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About Debbie Fledderjohann
Recognized as the industry expert for technical, professional and healthcare contract staffing since transitioning to this growing industry in 1993. The primary focus is to help recruiters make contract placements. Top Echelon Contracting takes responsibility for all the back-office tasks associated with being the legal employer of record. Experience includes all areas of human resources, financial management, accounting, payroll, state and federal laws, legal contract reviews, benefit administration, and sales and marketing for the placement of professional contractors in 49 states. Eleven years experience as a primary vendor with the Federal Government for professional healthcare contract placements. Speaker and Trainer for industry conferences such as NAPS, CSP, and Top Echelon Network. In addition to writing for various magazines, newsletters, The Contracting Corner, and a Contracting Blog.

4 Factors (Besides Skills Shortage) That Are Causing Record Hiring Decision Delays

Hiring ISngThe latest statistics on hiring are very encouraging for recruiters on both the direct hire and contract side of the business. But there is one recent statistic that is not good for anyone in the employment arena. The time-to-fill open positions has reached an average of 25.1 days, the longest period since that statistic first began being tracked in 2001, according to the Washington Post.  When the recovery first began in July 2009, that number was at 15.3 days.

This record was hit even though there are 9.5 million unemployed individuals available to fill approximately 4.6 million open jobs. Not to mention all of the currently employed people who are actively looking for new jobs, a number that is growing as the economy improves. So what is behind these hiring decision delays?

Conversion Fee samplesMany experts and recruiters point to a mismatch between the skills that available workers have and those that are needed. This is definitely true for certain positions and industries. However,  as Catherine Rampell notes in the Washington Post, if a skills mismatch were a widespread problem, we would see an overall increase in wages as companies compete for the small number of qualified individuals.  That is not happening. Additionally, when the four regional branches of the Federal Reserve and former chairman Ben Bernacke looked into the issue, they could not verify that there was a bonafide skills crisis,  stating that “current skills mismatches are limited,” Inc.com reported.

It appears that there are a number of other potential factors causing hiring decision delays:

  1. Economic uncertainty - The economy is getting better, but it’s still not out of the woods.  A number of issues, including political disputes, the expected turnover in Congress due to the November Elections, and the unknown impact of the Affordable Care Act (ACA or Obamacare) are leaving employers less than confident about hiring, especially with the recession and its massive layoffs still fresh in their minds.
  2. Increased employment regulation – In addition to the ACA, employment legislation has increased on the federal, state, and even local level.  A prime example: A number of states and localities are passing paid sick leave laws. Employers have to determine whether they must comply with these laws, how to administer and track the leave, and how to cover the costs. The regulatory burden weighs on employers’ minds every time they consider adding to their staff.
  3. Reluctance to hire long-term unemployed – The “unemployed mindset,” in which employers assume there is something wrong with a candidate who is not actively employed, is alive and well. This is especially true when it comes to the 3 million people considered to be “long-term” unemployed, meaning they have been out of work for 27 weeks or more. Citing data from an Evolv study, Bloomberg reported that callbacks for those with 8 months of unemployment is 45% lower than those out of work only a month.
  4. Search for the “perfect” candidate - When they have to hire, companies seem to be seeking the proverbial “purple squirrel.” According to Inc.com, 67% of hiring managers said they “don’t feel like they have to settle for a candidate without the perfect qualifications.”  They are disqualifying candidates for things as simple as not having the exact years of experience requested or missing certain “buzzwords” from their resume. It is not uncommon for candidates to go on several interviews and still not be hired. Recruiters have also reported that clients are continually asking for more options even after quality candidates have been presented.

This failure to act can cause more problems than it solves. As a recruiter, you know that quality candidates start to drop out of the hiring process the longer it goes.  Also, failing to hire hampers the growth of the company. Finally, the shortage of help can put undue stress on existing employees, which can impact productivity and retention.

You can help clients avoid these problems by offering candidates on a contract basis.  This can help in a number of ways.  If they are concerned about the cost and administrative burden tied to employees, they can instead utilize contractors, who are the legal employees of a third party (you as the recruiter or an outside contract staffing back-office service that you utilize). The third party then assumes the responsibility for legal compliance. If they are uncertain of the economy, they can use the person on a contract basis and convert them to a direct hire when they feel more secure.

