THE BACK OFFICE: Converting the Temps Into a Permanent Solution

Back-office staffs are usually hit hard when banks merge. But after the pink slips are handed out, banks sometimes find they need more expertise than they're left with - but are loathe to rehire full-time employees.

One solution is to retain skilled temporary workers to handle conversions and other big projects. But Irene Cohen cautions that if those independent contractors stay on long enough at the bank, and take on permanent responsibilities, it can attract the attention of the Internal Revenue Service. Under ERISA, it's illegal to move long-term workers from job to job, or to lay them off to avoid offering benefits.

Enter Corporate Staffing Alternatives Inc., a kind of outsourcing firm for longer-term temporary workers. New York-based Corporate Staffing becomes the employer of the formerly independent contractors. The firm, which handles payroll and other administrative tasks, provides employees benefits, including medical coverage and 401(k) plans.

"CSA allows banks not to worry about having to release employees after a 1,000 or 1,500 hours, when they start looking like bank employees," said Ms. Cohen.

Corporate Staffing won't disclose its list of bank clients, who apparently fear inviting an IRS audit. But Ms. Cohen said about 200 of the company's employees now work in banks. Most of those are technology-related jobs paying $50,000 to $200,000 a year. Corporate Staffing receives a flat- fee for each employee, unlike most temporary agencies that charge a percentage of each paycheck.

Ms. Cohen concedes one hitch is getting workers to accept the idea that they will be employees, and not independent consultants or entrepreneurs.

"You have the problem of the ego of the person who wants to be in his own business," she said. "They are more concerned initially about the fact that they are not considered self-employed."