This section discusses the aspects of the law that specifically apply to staff leasing companies.

"Staff Leasing" is a term used by the Tax Department to denote a relationship whereby one legal entity supplies labor to another legal entity on a continuing basis for a fee.

Staff leasing in Texas is governed by the Staff Leasing Services Act. This Act governs staff leasing companies in Texas and is the basis for how the Commission handles staff leasing companies. The Texas Department of Licensing and Regulation (TDLR) administers the Act including the licensing of staff leasing companies.

The Staff Leasing Services Act defines staff leasing services as "an arrangement by which employees of a license holder are assigned to work at a client company and in which employment responsibilities are in fact shared by the license holder and the client company, the employee's assignment is intended to be of a long-term or continuing nature, rather than temporary or seasonal in nature, and a majority of the work force at a client company worksite or a specialized group within that work force consists of assigned employees of the license holder."  

The Commission was at odds with the concept of staff leasing for many years. The Tax Department maintained that the client company, rather than the staff leasing company, was the employer. The Tax Department required workers' wages to be reported under the client's TWC account number. The staff leasing industry disagreed. The staff leasing industry asserted that the staff leasing company was the employer and that workers' wages should be reported under the leasing company's TWC account number. Effective September 7, 1989, Rule 815.33 was enacted to aid in determining the correct employer. This was in effect until the Staff Leasing Services Act was enacted on September 1, 1993. The TWC state office status section works together with the Texas Department of Licensing and Regulation to determine the legality of a staff leasing company under the provisions of the Staff Leasing Services Act.

Staff leasing companies are not the same as temporary help agencies.

A staff leasing company:

A temporary help agency:

If a staff leasing company applies for a license to operate in Texas TDLR will conduct a background investigation of the staff leasing company and its "Controlling Persons". Controlling persons are people or entities associated with the staff leasing company. A controlling person need not be only an individual. Sometimes, a controlling person is a corporation. An all circumstances, TDLR will detail who is under investigation.

Under current state law, a staff leasing company must be licensed with TDLR to be recognized as the employer. Staff leasing companies, which have applied for a license may not report client wages to the Commission. The TWC Office of General Console has determined that “unlicensed” means without a valid license and only licensed staff leasing companies can act as employer and report wages. Therefore, if a staff leasing company does not have a valid license, their client(s) are responsible for reporting employees under their own TWC account number. If a staff leasing company applies for and is denied a license, the clients will be held responsible for reporting wages and paying taxes to the Commission.

Upon notification of license denial by TDLR, State Office/Status will contact the affected leasing company and each of their clients. Unless a client switches to a licensed leasing company, they will be expected to report under their own account number.

A staff leasing company should not be treated as the successor (total or partial) to one of their clients. It is permissible, however, for one staff leasing company to acquire another staff leasing company. In this situation, the successor staff leasing company can be considered the successor (total or partial).

A Client List (Form C-3020) is a quarterly survey sent to staff leasing companies. The form, which is required by state law, solicits the name, address, number of employees, and total quarterly payroll amount from the staff leasing company, for each of their clients.

The Status Section and LMI use Client Lists to record the activities of staff leasing companies. LMI sends staff leasing companies Form C-3030 each quarter. Each staff leasing company is required to complete and return the form on or before the end of the month following the close of the quarter.