Posted on Tue, Apr 16, 2013
By Debbie Fledderjohann, Top Echelon Contracting President
One of the trickiest things about running your own back-office is navigating the complex web of state and local laws. Paid sick leave (PSL) is an area where recruiters need to be especially careful. With no paid leave laws on the federal level, some states and cities are taking matters into their own hands. Most recently, the city of Portland, Ore., passed a sick leave ordinance that will go into effect on Jan 1, 2014, according to HR Hero.
If you are running your own back-office, you are responsible, as the employer of your contractors, for providing PSL when required. Here is a quick breakdown of the PSL laws currently on the books in specific areas:
Portland, Ore. - Employers with six or more employees will be required starting 1/1/2014 to provide PSL to those working 240 or more hours per year within the city limits. This will apply to employers even if they are not based in Portland and even if the employee only works in the city occasionally, as long as they meet the 240 hour per year requirement. Employees will earn one hour of paid leave for every 30 hours worked up to a maximum of 40 hours per year. They can also carry up to 40 unused hours over. This law will also require employers with less than six employees to provide them with one hour of UNPAID sick leave for every 30 hours worked up to 40 hours per year.
San Francisco - All San Francisco employers are required to provide one hour of PSL to employees for every 30 hours worked. The maximum is 40 hours per year for small businesses (10 or fewer employees) and 72 for larger employers (more than 10). Unused leave carries over every year, not to exceed the maximum limit. Visit the City & County of San Francisco Labor Standard Enforcement site for more details.
Seattle - Seattle's PSL law applies to employers with a total of five or more full-time employees. If any of those employees work at least 240 hours per year within Seattle's city limits, the employer is required to provide one hour of leave for every 40 hours they work. The maximum hours range from 40 to 72 depending on the size of the company. This law is unique in that it not only allows employees to use the time to care for themselves or a family member in the case of injury or illness, it also can be used as "safe leave" if their place of business has been closed by a public official for health or safety reasons.
Washington, D.C. - Under the Washington D.C. Paid Sick Leave Act, employees must be employed for a year without a break in service and work at least 1,000 hours prior to their request to take time off. The law excludes the following types of workers: independent contractors, students, health care workers who have opted into a premium pay program, and restaurant servers and bartenders who receive both wages and tips. The number of hours accrued depends on the employer's size but cannot exceed seven days a year.
Connecticut - With the only state-wide PSL law so far, Connecticut requires employers with 50 or more employees in the state to provide up to 40 hours of PSL. The tricky part about this law is that it only applies to "service workers" - those who are not exempt from the Fair Labor Standards Act (FLSA) requirements and who fall into one of the positions listed in the legislation. You can view a list and other details about the law at http://www.ctdol.state.ct.us/wgwkstnd/12-15%20PSLfinal2011.pdf
Just because you don't have contractors working in these areas doesn't mean you don't need to be concerned. New York City is also close to passing legislation, and Philadelphia is considering its own PSL law. Chances are that more will follow suit. As a contract staffing recruiter running your own back-office, it is important that you stay on top of these developments and make sure you are following any applicable PSL laws.
This article is for informational purposes only and should not be construed as legal advice.
Posted on Fri, Apr 12, 2013
By Debbie Fledderjohann, Top Echelon Contracting President
Chances are you've heard the phrase "Do what you do best and outsource the rest." That phrase rings particularly true when it comes to recruiters who make contract placements.
 |
|
Mike Toohey, President
Contract Staffing Recruiters
|
Contract staffing provides a great opportunity for recruiters to increase their sales and establish a steady, predictable income stream. But it also comes with a number of time-consuming and complex financial, administrative, and legal duties associated with employing the contractors, including legal contracts with the contractors and clients, payroll funding and processing, Workers' Compensation, contractor benefits (including compliance with the healthcare reform law), invoicing, and collections.
These are typically called the "back-office" tasks, which fortunately can be outsourced so recruiters can concentrate on the actual recruiting or "front-office" duties. By utilizing a contract back-office provider, such as Top Echelon Contracting, recruiters can spend their time making more placements and expanding their business rather than on the back-office tasks.
