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.

2015 UPDATE – Worker Misclassification Forgiveness Program

Do your clients utilize 1099 independent contractors (ICs) who should rightly be W-2 employees? Between government audits and contractor lawsuits, this worker misclassification is becoming an ever more dangerous tightrope to walk. Even so, they may be afraid to set off IRS and U.S. Department of Labor (USDOL) red flags by reclassifying these workers properly, fearing that the fines, back wages and taxes, and other costs owed will outweigh the long-term benefits of going “legit.”  The Voluntary Classification Settlement Program (VCSP), which was established in 2011 and expanded in 2013, is a great solution to this problem. Through the program, employers who voluntarily reclassifiy ICs as W-2 employees are only required to repay a small portion of the back payroll taxes they owe. This significantly reduces the financial hardships that can keep employers from reclassifying employees correctly. The employer must meet the following criteria to qualify: The workers they want to reclassify must have been consistently treated as non-employees in the past and must be treated as such at the time of application. The employer must have filed all required Forms 1099 for the applicable workers for the previous 3 years at the time of application. The employer cannot be be under an IRS audit regarding employment taxes (other types of IRS audits are permissible). The employer cannot be under USDOL or state agency audits regarding the classification of workers. If the IRS or the USDOL has previously audited an employer regarding the classification of the workers, they will be eligible only if they have complied with the results of that audit and are not currently contesting the classification in court. Employers can apply for the VCSP by filling out Form 8952. If they meet the eligibility requirements, they will receive the following benefits in exchange for agreeing to treat the workers as employees for future tax periods: The employer will pay only 10 percent of the employment tax liability that would have been due on worker wages for the most recent tax year. The employer will not be liable for any interest and penalties on the amount. The employer will not be subject to an employment tax audit with respect to the worker classification of the workers being reclassified under the VCSP for prior years. Bottom Line Whether or not your clients enroll in this formal program to reclassify their ICs, they should conduct an internal audit to ensure that anyone who is classified as an IC meets the IRS guidelines. Another way to help your clients is by offering to convert 1099 ICs to contractors who become W-2 employees of a contract staffing back-office. Also, if you, the recruiter, have been offering contract staffing to your clients by paying the contractors as ICs, you can conduct your own internal audit and consider using a back-office to convert these contractors to W-2 employees. In both cases, the back-office takes on all the employment responsibilities, including paying the employer portion of taxes, administering and paying the employer portion of benefits (and complying with healthcare reform), payroll processing and funding, Workers’ Compensation, all state and federal tax withholdings, employee issues, and more. That way, the employer or the recruiter will still avoid the administrative hassles and additional costs that come with W-2 employees while removing the risk of an IRS audit. This article is for informational purposes only and should not be construed as legal [...read more...]

