A
Alternative Staffing
Another term for "Contingent Staffing," includes all nontraditional work arrangements other than direct full-time employment, including: contractors, temporaries, consultants, self-employed, 1099 independent contractors, and part-time workers.
B
Back-office
The tasks associated with employing a contractor, including, but not limited to, running payroll, collecting and maintaining employee paperwork, providing benefits, providing Unemployment and Workers' Compensation coverage, etc.
Bill Rate
The hourly rate the Client Company pays for each hour a contractor works on his/her assignment. The Bill Rate traditionally includes the contractor's hourly pay rate, employers share of Social Security and Medicare, applicable state taxes like Unemployment and Workers' Compensation, along with any other state specific taxes or benefits. Based on how the contract placement is structured, the Bill Rate could also include Per Diem, and profit to the recruiter and/or back-office provider.
Buy-out Agreement
See "Conversion Fee Agreement."
C
Candidate
Person to potentially fill a job opening. Usually refers to an applicant who has been qualified for the position and submitted to the client company (may then be known as a "submittal"). In contracting, after the candidate is placed they become the "employee" of the contract staffing back-office.
Clerical
The largest segment of the temporary help industry. Refers to secretaries, typists, word processors, general office clerks, data entry, and other administrative office personnel.
Client Company
Company receiving services from workers who are employees of a "Staffing Company."
COBRA
COBRA, which stands for The Consolidated Omnibus Budget Reconciliation Act, was enacted in 1986. It requires employers with more than 20 employees to offer continuation of health care coverage when an employee loses coverage due to status changes, such as resigning, losing a job, or having hours reduced.
Contract-to-Direct
See "Temp-to-Direct."
Co-employment
An employment relationship where two or more legally separated employers share potential or actual employer responsibilities with a common employee[s].
Common-law Employer
Common-law is defined as “the law of a country or state, based on custom, usage and the decisions and opinions of law courts.” A common-law employer is the entity that has the right to direct and control where, when, and how the work is done and the final results.
Contingent Staffing
Flexible supply of temporary workers to support a core of employees in peripheral, non-core functions and during periods of increased demand.
Contingent Workers
Inviduals placed in a nontraditional work arrangements including: contractors, temporaries, consultants, self-employed, independent contractors, and part-time workers.
Contract Staffing
An alternate staffing arrangement in which companies bring workers in on a contract basis for a limited amount of time to complete projects, respond to surges in business, meet deadlines, or for other temporary needs. The workers are traditionally white-collar professionals, and the time period is six months or longer. See also "Contingent Staffing."
Contracting
Triangular employment relationship where a company provides employees (contractors) to a client company for a specific function and time period, at a specified hourly rate. In this arrangment, contractors are traditionally white-collar professionals, and the time period is six months or longer.
Contractor
Employee of a staffing company who provides services to a client company under the day-to-day supervision of the client company.
Conversion Fee
Placement fee earned by the recruiter when a contract candidate is hired as a direct-hire employee of the client company. The conversion fee is in addition to the hourly fee earned during the term of the contract.
Conversion Fee Agreement
Fee schedule between the recruiter and client company covering the fee due if the contract candidate is hired as a direct-hire employee of the client company. A conversion fee agreement should be executed for every contract placement. The financial details of each placement could be different, so recruiters need a separate agreement for each contract candidate to protect the fee.
Core Employees
"Traditional" employees who have the critical skills necessary for an organization's continued existence. These employees guide the company's strategies for the future. Core employees may be surrounded by a flexible ring of contingent workers who handle non-core work.
D
Downsizing
Movement in Corporate America to reduce costs and become more competitive by reducing headcount to lower fixed costs.
E
Employee Benefits
An indirect form of employee compensation, in addition to wages. Some employee benefits are mandated by law. These include Social Security, Unemployment, and Workers' Compensation. Other employee benefits,such as health insurance, life insurance, retirement, and other welfare benefits, are sponsored voluntarily by employers.
Employee Leasing
A service in which a company's long-term, regular employees are transferred to the payroll of a firm that specializes in payroll accounting, personnel management, employee benefits, and risk administration. The employees continue to provide services to the original company despite being transferred to the other company's payroll.