Contract-to-direct arrangements can also help clients ensure a good fit in the absence of the purple squirrel. They can evaluate the workers’ performance and work ethic during the contract period and then decide whether or not to extend the direct hire offer.  Some recruiters we work with actually have clients who are utilizing the contract-to-direct option to evaluate most of their new hires.

Dragging out the hiring process is not good for you, your clients, or your candidates. You can help reduce the time-to-hire by offering clients another option that helps everyone – contract staffing.

Contract Staffing Growth Continues Even As Overall Job Market Rebounds

 	green grass isolated on white backgroundIf there was any doubt that the contract staffing growth experienced in the past few years is more than a mere reaction to the recession, that doubt should be put to rest with the latest Employment Situation Summary for June.

The jobs report exceeded expectations, showing that the United States added 288,000 jobs last month and unemployment dropped to 6.1%, the lowest point since September 2008, according to ForbesThe job gains were shared by a variety of industries, giving the recovery the type of boost economists have been looking for since the recession ended.

If this was like other recessions and recoveries, we would expect that the popularity of contract staffing would now decline.  Typically, companies have used contract staffing to test the hiring waters following a recession and then return to direct hiring once the overall job market improves. That does not appear to be the case this time. In fact, “temporary help services” added 10,100 jobs in June, once again reaching an all-time high temp penetration rate. That rate, which calculates the number of contract jobs as a percentage of total employment, is now at 2.0677%. That percentage has risen for 19 of the past 20 months, according to Bloomberg.

These numbers support what we have long been saying on this blog: There has been a fundamental shift toward a new blended workforce model in which employers utilize both direct hires and contractors as part of a long-term business strategy. This blended workforce model allows companies to remain nimble as they respond to ever-changing business demands, continued economic uncertainty (healthcare reform, political unrest, etc.), and increasing employment regulations. Meanwhile, individuals are also changing the way they approach work with many adopting contract staffing as a lifestyle due to the flexibility and increased earning potential it offers. As a result, experts predict that contractors will comprise 40-50% of the entire workforce by 2020.

The June jobs report is great news for workers, employers, and our economy as a whole, but it’s even better news for recruiters. The overall growth in jobs will hopefully result in an uptick in your direct hire business, but you can also cash in on the continued popularity of contract staffing by placing contractors. This allows you to add a steady stream of recruiter income in between your direct hire placement fees.

If you have not yet added contract staffing, these statistics show that it is not going away.  Companies and candidates have embraced contracting, so if you want to remain competitive in this new environment, you will want to be sure sure you can meet their needs by offering contract staffing.

Marketing Contract Staffing on the Internet

Marketing-Contract-Staffing-on-the-Internet-7081From websites to social media, the Internet offers a number of ways to spread your contract staffing message even further than anyone would have thought possible even 10 years ago. Here are some of the ways to get the most out of some common Internet mediums:

Your website

Does your website make it clear that you provide contract staffing services in addition to direct hires? You should at least have a paragraph on your website devoted to contract staffing. Better yet, add a page about your contract staffing services for clients and ANOTHER one for candidates. These pages should point out the advantages of contract staffing for both groups and why they should utilize YOUR services. This will help you get found by companies and candidates using Internet search engines to find recruiters who offer contract staffing, particularly if you use keywords such as contracting, contractor, etc. Bonus points for having a blog dedicated to contract staffing, which can help you share your expertise and set you apart from the competition.

LinkedIn

This is probably the most popular social media site for recruiters, but are you using it to its full advantage? Be sure to mention contract staffing on both your personal and company profiles. Remember, you have 120 characters in the headline for your title, so make sure some of those characters mention contract staffing, contractors, contracting, or something similar. Those keywords can help you get found by potential clients and candidates.  You can also join and participate in LinkedIn Groups in your niche. By participating in discussions and posting RELEVANT content in Groups, you can again differentiate yourself. It’s a good idea to start by reading others’ conversations and commenting on them before you start posting your own discussions. You can also start your own Group to further expand your name recognition. But whether you are posting in other groups or your own, you always want to provide useful information rather than being self-promotional.