Case in point: Mike Toohey, president of Contract Staffing Recruiters, credits much of the growth of his recruiting firm to his relationship with Top Echelon Contracting. Toohey, who has been recruiting since 1998, established Contract Staffing Recruiters when he opened the job board CareersInConnecticut.com in 2000. In the past year, he has been able to add two additional job boards and is preparing to launch one for Florida and another for Armenia this year. He is also planning to establish physical locations in Florida and in Armenia, which will be the firm's first foray into the European market.
“Top Echelon Contracting allows us to say yes to things we wouldn’t normally be able to say yes to,” Toohey said. “We don’t have to turn down business like we did in the past. They allow us to focus more on our core business with our permanent placements and career boards.”
Without the use of a back-office service, Toohey said they would not have the time or resources to expand or to take on the amount of contract staffing business that they have today. TEC handles the entire financial picture, including payroll funding.
“It just eases the burden,” Toohey said. “I don’t have to go to the bank to ask them to increase my credit line so I can fund a new client’s payroll or worry about missing something on employee paperwork.”
Are contract staffing back-office tasks holding your firm back? Or are you afraid to even get into contracting for fear it will take away from your perm business? As Toohey illustrates, it doesn't have to be that way. You can take on contract placements and still do what you do best - recruit!
Posted on Thu, Dec 27, 2012
By Debbie Fledderjohann, Top Echelon Contracting President
I
n a general sense, the Employer of Record is simply the entity that serves as the employer for tax purposes while the employee performs work for a different company. The Employer of Record, often referred to as the W-2 Employer of Record because they are responsible for issuing W-2s to the employee, shoulders the responsibility for all the traditional employment tasks and liabilities.
When applied to a contract staffing situation, the Employer of Record serves as the legal employer for a contractor. This responsibility often falls to a third party known as a contract staffing back-office, such as Top Echelon Contracting. In other situations, a recruiter can take on the employment tasks and liabilities.
If you decide to add contract staffing to your business model, one of the first things you need to do is determine who will serve as the Employer of Record for your contractors: you or a contract staffing back-office. If you decide to do it yourself, you need to make sure you have the time and resources to get set up (which typically takes up to six months) and to handle the following ongoing tasks:
- Payroll processing and funding
- Tax deposits and filings
- Employment contracts and paperwork
- Maintaining Certificate of Insurance
- I-9 and E-Verify
- Unemployment insurance
- Workers' Compensation
- Background checks and drug screenings
- Benefits administration
- (health, dental, vision, life,
401k)
- Employee terminations
- Employee issues
- And more
If you do not feel comfortable taking on these responsibilities, a contract staffing back-office not only takes them off your shoulders but also can have you up and running within hours, not weeks or months.
Whether you chose become the Employer of Record for your contractors or outsource those responsibilities, make sure they are handled correctly because there can be consequences at the state and federal level.
Posted on Tue, Oct 30, 2012
By Debbie Fledderjohann, Top Echelon Contracting President
It's hard to believe, but this year Top Echelon® Contracting is celebrating its 20th anniversary. Over the years, we have seen many changes in the contract staffing industry as it has grown and become a more critical part of the business environment.
Top Echelon Contracting was established in Canton, OH, in 1992 in response to the increased use of contractors in the professional and technical sectors. As contract staffing continued to grow, many recruiters were turning down contracting job orders because they didn’t have the resources or ability to handle all the tasks associated with employing contractors.
As a result, Top Echelon Contracting was formed to help direct-hire recruiters make contract placements. Essentially, TEC became the legal W-2 employer of record for the contractors that recruiters were placing, and that is still our business model today. We handle all of the financial, administrative, and legal tasks, including employee paperwork, background checks, legal contracts, timesheet collection, payroll processing and funding, tax withholding, benefits, Workers’ Compensation, invoicing, collection of accounts receivables, and everything else that falls to the responsibility of having employees on payroll. We also provide free training and marketing assistance to the recruiters who work with us.
In the beginning, we were placing mostly Information Technology “job-shoppers”, along with a few technical and professional contractors. The practice of utilizing contractors expanded into an extremely wide range of engineering fields and is now a business strategy utilized by nearly every industry and for positions leading all the way to the C-Suite.