Employer of Record
In a contract staffing arrangement, the entity that serves as the legal employer for tax purposes while the employee performs work at another company. The Employer of Record is generally responsible for all the traditional employment tasks, including processing employee pay, paying the employer portion of payroll taxes, providing Workers Compensation, Unemployment, and health benefits, and complying with employment laws. See also "W-2 Employer of Record."
ERISA
Acronym for the Employment Retirement Income Security Act. A federal law that governs pension and welfare employee benefit plans and sets guidelines for these programs.
F
Fair Labor Standards Act (FLSA)
The FLSA establishes minimum wage, overtime pay, recordkeeping, and child labor regulations for American employers. It requires that, with very limited exceptions, employees be paid one and a half times their regular pay rate for any hours worked over 40 in a workweek.
Fidelity Bond
Protects an insured business against dishonest acts such as embezzlement, forgery, and theft committed by employees.
Flexible Staffing
Trend in American companies towards establishing a core of employees with critical skills necessary for a company's survival, surrounded by a flexible ring of contingent staff to handle peripheral, non-core functions. See also "Contingent Staffing.”
Front-Office
In terms of contracting, the tasks directly related to placing a contract candidate with a client company, including getting the job order, recruiting the candidate, interviewing, negotiating pay rates, etc., as opposed to back-office tasks such as generating the contract and employment paperwork, processing payroll, taxes, Workers Compensation, etc., associated with the employment of the contractors.
FUTA
Stands for Federal Unemployment Tax Act. "FUTA" is the term used for the payroll tax every employer must pay under this Act. This tax cannot be withheld from the employee's pay, it is solely the responsibility of the employer
G
General Employer
In joint employer situations or court cases involving multiple employers, the general employer is the original employer who retains the employment agreement with the employee and maintains broad control. The courts and administrative agencies identify the general employer as the employer who maintains the employee on the payroll and provides benefits and is responsible for the long-term employment relationship.
H
HIPAA
The Health Insurance Portability and Accountability Act allows individuals to obtain health insurance for a certain period of time after losing or dropping other healthcare coverage without being subject to pre-existing health condition exclusions. It also establishes regulations regarding the disclosure of health insurance participants' private health information.
I
Independent Contractor
An independent contractor provides services to a company, but is not an employee of that company. The company pays the independent contractor without withholding payroll taxes or paying the employer's share of payroll taxes. An independent contractor has the right to decide how the work will be done and may hire others to assist or do the work. Independent Contractors are under intense scrutiny from the IRS and states because of abuses costing billions of dollars of taxes. The worker should receive Form 1099-MISC.
L
Liability Insurance
Insurance that covers bodily injury or property damage to others, to third parties.
M
Margin
Dollar amount difference between the client company bill rate and the employee (contractor) pay rate. For example, if the hourly bill rate is $30 and the hourly pay rate is $20 , the margin is $10. See also "Markup" and "Multiplier."
Markup
The percentage by which the client company bill rate is greater than the employee (contractor) pay rate. For example, if the hourly bill rate is $30 and the hourly pay is $20, the markup is 50%. See also "Margin" and "Multiplier."
Multiplier
The quotient of the client company bill rate divided by the employee (contractor) pay rate. For example, if the hourly bill rate is $30 and the hourly pay rate is $20 , the multiplier is 1.5. See also "Margin" and "Markup."
0
Outsourcing
Basic outsourcing is where the client company has an entire department staffed by the employees of a staffing company, from top to bottom. Can be done on or off the client company's premises. See also "Vendor on Premises."
P
Payroll Taxes
Employers are appointed, as agents of the government, to withhold federal, state and local income tax from employee’s wages. These obligations are severely regulated and carry heavy penalties if they are not done correctly.
Payrolling
Refers to situations where a portion of a client’s employees are on the payroll of a staffing firm but are working at the client’s location. The client company may want to locate, screen, or interview the employees, but they do not want the recordkeeping obligations associated with payroll, tax withholding, benefits, etc. Traditionally, a recruiter does not locate a payroll candidate.
PEO
See "Professional Employment Organization."
