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2003 SPECIFICATIONS

SECTION 107

EMPLOYEE LEASE AGREEMENTS

Contractors today sometimes utilize “temp” services, or employee lease agreements for a portion of their staffing. Hence the question arises:

When a contractor or subcontractor enters into an agreement with a firm to lease employees, does this constitute a subcontract and, thus, be subject to the 30% subcontract limitation?

ANSWER: Employee lease arrangements are acceptable for Federal-aid projects if the leased employees are under the direct supervision and control of

the prime/sub contractor's (i. e., leasing contractor’s) superintendent

supervisor. contractor’s

Leased employees may be considered to be "own organization" and not a subcontractor if:

part

of

the

and/or leasing

  • (1)

    The leasing contractor maintains control over the supervision of the day- to-day activities of the leased employees;

  • (2)

    The leasing contractor remains responsible for the quality of the work of the leased employees;

  • (3)

    The leasing contractor retains all power to accept or exclude individual employees from work on the project; and

  • (4)

    The leasing contractor remains ultimately responsible for the payment of predetermined minimum wages, the submission of payrolls, statements of compliance and all other Federal regulatory requirements.

The key issue is supervision and control of any leased personnel. If the leased personnel are treated as employees of the leasing contractor, and would be considered as such but for their actual employment by a leasing agency, then for purposes of 23 CFR Section 635.116(a) they should be considered employees of the leasing contractor's organization.

Payrolls submittted by the firm leasing personnel to a prime/sub contractor (leasing contractor) should contain a statement to the effect that “the payrolls for this time period are in addition to the certified payrolls submitted by the leasing contractor (insert name) for this time period”. The firm leasing personnel to a

prime/sub contractor subcontractor box on

should not their payroll

check form.

either the prime contractor or The prime/sub contractor (leasing

contractor) must submit copies of these review in the same manner as payrolls for

payrolls to employees

the Resident Engineer it directly employs.

for

FIGURE 107-3A

Page 100-56A

2-14-05

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