One area in particular where we noticed a surge in contract staffing was healthcare, so about seven years ago, we added healthcare contract staffing to our service offerings. This was an excellent move due to the aging population, along with state and federal mandates associated with medical services for children. The number of contract opportunities for therapy, nursing, and pharmacy careers continues to grow each year.
Contract staffing has especially become prevalent in the wake of the recession as flexibility and cost-containment have become critical issues in today’s business environment. In fact, we experienced a 22% increase in commercial placements in last year.
Over the past 20 years, we have also noticed a change in workers’ attitudes toward contracting. Contract assignments were once considered a last resort when candidates couldn't find a traditional direct-hire position. Now workers are actively seeking contract positions because they like the flexibility it offers them from a work/life balance perspective, plus they are paid for every hour they work, as opposed to a traditional salary structure under which most professionals are paid.
One fact that we are particularly proud of is that we offer our contractors medical insurance through Anthem Blue Cross and Blue Shield. Benefits are extremely important to candidates, and being able to access them through Top Echelon Contracting helps make their decision work on contract assignments easier.
TEC is now known industry-wide as “The Recruiter’s Back-Office Solution.” We do business in 49 states and specialize in technical, professional, and healthcare contract placements. We have experienced growth in 18 of its 20 years and has paid recruiters more than $50 million in profits.
If you have utilized our services, we sincerely thank you for your business. If you have not yet used TEC, we invite you to call us at (888) 627-3678 to find out how we can help you make contract placements.
Posted on Thu, Oct 25, 2012
By Debbie Fledderjohann, Top Echelon Contracting President
Love it or hate it, E-Verify is sticking around for at least another three years.
E-Verify is the online federal system that checks information from an employee's Form I-9 (Employment Eligibility Verification) against records from the Social Security Administration and Department of Homeland Security to verify that they are eligible to work in the United States. While some legislators have tried to require all employers to use it to check the eligibility of their employees, others have blasted the system for not being accurate because it can only verify that the information on the I-9 matches what is in the databases, not that the person is who they say they are.
President Obama recently signed a bill reauthorizing E-Verify through September 30, 2015. E-Verify is still voluntary for most employers, but it is required for federal contractors and in certain states and localities.
So why should you, as a recruiter, be concerned? Well, if you run your own back-office and you are placing contractors for which E-Verify is required, you must comply with E-Verify. Even if it is not required by law for the contractors you place, more and more client companies are requiring it.
If you are going to run contractors through E-Verify, keep the following things in mind:
- You must be trained and certified to use the system. If there are changes to the system after you have been certified, E-Verify may require you to go through a refresher course and testing.
- Before you can E-Verify any contractor, you MUST have a complete I-9. On the first day of work, make sure you have the contractors complete Section 1. Then you must complete Section 2 within three days of their start date after you have viewed the contractor's "acceptable documents."
- You must run contractors through E-Verify within three days of their start date. For example, if the contractor starts on Monday, you must E-Verify no later than Thursday.
- If you receive a Tentative Nonconfirmation, which means the system could not verify the contractor's employment eligibility, you should not immediately terminate. You must give the employee the opportunity to contest the result.
- To avoid getting a Tentative Nonconfirmation, be sure to type in all the information carefully and check over your work before submitting. The U.S Citizenship and Immigration Services website has additional Tips to Prevent a Tentative Nonconfirmation.
And remember, just because you outsource your contract staffing back-office does not mean you don't have to worry about E-Verify. If the contractors you place are required to be run through E-Verify or you have clients who require the use of the system, you will want to be sure that your back-office is E-Verify compliant.
Top Echelon Contracting is trained and certified in E-Verify. We have been running all contractors through the system since January 2010, so if you use our back-office to place your contractors, you will automatically be E-Verify compliant. Please call us at (888) 627-3678 for more information.
Posted on Tue, Oct 23, 2012
By Debbie Fledderjohann, Top Echelon Contracting President
Forget about ghosts and goblins. When it comes to running your own contract staffing back-office, there are very real risks that can keep any recruiter up at night.
Handling the back-office duties associated with contract placements becomes more complicated each year as employment regulations continue to increase.
Here are just some of the scary details to fear:
- IRS audits — The IRS seems to be cracking down on worker misclassification more every year with no end in sight. Most recently, the IRS, Department of Labor, and several state agencies agreed to share information on worker misclassification, so it's more important than ever to make sure you are not incorrectly classifying W-2 employees as 1099 independent contractors.