Professional Employment Organization
Also known as a PEO, this is an organization that becomes the Employer of Record for all of a company's workers, creating a co-employment situation in which the PEO handles the payroll and all administrative tasks and takes on the legal liability associated with employing those workers while the company directs, supervises, and controls the work being completed.
S
Sole-Source Provider
A single recruiter or firm that a client company uses to fulfill all of its staffing needs (direct-hire, contract-to-direct, contract, etc.).
Staffing Company
A company, such as Top Echelon Contracting, that becomes the employer for contract candidates and handles all the employee paperwork, legal contracts, timesheet collection, payroll processing and funding, tax withholding, benefits, Workers' Compensation, invoicing, collection of accounts receivables, background checks, etc.
SUI
Stands for State Unemployment Insurance. Each state imposes a payroll tax on the employer for unemployment benefits. The tax ranges from 1% to over 10% of each dollar of payroll. The employer is entirely responsible for paying the tax, it cannot be deducted from the employee's pay.
T
Technical Contracting
Contracting jobs such as engineers, programmer analysts, systems analysts, drafters, designers, and technical writers.
Temp-to-Direct
When a contract candidate is placed on an assignment with a client company based on the assumption that if the client likes the candidate, the candidate may be permitted to be hired by the client as a direct-hire. See also "Contract-to-Direct" and "Try-Before-You-Buy."
Temporary Staffing
Triangular employment relationship where a company provides employees (temps) to a client company for a specific function and time period, at a specified hourly rate. In this arrangment, the workers are traditionally blue-collar professionals, and the time period is three months or less.
Top Echelon Contracting
Top Echelon Contracting, Inc., is a contract staffing service provider and functions as the employer of record for contract candidates who have been placed by recruiters in technical, professional, and healthcare contract placements.
Top Echelon Network
Top Echelon Network, Inc., a sister company of Top Echelon Contracting, is the leading split placement network. Top Echelon Network has become the leader in providing efficiency tools and services for small to medium-sized recruiting firms and specializes in connecting job order recruiters with candidate recruiters, thereby expanding the resources and capabilities of each recruiting firm.
Traditional Employment
Term for direct employment. Non-traditional jobs are the contingency or contract positions.
Trial-By-Hire
Trial-By-Hire is a sister company of Top Echelon Contracting that allows companies to "try out" a job applicant on a contract basis prior to offering him/her a permanent (direct-hire) position with their company.
Triangular Employment
Relationship between contract candidate, staffing company, and client company in which the contract candidate is the employee of the staffing company but performs services for the client company.
Try-Before-You-Buy
A hiring concept especially popular during trying economic times in which a worker is brought in to a company on a contract basis so that an employer may "try" that worker before they hire that person directly ("buy"). See also "Contract-to-Direct" and "Temp-to-Direct."
U
Unemployment Insurance
Government sponsored protection to provide income for a limited amount of time to workers who have become unemployed through no fault of their own. Employers must contribute a percentage of employees’ gross wages in the form of the FUTA tax.
V
Vendor on Premises
Outsourcing arrangement where a full-time staffing coordinator administers the entire employment process for the client: interviewing, testing and screening applicants, filling job assignments, issuing payrolls, providing on-site management of the department, etc.
Virtual Corporation
New term for maintaining a minimum staff of core employees, surrounded by a ring of contingent staff.
W
W-2 Employee
A worker whose services are completely controlled and directed by the employer and who is paid via Form W-2. An employer must pay the employer share of taxes, withhold the employee share from paychecks, and provide Workers' Compensation and Unemployment coverage for its W-2 Employees.
W-2 Employer of Record
In a contract staffing arrangement, the entity that serves as the legal employer for tax purposes while the employee performs work at another company. The employee is paid via Form W-2. See also "Employer of Record."
W-2 vs. 1099MISC
At the end of each year, workers either receive a Form W-2 or a Form 1099MISC. An employee receives a W-2 and has all required payroll taxes withheld throughout the year. An independent contractor receives a 1099 and has no payroll taxes withheld.
Workers' Compensation
Businesses are required by law to obtain Workers' Compensation insurance for their employees. The purpose of this insurance is to provide medical and other benefit coverage for employees who suffer a job-related injury or illness. Generally speaking, the staffing firm must maintain Workers' Compensation for their employees, or coordinate coverage through the subscriber.