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How is it legal for employers to contract out employees in the US?The way law works, everything is legal unless there is a law against it. You don't have to seek legal permission to do anything, as long as the thing you're doing doesn't violate a law you can do whatever you want.No laws happen to have been passed that would prohibit any of the things these companies are doing, particularly not the underlying service of one business billing another business by the hour, day, month, or year for assigning a specific employee of the first business to perform services at the direction of the second. The first company is careful to honor all of the employment-related laws that are in place with respect to things like pay, insurance, and avoiding discrimination. The second company, in turn, is shielded from a lot of HR-related functions and legal liability because the person is an employee of the first. That's part of what they are paying for.
How much paperwork does an employer have to fill out if an employee quits without putting their two weeks in?Generally an exit interview is required to return company's items including but not limited to software. Hardware, passwords, company cars and more. The Dept head should sign as well as all the way up the ladder until human resources is satisfied with a clean break of employment