Twitter

Any recruiter can simply post their job openings. If you want to stand out, retweet others’ posts, comment, and try to spur your own discussions by tweeting relevant and useful information.  And don’t forget to use hashtags by putting a # in front of phrases you think people will search on. You can find hashtags trending in certain industries by using hashtagify.me

Facebook

Marketing on Facebook has always been challenging, especially in the business-to-business arena, but since Facebook changed its algorithm, it is getting nearly impossible for businesses to get seen by simply creating good posts, according to Social Media Examiner. Businesses will most likely have to use paid advertising to get seen on Facebook. However, there is some good news. With over a billion users, Facebook has the largest database of candidates available, and with its “Open Graph” search, which is built around natural language rather than keywords, you can find contract candidates with very specific criteria.  Read more about it here: www.topecheloncontracting.com/blog/sourcing-contract-candidates-facebook/

Google+

Despite reports that this social media site is doomed since  its creator left the company, Google says its social networking site isn’t going anywhere. And according to Social-Hire.com it has more ACTIVE users than LinkedIn, and users tend to respond more quickly than they do in LinkedIn. It also has some good features. For starters, it allows you to segment connections into customizable Circles. You can tailor different posts to candidates and clients and even segment contacts into different industries if you have multiple niches. Then there are the video chats called Hangouts, which could allow you to conduct candidate interviews virtually. This is especially useful for contract placements that need to be made quickly or when the candidate is remote. Google+ also has “Communities,” much like LinkedIn’s Groups. So for the time being, you would be wise not to ignore Google+.  But remember, Google+ is very visual, so be sure to use eye-catching images on your posts.

Pinterest

This is the last social media network many would think of when it comes to recruiting. Yet some recruiters are finding success there, although more often on the candidates side than with clients. Those seeking creative contractors, like Graphic Artists and Web Designers, will likely have the best luck because those professionals often share work on Pinterest. You can find them by searching for terms such as “resume,” “cv,” and “portfolio.” Pinterest can also be a branding tool if you provide useful information to your audience. You will want to think a little “outside the box” and figure out what tools or information candidates can use to do their job better. For instance, if you recruit Web Designers, they may enjoy posts with uniquely designed pages. People in education may appreciate classroom tips. To learn about how one recruiting firm has successfully used Pinterest, check out our article about PediaStaff’s Pinterest Profile.

This is just a small sampling of the tools and sites that can help you spread your contract staffing message. If you are ready to shake up your contract staffing marketing, the Internet offers infinite marketing options that are just there waiting to be discovered.

5 Ways to Build Stronger Recruiter-Client Relationships

5-ways-to-build-stronger-client-relationships-7073After over 20 years in the contract staffing industry, we have seen our fair share of successful recruiters.  While these recruiters are different in many ways, they all seem to have a particularly keen ability to build strong recruiter-client relationships. Here are some the common relationship-building techniques that we have noticed while working with recruiters who are successful in contract staffing AND direct hire:

  1. REALLY Getting to Know the Client. One of employers’ pet peeves is that some recruiters seem to throw as many resumes as possible their way to see what “sticks.”  Recruiters who only send a few highly targeted resumes set themselves apart.  In order to do that, you have to go beyond the surface information many “vendors” get about their clients. Conversion Fee samplesA number of successful recruiters make on-site visits a core part of their recruitment process.  In fact, one recruiting firm we work with will not take a job order from companies that will not meet with them in person. These recruiters take the opportunity to meet with as many people as they can, ask detailed questions, and tour the facility. The goal is to understand the culture of the company, their recruitment process, and what it takes for a candidate to truly succeed there.
  2. Being a One-Stop Shop. Successful recruiter make sure they don’t give their clients any reason to go to any other firm because they provide ALL of the staffing solutions a company could possibly need. These solutions include direct hire, traditional contract staffing, contract-to-direct hire, payrolling, 1099 independent contractor to W-2 employee conversions, retiree re-staffing, and internships/co-ops. Employers are busy, so allowing them to have one contact for all their staffing needs is a great way to build loyalty.
  3. Selling a SOLUTION, Not a Person. Clients don’t always know that they need one of those alternative staffing options. All they know is they a problem. If you can provide a viable solution, you become more than a vendor. You become a trusted staffing partner.  To do this, you need to ask open-ended questions to determine what their exact need is and then suggest a solution. For example, you might want to ask if they have a special project or deadline they need to address, which may indicate the need for a traditional contract staffing arrangement.  Or you might ask if they have a hiring freeze that is preventing them from getting the help they need, in which case you might suggest they hire someone on a contract-to direct basis because contractors come out of a different budget from direct hires, so they could use them on a contract basis until the hiring freeze lifts.
  4. Being An Employment Expert. Besides looking to you for solutions, companies often look to recruiters to be a resource regarding employment laws and issues. Therefore, it is important that you keep up-to-date on issues such as healthcare reform (aka Obamacare), wage and hour regulations under the Fair Labor Standards Act (FLSA), and proper worker classification (1099 independent contractor vs. W-2 employee).
  5. Following Up. Of course, you want to be sure to be in frequent contact with the client when you are working a job order. But don’t forget to keep in touch even if you don’t get a job order.  Just because a company may not have a need now doesn’t mean they won’t later.  Call them occasionally just to touch base. You want to be sure to stay at the top of their mind so that when they DO have a need, they think of you first.

In general, everything you can do for your client builds strong recruiter-client relationships. This not only helps you retain current clients but can also help you gain new ones through referrals and word of mouth. By simply putting your client first, you can build a successful firm that can thrive even in the most challenging economic conditions.

The Impact of Rising Healthcare Costs on Recruiters, Candidates, and Companies

 	Prescription Medicine The American Flag and MoneyRegardless of how you feel about the healthcare reform law commonly known as Obamacare, there is no doubt that employer-sponsored health insurance has become more expensive and complex over the past several years. The implications of the rising healthcare costs are far-reaching, driving business decisions in a variety of ways that impact everyone in the employment arena.

It is estimated that health insurance premiums for employer-sponsored plans have gone up 80-100% in the past decade. It’s no surprise, then, that 49% of employers surveyed by Aflac for their Aflac Workforce Report listed cost containment, including healthcare insurance costs, as their top business issue.  This is an increase from 28% in 2011.

20 marketing tips 2“The research shows how the need to control costs is driving workforce decisions,” said Teresa White, executive vice president and chief operating officer for Aflac Columbus. “For four consecutive years, we have witnessed this growing trend and can foresee the possible ramifications for the U.S. workforce.”

Possible Causes for Health Insurance Premium Increases

Before we get into that, let’s explore what is feeding into these ever-increasing premiums. The first and most obvious potential cause is Obamacare, or more formally, the Affordable Care Act (ACA). Forbes lists four reasons that the ACA is driving the rising healthcare costs:

  1. Commercial underwriting restrictions – For example, insurers must now offer coverage to participants’ children up to age 26, and they can no longer apply pre-existing condition exclusions or lifetime limits on coverage.
  2. Insurers are now limited in how much they can vary premiums based on age
  3. New taxes and fees on insurance companies that are typically passed to employers
  4. The “Essential Health Benefits” that must be offered, including ambulatory patient services, emergency services, substance abuse disorder services, etc.

However, there are a number of factors outside the ACA that are also influencing premiums:

  • Aging population
  • Unhealthy lifestyles
  • Costly technological advances
  • Inaccessibility of healthcare pricing to allow consumers to make cost-effective choices

The situation is even worse for small employers, whose participant pool is not large enough to absorb high medical bills. Where one sick employee with high claims may not even cause a ripple at a large company, it can easily result in a massive premium increase at a smaller organization.