- Workers’ Compensation coverage (or cancellation)—Getting affordable Workers' Comp coverage is hard enough, especially for small-to-medium-sized firms. But what happens if your carrier decides to cancel your coverage because of too many claims that were totally out of your control?
- Exposure and liability — In our increasingly litigious society, one little mistake or oversight could put you out of business. We’re talking about mistakes made by either your contractors or your in-house staff. And don't forget to have legal counsel review and negotiate contracts on your behalf.
- Certificate of Insurance — Do you have enough insurance to protect you from those legal risks? Can you afford continuous premium increases? Can you afford the additional coverage potential clients may require in their contracts?
- Line of credit — As your business grows, so does your line of credit. But what will happen to your line of credit if a client stops paying their invoices in a timely manner (or at all)? What if they go bankrupt?
- Missing payroll — Missing a payroll for ANY reason is one of the quickest ways to completely destroy your reputation . . . and it only takes once. Think how you would feel if you worked 40 or 80 hours and someone couldn’t pay you!
So does this mean you should run screaming in the opposite direction from contract staffing? No, of course not! You can still reap all of the benefits of contract staffing without having to handle the scary details. You can outsource those tasks to a back-office, such as Top Echelon Contracting. As the Employer of Record for the contractors you place, the back-office assumes all the employment responsibilities and risks. So you have nothing to fear - except missing out on great opportunities if you don't offer contract staffing to your clients.
Posted on Thu, Oct 11, 2012
By Debbie Fledderjohann, Top Echelon Contracting President
Top Echelon® Contracting recently had the opportunity to sponsor and exhibit at the National Association of Personnel Services (NAPS) Conference in San Antonio, Texas. The one overwhelming theme of the conference is that the work environment is changing and that contract staffing is becoming a critical part of it.
In fact, that was the subject of a session by Amy Bingham, Managing Partner of Bingham Consulting Services, which helps the staffing industry optimize sales effectiveness. In the session, titled "The World of Work is Changing. Is Your Firm Adapting?" she discussed two trends impacting recruiters:
- Contingent labor has evolved from a necessary evil to a benefit.
- Preferences for how people work have changed.
Bingham, who has over 19 years of staffing industry sales leadership expertise, addressed the fact that the world of work is changing and challenged conference attendees to position their recruiting firms to take advantage of contract and interim executive opportunities, in addition to the traditional search and direct-hire placements.
From an employer perspective, the economic uncertainty, coupled with the demands placed on U.S. businesses to operate with greater efficiency, is forcing employers to adopt a variety of contract staffing alternatives, including project-related staffing models, in lieu of making full-time hires, she said. Many believe there has been a shift in buyer thinking and this is the “new normal.”
As labor costs increase, Bingham said that employers are striving for cost savings that can be gained by hiring contractors and outsourcing the legal employer responsibilities for things like unemployment, workers’ compensation, and benefits.
From a candidate perspective, preferences for how to work are changing. Today’s worker sees a career as an opportunity for multiple experiences and strives to achieve a balance of work and “life” experiences, with flexibility as a key component.
Recruiters who are adapting to these changes are finding themselves in the role of career agents and consultants, with the ultimate goal of helping clients to succeed within the restraints of the economy, skill shortages, and budget constraints.
“Today’s staffing firms face unprecedented competition, and differentiation is more difficult in the commoditized world of staffing today than ever,” Bingham said. “To the extent a staffing professional can step into the role of ‘labor consultant,’ he or she will be viewed by both buyers of staffing services and candidates as more valued.”
TEC is experiencing the trend that Bingham referenced. More and more recruiters are turning to TEC for help with their first contract assignment. TEC is a full-service back-office provider that has been helping direct hire recruiters add contract staffing to their business models for over 20 years. By utilizing TEC’s back-office, the recruiter can outsource all the time-consuming details (contracts, payroll, funding, benefits, background checks, etc.) of a contract placement. This frees the recruiter up to do what they do best… recruit! And candidates who are looking for the flexibility provided by contract work also appreciate the fact that they are paid for every hour worked and still have access to benefits like medical, dental, and vision coverage, as well as a 401(k) through TEC.
