What Is a Rent-an-Employee?
A rent-an-employee is a person hired by a business as a pretend member of staff. Companies pursue this strategy of recruiting fake workers for a short-term period or one-off event to fool others into believing that they are fully-staffed, busy, and otherwise prosperous.
Rent-an-employees are sometimes used when an important client is coming into the office and the company does not want to come across as struggling. The goal is to instill confidence in the client and give the impression that many other clients have also chosen them for their services.
- A rent-an-employee is a business strategy that involves a company hiring fake employees.
- These individuals are usually actors, staged to create an illusion that it's busy and prosperous.
- A fully-staffed office can make the difference when closing important sales, giving prospective clients the impression that the company's services are in demand.
- Similar efforts such as rent-a-crowd can give the illusion of success or popularity even when it does not actually exist.
- Though not illegal, hiring rented employees may be considered unethical.
Understanding a Rent-an-Employee
Rent-an-employees are contracted to create the illusion that a business is fully staffed and thriving. These services are usually provided by staffing or specialized casting companies in return for a fee.
Rent-an-employee shares many characteristics with the rent-a-crowd phenomenon that is currently sweeping the world. In recent years, it has become increasingly common for businesses and politicians to hire a group of people to simulate broad public interest or support in, for example, a grand opening of a new store or a political candidate or movement.
Rent-a-crowd and rent-an-employee are both used to create the illusion that something is more successful and popular than it actually is. The difference between the two is that one focuses on hiring groups of people as spectators while the other expects recruits to take on the role of employee.
Fake staff are required to appear competent and at ease in the jobs they've been commissioned to do, despite perhaps not having any prior experience in the sector or having the time to meet and acquaint themselves with any of their new pretend colleagues. Consequently, these types of tasks are mainly reserved for and generally best suited to professional actors.
As is the case with rent-a-crowds, it's also likely that recruits will be asked to sign a non-disclosure agreement (NDA) to protect the client's anonymity and prevent the embarrassing revelation that they were paid to put on an act from coming to light.
Benefits of a Rent-an-Employee
Rent-an-employees are often used to impress prospective investors or buyers. A fully-staffed office can make the difference when closing important sales, giving clients the impression that the company needs numerous employees because its services are in demand and it receives lots of business.
If, on the other hand, prospective clients were to walk into a building that's deserted, they might have second thoughts about the track record, credibility, and prosperity of the company.
Criticism of a Rent-an-Employee
While there is nothing against the law about hiring rent-an-employees to fill empty seats or pretend that a company is larger or more successful than it is, such a practice may be considered unethical. These workers are not meant to perform tasks or work on projects that produce income; their sole purpose is to trick potential customers into believing that a company is sound.
Donald Trump's 2015 presidential campaign launch employed a rent-a-crowd, with his campaign hired actors to simulate public support for his candidacy and cheer enthusiastically—at $50 a pop.
Rent-an-Employee vs. Leased Employees
The term rent-an-employee should not be confused with rented or leased employees. Sometimes, businesses might require a short-term boost in workforce numbers to handle a one-off or occasionally recurring busy period of trading.
Companies that want to quickly staff up without taking on the usual administrative burden that comes with hiring workers may reach out to a professional employer organization (PEO) to provide them with a batch of skilled people to work on an assignment. In such circumstances, the employer is simply required to manage the workers and write a check. The PEO would then be responsible for handling everything else, including payroll, taxes, health benefits, insurance, pensions, and other employee benefits.
Is Employee Leasing Legal?
A leased employee, such as a contractor or temporary (temp) worker is perfectly legal. Even rented employees, paid actors who simply fill seats without fulfilling any other real purpose, are legal.
How Are Rented Employees Reported on Taxes?
Because they are not actual employees of the firm (and do not do any actual work as a temporary worker does), rented employees are considered to be expenses.
Are Leased Employees Considered Employees for a PPP Loaj?
No. Temporary workers and contractors are not considered for a payment protection plan (PPP) loan, since contractors are technically their own entity and temps are employed by an agency.
Do Leased Employees Qualify for a 401(k) Plan?
Typically, only full-time employees are eligible for a company's 401(k) plan. Sometimes, however, leased employees can become eligible if they meet the following criteria:
- They must work primarily at the direction of the company leasing them.
- The leased employees work on a substantially full-time basis for more than a year with the leased employer.
- There is an agreement with the leasing organization.