How Employers Are Containing Healthcare Costs

The money for the increased premiums has to come from somewhere, so employers are being forced to make hard decisions that impact the entire business:

  1. Cost-Shifting - The days of going to the doctor and paying nothing out of pocket are nearly gone. To minimize the premium increases, employers have been forced to choose plan designs with higher deductibles, copays, coinsurance, etc. The Kaiser Family Foundation found that the number of workers covered by high deductible plans has quadrupled since 2007. In addition, some employers are contributing a lower percentage toward employees’ benefits premiums.  All of these techniques result in shifting more of the costs to the workers.
  2. Raising the costs of products/services - As a company’s overhead costs increase, some of that cost is ultimately passed on to its customers. But how much can companies raise the costs of their products and services before they lose business?
  3. Employment decisions - You have certainly heard that some companies are avoiding hiring or reducing employee hours to part-time to avoid the upcoming employer mandate of Obamacare. Although it keeps getting delayed, the mandate will eventually require employers with 50 or more full-time employees to provide healthcare insurance to those employees. But because premium increases are impacting ALL companies, not just the so-called large employers subject to the employer mandate, organizations of all sizes are making these and other difficult employment decisions (e.g., freezing raises) to reduce the impact of healthcare costs.
  4. Dropping healthcare - For some employers, the costs and administrative headaches that come with offering benefits simply aren’t worth it, so they are dropping coverage. That means some of them who fall under the Obamacare employer mandate will eventually face fines once the mandate goes into effect, but they have determined that the fines are less costly than actually providing coverage.

Impact on Recruiters

Recruiters are being affected, too. For starters, you can expect candidates to be looking closer at their TOTAL compensation package, not just salary.  This is especially important now that the ACA is requiring most Americans to have health insurance under the individual mandate.  You may find negotiations to be tougher if quality benefits are not available.

You may also notice a decrease in direct hire job orders as employers try to contain costs. However, companies will still need help to address business demands, so they may turn to you for contractors. This is likely one of the reasons that contract staffing continues to grow. If you are not already offering contracting, you may find the need to in this complicated business environment.

Of course, if you employ in-house staff and/or contractors, these issues have a more direct impact on you. Are you required to provide insurance? If not, should you? Benefits are a great way to attract quality contractors, but recruiters must weigh the cost and administrative burden. Some opt to outsource the employment of their contractors to a contract staffing back-office that provides contractor benefits. That can be a great way to brand yourself as a recruiting firm of choice without taking on the complexities of offering healthcare insurance.

The cost of healthcare is a problem with more questions than answers and one that affects everyone in one way or another.  The important thing is to remain educated on the issue and put yourself in the best position to succeed in this increasingly challenging environment. The best way to do that is to become a sole-source provider who can solve all of your clients staffing by offering a variety of options, including contract staffing.

 

FLSA Lawsuits Up 438% Since 2000 – Are You At Risk?

 	Historic Building Courtroom Court of Appeals Portland OregonWage and Hour lawsuits under the Fair Labor Standards Act (FLSA) have hit a record high once again, representing a 438% increase since 2000. If you run your own back-office for your contractors, you, as their employer, assume the responsibility of compliance and could be at risk for FLSA lawsuits.

FLSA cases hit an all-time high of 8,126 for the period between April 2013 and March 2014, according to the Society for Human Resource Management (SHRM), citing data from the Federal Judicial Center. This is an almost 5% increase over last year when 7,764 cases were filed, and this is the seventh straight year of increases. Even more cases were filed in state courts under state wage and hour codes.

This shows how intense the enforcement and focus on wage and hour issues has become. Some driving forces include the movement to raise the minimum wage and President Obama’s recent directive to the Department of Labor (DOL) to revise the regulations that allow certain workers to be exempt from overtime (“white collar exemptions”).  All of the publicity surrounding wage and hour regulations has also increased employee awareness of those regulations, making them more likely to file FLSA lawsuits.

