the sector.
- Interview potential wage portage agencies. Find out if the agency can meet your needs. Find out about their certifications and licenses and make sure they meet the requirements of your state or country. Find out about the agency's work experience.
- Ask potential agencies how benefits are managed. Determine whether the benefits offered to employees by the agency will help attract and retain talent. Find out if it is fully insured.
- Ask for referrals from the wage portage agencies.
- Consult the agency's service contract. Review your responsibilities as host employer and the agency's responsibilities. Make sure that the agreement with the wage portage agency is flexible enough to meet your needs, so that you can increase or decrease the requirements according to your company's needs.