Posted on Thu, Jun 21, 2012
By Debbie Fledderjohann, Top Echelon Contracting President
When adding contract staffing services to your existing direct-hire recruiting business, you must first decide if you are going to handle the back-office tasks (payroll, benefits administration, employment paperwork, invoicing, etc.) in-house or if you are going to outsource them.
Many small firms or "one-man shows" choose the latter. After all, it can take the average recruiter one to six months to get set up to handle contract staffing issues in-house. Not only that, it takes one or two days every week to keep up with the timesheet, payroll, and invoicing issues. By outsourcing these tasks, recruiters can take on contract opportunities without taking away from their direct-hire business.
A contract staffing back-office can handle all the administrative, financial, and legal details associated with contract placements. The back-office should also handle all the weekly tasks and actually become the contractors’ legal employer.
If you decide to outsource these tasks rather than handle them in-house, you will want to find an experienced contract staffing back-office with a well-documented history, an impeccable reputation, and positive referrals and testimonials. Remember that your back-office is a reflection of you, the recruiter.
Here is a partial list of the critical tasks that should be provided by a contract staffing back-office:
- Bill rates and pay rates assistance
- Contract generation
- Employee paperwork
- Payroll funding and processing
- State and federal taxes
- Workers’ compensation
- Unemployment
- Invoicing and collections
- Background checks
- Certificate of Insurance
- Benefits – medical, dental, vision, 401(k), etc.
If you use a quality contract staffing back-office, you can easily offer both direct and contract staffing services to your clients, regardless of your size. You can enjoy the extra income and client loyalty that come with contract staffing without having to worry about all of the administrative details tied to a blended service business model. In short, you will be able to focus on what you do best – recruiting.
Posted on Tue, Apr 24, 2012
By Debbie Fledderjohann, Top Echelon Contracting President
If you have contractors in your home state, it may not be a big deal for you to run your own back-office, particularly if you are already processing payroll and handling taxes, unemployment, Workers' Compensation, benefits, etc. for your own staff.
But before you can take placements in other states, you're going to have to do a lot of legwork and homework. Every state has different laws and requirements you will have to follow for the contractors you have placed there. For example, each state has specific tax requirements, so you will have to get registered to pay those taxes and handle any withholding, reporting, reconciliation, etc., that are involved. The regulations are different in each state, so you will also have to invest a lot of time researching upfront.
If you don't feel that your firm has the time or resources to take on these additional tasks, that doesn't mean you have to turn down out-of-state contract job orders. You can outsource those placements to a contract staffing back-office that will take on those responsibilities as the W-2 employer of your contractors. For example, Top Echelon Contracting is already set up to do business in 49 states. If you choose Top Echelon Contracting as your back-office, you do not sign a contract and are under no obligation to run all your contract placements through us, so you can still run the back-office for placements in your home state.
Posted on Tue, Apr 10, 2012
By Debbie Fledderjohann, Top Echelon Contracting President
As the demand for contractors continues to increase, clients are getting more picky about the vendors they select to supply them with the help they need. One issue we are seeing companies scrutinize more closely is the Certificate of Insurance.
A Certificate of Insurance is a document that proves that the vendor is insured to take on the liability associated with employing the contractors. When you place contract candidates, most major clients will want to see a Certificate of Insurance to assure that all of the insurance policies are current and have acceptable dollar limits. You will need to have one if you are running your own back-office.
Typically, companies will not work with vendors who do not meet certain insurance requirements. These requirements usually include, at minimum:
► Professional Liability
► Commercial Excess Liability
► Employer Practices Liability Insurance (EPLI)
► Automobile Insurance
► Forgery and Bonding
These requirements prevent many smaller firms from taking contract job orders because this coverage is very expensive. But it is not necessary for you to purchase insurance to meet your clients' needs. You can outsource the employment of your contractors to a reputable contract staffing back-office that will then be responsible for carrying the required insurances. For example, Top Echelon Contracting carries a comprehensive Certificate of Insurance that meets the requirements of most companies.
Don't let the cost of insurance coverage rob you of the consistent cash flow that contract staffing can provide you. Let a contract staffing back-office, such as Top Echelon Contracting, take on that responsibility so you can enjoy all of the advantages contract staffing has to offer.