Contract Training KitThis is a good time to remind you of some of the key provisions of the FLSA. Even if you do not employ any contractors or in-house staff, your clients look to recruiters as an employment resource, so it is important for you to know the basics of this law:

  1. Most employees are entitled to overtime (1.5 times the regular pay rate) when they work more than 40 hours in a work week. Keep in mind that the overtime (OT) laws may be even more generous to employees in certain states.  For example, in California, employees earn OT for any hours worked over 8 in a work day and for their seventh consecutive day of work in a workweek.
  2. Employees CANNOT work off the clock. It’s OK to request that they get preauthorization before they work OT, but if they do work enough hours to be entitled to OT, they must be paid for it.
  3. In order to be exempt from OT, employees must fall into the Executive, Administrative, Learned Professional, Computer-Related, or Outside Sales classifications. These classifications come with specific requirements, which again, are subject to change based on President Obama’s decree to the DOL to update the regulations. The CURRENT exempt requirements are provided on the DOL Web site.
  4. Those who DO qualify as exempt must be paid at least $455 a week on a salary (not hourly) basis with a couple of exceptions. Computer-Related professionals may be paid at an hourly rate of at least $27.63 per hour ($40.38 per hour in California). The salary requirements also do not apply to those under the Outside Sales exemption.
  5. DO NOT let clients misclassify W-2 employees as 1099 Independent Contractors. This may seem like a good way to get around the overtime rules since independent contractors don’t earn overtime, but increased enforcement against the misclassification of workers has made this a treacherous proposition.  IRS back taxes are no longer the only risk. The DOL is now actively seeking back wages, and a number of state agencies are tacking on their own penalties and damages.

This article is for informational purposes only and should not be construed as legal advice.

5 Tips for Avoiding Challenges in Recruiting Millennials

Now hiring keyboard keyWe’ve all heard the horror stories about entitled, job-hopping Millennials (aka, Generation Y) in today’s workplace.  But before they enter the workplace,  many of them start as candidates being placed by independent recruiters like yourself.  Whether or not you buy the stereotypes attached to this generation, it’s clear that placing them can be challenging as recruiters determine how to relate to them. Here are some tips for navigating the challenges involved with placing these young candidates, who were generally born between the early 1980s and early 2000s:

  1. Don’t blame it all on their generation. The Millennial label tends to be a scapegoat for any weakness or issue a young candidate may have. But some candidates are entitled, arrogant, and just downright difficult, and it has nothing to do with when they were born.  In these cases, you may be better off setting the candidate free.
  2. contracting_videoDon’t assume they know the basics. This group may need more coaching than you are used to providing candidates.  You may think it is common sense to dress appropriately for an interview and to not ask about salary right out of the gate. You may not think it’s necessary to tell someone that the abbreviations they use when texting aren’t appropriate when emailing a potential employer.  But many recruiters are learning the hard way (i.e., from their clients) that these young candidates are not as savvy as they would hope.  It’s far better to over-educate and over-prepare your candidates than to have them potentially damage your reputation with a client. With that being said, some candidates may require formal training on basic skills such as interpersonal communication and business writing.  There are many affordable online courses out there that may be worth purchasing for your candidates.
  3. Employers need to be coached, too. Your clients likely have a lot of preconceived notations about Millennials, just like the ones we mentioned at the beginning of this post.  Certainly, young workers new to the workforce are going to have a different approach. But different doesn’t mean bad. In fact, Millennials bring a lot of positive attributes to the table:  They are good at multi-tasking. They are skilled critical thinkers. They are technology wizzes. If you can get your clients to adapt and look past potential biases, they may find some of their best employees within this generation.
  4. Be patient and understand their needs. Millennials are notoriously picky when it comes to accepting a job, so be prepared to field numerous questions. They want to make sure that the job meets their needs: collaboration, technology, work-life balance, innovation, etc. They want to work for a company that is socially conscious and can fulfill their long-term career goals. Understanding what is important to Millennials can save you a lot of hassle because you will be less likely to present them for opportunities that are not a fit.
  5. They may not be cut out for traditional employment. Some Millennials (and members of other generations for that matter) really are job hoppers.  They thrive on variety and can’t stay in one place too long. Or maybe the typical 9-5 grind doesn’t work for them and they need a more flexible work arrangement. It can be nearly impossible to find a direct hire position for these candidates that will work for them in the long run.  Instead, you may want to find contract assignments that provide the variety and flexibility they need.

Yes, recruiting Millennials can be difficult, but once you learn how to manage them and what motivates them, you will find that they really aren’t that different from other candidates.  They want to make a living but not at the expense of having a life.  They want to be respected. They want to have a job they can enjoy and be proud of.  You have a unique opportunity to help them do that all while filling critical openings for your clients.

Protect Your Clients From Being Burned by Unpaid Summer Internships

Unpaid internshipsAs summer approaches, many college students and graduates are gearing up for the traditional right of passage known as the summer internship. These internships can be a win-win for both the students and the companies utilizing their services. While the students gain experience and try to get their foot in the door for future career opportunities, companies can get manpower at a reasonable price.

The problem is when “reasonable” becomes free. While common, unpaid internships are increasingly coming under fire by the Department of Labor (DOL). If your clients are utilizing unpaid summer interns, it is important they understand the rules and potential implications of this arrangement. In order to be legal, unpaid internships must meet six criteria established under the Fair Labor Standards Act (FLSA) as stated on the DOL’s fact sheet on Internships:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment.
  2. The internship experience is for the benefit of the intern.
  3. The intern does not displace regular employees, but works under close supervision of existing staff.
  4. The employer that provides the training /internship derives no immediate advantage from the activities of the intern, and on occasion its operations may actually be impeded.
  5. The intern is not necessarily entitled to a job at the conclusion of the internship.
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

Training CenterThe DOL has been cracking down on illegal unpaid internships over the past few years. But the DOL is not the only thing employers have to fear. Interns who believe they have been treated unfairly are proactively filing class action lawsuits. A famous example is the ongoing lawsuit between former interns for the film “Black Swan” and Fox Searchlight Pictures.  Companies targeted in unpaid internship lawsuits could have to pay back wages in addition to damages and fines.

Statistics show that nearly half of all interns are unpaid.  That means there is a good chance your clients are utilizing unpaid interns, quite possibly illegally. You may want to warn your clients of the potential pitfalls of unpaid internships and encourage them to take a close look at their programs to make sure they are being implemented in accordance with the FLSA.

This does not mean that companies should abandon their internship programs, which can be a great way to identify and groom potential talent.  It also does not mean they have to hire them as traditional employees, taking on all the risk, liability, administration, and additional costs that come with employees.  Instead, you can offer to convert their interns to contractors who will become W-2 employees of a contract staffing back-office.  The back-office will then retain all of the employment responsibility and liability. Plus, this can provide a great source of additional summer income for you as a recruiter.

This article is for informational purposes only and should not be construed as legal advice.

How the New Blended Workforce Model Impacts Recruiting

How-the-New-Blended-Workforce-Model-Impacts-Recruiting-4871There is no question that the popularity of contract staffing has surged since the recession and even more so in the past year. The use of contractors has consistently broken records over the past several months even as the economy finally seems to be on the upswing.  What is interesting about this trend is how contract staffing appears to be transforming the traditional workforce model.  Employers are no longer using contractors sporadically as a stop-gap measure in limited circumstances. Rather, they are building a blended workforce model that integrates contractors as part of a deliberate business strategy.

In this model, companies typically maintain a small core group of traditional, direct hire employees. These are the key personnel whose experience and longevity drive the stability and growth of the business, making high turnover very detrimental.  That core is surrounded by an outer ring of contractors who are often responsible for day-to-day tasks and critical projects.  Turnover in this ring is not as disruptive.

Contracting-Corner-CTAThe key to this model is that the outer ring can be easily adjusted based on business demands. The outer ring can grow quickly when extra help is needed, which is especially important when the peak is sudden and unexpected. That ring can be reduced just as quickly when the need passes, helping companies avoid the ugly layoffs that typically accompany a reduction in force. Contractors know from the get-go that their assignments are only for a finite amount of time.

Let’s take a look at the blended workforce model in action:

  1. A company has neglected its computer hardware and/or software while waiting for the economy to improve. Now they need major upgrades.  They can bring in contractors to get the work done and end the contracts when the work is complete.
  2. Manufacturers experience frequent ups and downs in production. Engineers and other highly skilled contractors can be brought in as needed.
  3. Insurance companies need more adjusters and other workers following major disasters than they do in “normal” times.  Contractors give them the manpower to respond to those disasters without permanently adding to their overhead.
  4. Accounting firms must ramp up for annual crunch times, such as year-end reconciliations and tax season.  They can bring in auditors, accountants, and tax experts on a contract basis during those times so they don’t have an over-inflated staff the rest of the year.

These are just a few examples, but there are many other ways this workforce model can be used. In fact, savvy companies are looking at EVERY open position strategically to figure out if it may be better suited to the outer ring of contractors.

So what does this mean to you? Well, if you are already offering contract staffing, you can expect continued growth in your business. Your clients are going to have a consistent need for contractors, and because those contractors are taking on more critical tasks, they need the quality talent that only a top-notch recruiter can provide.  This may be a good time to consider expanding your business into additional states and industries so that you can further capitalize on this trend.

If you are not offering contract staffing, now is the time to start.  Statistics show that 80% of contract job orders come from a recruiter’s existing direct hire clients, so the business is there for the taking if you simply let your clients know you can place contractors. And if you utilize a contract staffing back-office, you can start taking job orders NOW with no ramp-up time or upfront financial investment.

The employment landscape has forever changed. Change can be scary, but in this case, it can also be very good.  Recruiters who can provide direct hires AND contractors can be very successful in this new environment as companies start seeing them as staffing partners rather than mere vendors.

To learn more about this trend, read the Contracting Corner feature on it at https://secure.topecheloncontracting.com/recruiters/newsletter/First_Quarter_2014.pdf

 

 

What is the Difference Between Direct Hire and Contract Placements?

Happy young businesswoman working on laptopJust as with anything that is unfamiliar or outside a person’s comfort zone, there is a huge fear factor involved with contract staffing.  Many recruiters believe contracting is extremely complicated and too different from direct hire.  But as the popularity of contract staffing continues to grow, more recruiters are taking the leap and are finding that contract placements are really not as different from direct hire as they thought.

Training CenterConsider the main steps of a contract placement:

  1. Get the job order.
  2. Locate the candidate.
  3. Negotiate rates.
  4. Employ the contractor and handle the employment tasks. (Outsource)

You will notice that the first three steps are things you already do for direct hires.  The rates are a little different when it comes to a contract placement, but once you understand the process for determining the hourly rate structures and markups that will be charged to the client company, it is easy.

So when it comes down to it, the biggest difference between direct hire and contract placements is the employment of the contractor and the “back-office” tasks associated with being the legal employer.  Fortunately, those tasks can be outsourced to a contract staffing back-office, leaving you with the tasks that you are already well familiar with.

If you decide you do NOT want to outsource, you need to allow yourself plenty of ramp up time before you start taking contract placements. You will need to get set up to withhold taxes and obtain Workers’ Compensation insurance in each state in which you plan to place contractors. You’ll want to decide how you will fund payroll (by yourself or through a third party funding company).  You will need to decide if you are going to offer contractor benefits (or if you are required to under the Affordable Care Act) and get those benefits set up.  These are just some of the biggest setup tasks to consider if you want to be the legal employer. You also want to make sure that you have sufficient administrative support (both human and electronic) to handle the day-to-day tasks associated with employing contractors and running a contract staffing back-office, including:

  • Legal contracts with the contractor and the client
  • Payroll processing (on at least a biweekly basis)
  • Tax withholdings and filing
  • Background checks and drug screenings
  • Unemployment claims
  • Workers’ Compensation
  • Invoicing clients and managing accounts receivables
  • Benefits administration, if applicable
  • Employee issues
  • Employee terminations
  • Keeping up with and complying with the complicated web of local, state, and federal employment laws

This whole back-office piece is what scares many recruiters off.  But again, if you outsource this piece, you are left with the typical recruiting tasks.  Just be sure to select a FULL-SERVICE back-office that will become the legal employer of your contractors and handle ALL of the employment tasks and legal liability.  Otherwise, you may find yourself still wrangling with complicated contractor issues when you should be focusing on revenue-producing recruitment tasks.