The Real “Back-Story” on TEC’s Services

Interview with Bob Small, Vice President of Carroll Technology Services, Inc.  A few years ago, a die-hard direct hire recruiter was forced into making his first contract placement to meet his client’s request. He was amazed at how easy and profitable it turned out to be, and since that first placement, Bob Small has actually become an advocate for both contract staffing and Top Echelon Contracting, Inc. (TEC). Consequently, he is often approached by other direct hire recruiters with questions about contracting and TEC’s services. Read on for Bob’s most commonly asked questions and the answers he provides.  Why choose Top Echelon Contracting? As contract staffing back-office services go, in my opinion, they are top-notch. Absolutely everything is taken care of—there is no need to worry once the contract placement is in their hands. From client communication to employee questions to onboarding to human resources to taxes and insurance—they just handle it. Doesn’t it bother you that TEC has direct contact with your clients? Absolutely not. Believe me, they can explain contract staffing placements better than you or me. They’ve been doing this and ONLY this for 23 years. They know their stuff inside and out, and their obvious knowledge and professionalism will put your client at ease. And don’t worry that they’ll cut you out of the loop—they won’t. For one thing, they DO NOT recruit. They have no interest in your client without you. They only make money when YOU [the recruiter] make a placement! For another, they understand that your relationships with your clients are your most valuable business assets and they protect them. That includes situations where a contract placement converts to a direct hire. Even in collections circumstances, TEC is careful to keep you involved and informed. What about marketing contracting to clients? Is there any support with that? Yes, they help you with it. They can create marketing documents for you with your agency name and information on them. All you have to do is send them out. As business ramp-up for contract staffing goes, it doesn’t get much easier than that. You can tell, even when you’re just getting started, TEC really wants you to succeed. How would I get paid my [recruiter] share of the profit? TEC pays you [the recruiter] as soon as the client pays them. It’s seamless. When you make your first placement, they give you access to the Statement of Contract Assignment (SCA) system. From there, you can track everything for each placement you make: timesheets, invoices, collections, etc. They do all the work behind the scenes. I love the fact that every time my client pays an invoice, I get a check in my mailbox like clockwork. What has your experience been with TEC’s customer service? It’s fantastic. You can always reach someone. If the usual person you work with isn’t available or doesn’t immediately pick up, they always have backup in place and will get you an answer quickly. You’ll never be left hanging. They are always very polite, extremely professional, and highly efficient. If you [the recruiter] screw up, they’ll cover your butt and never get on your case about it. They absolutely saved me from getting in my own way on my first contract placement– I’ll never forget that! What do you do when a contractor has questions or problems? Just give the contractor your TEC administrator’s direct extension. The Contract Administrator will always get back to them quickly and take care of the contractor’s questions about benefits, timesheets, paychecks, HR, etc. Again, they can answer tricky employment issues, like questions about the Obama stuff, better than you or me. Let them handle it professionally and promptly. If it’s an urgent human resources issue, they also have a 24/7 line for that. Bottom line – would you recommend contract staffing and TEC? Without question. Don’t avoid contract staffing and miss out like I did for years—let TEC help you tap into that income stream. They are outstanding, and it’s obvious how much they value their recruiters. Customer service is a thing of the past in a lot of industries, but not with TEC. Just work with them, and you’ll see what I mean. They get an A+ from [...read more...]

Tips for Negotiating Contract Bill Rates

(Originally posted 03/18/10, updated 06/11/15) What should you do when a client doesn’t set any limit on the hourly bill rate for a contract placement? While it might sound like a great problem to have, this can be frustrating because you have no clue what rate they consider acceptable—you have to guess. If you keep your hourly fee (a.k.a. “recruiter share”) low and ask a lower bill rate than they expect, they’ll be pleased, but you might be shorting yourself. On the other hand, select a rate too steep and you could wind up losing the contract placement and injuring your reputation. So what’s a recruiter to do? The ideal approach is to have them suggest at least a range of hourly bill rates. As long as your rate falls within their range, they can’t argue that it is unreasonable. If that tactic fails, here are some strategies that have worked for other contract recruiters: Use a standard multiplier – Multipliers usually range between 1.5 and 1.8, but they can go much higher for healthcare professionals and hard-to-find positions. Simply select one and multiply by the contractor’s pay rate to determine the bill rate. Base the rate on your target income – Determine how much you want to make per hour and then negotiate the contractor’s pay rate to determine the bill rate. If you are using Top Echelon Contracting as your back-office, you can call us to run a Quote based on those numbers. Charge based on a direct placement fee –Calculate what you would normally earn on a direct hire and divide it by the length of the contract. For example, if the contract is 12 months and you would earn $20,000 by placing the candidate direct, divide that by 2,080 hours (the approximate number of hours a full-time contractor would work in a year). You would need to make $9.62 per hour to earn the entire fee in twelve months. You can call Top Echelon Contracting for a Quote that will give you the bill rate that corresponds to this amount. There is no one correct way to set the bill rate. The important thing is to be creative with each client and come up with a rate structure that will keep both of you [...read more...]

Sharing Economy Creates New Class of On-Demand Workers

How much do you know about the “sharing economy?” Also known as the “mesh” economy, it is an umbrella encompassing a variety of systems which enable the sharing of human and physical resources and services. It is a complex socio-economic force at work in shaping the future of the larger economy. And, perhaps most importantly, it is growing rapidly. One system that will almost certainly affect you and the way you recruit is the peer-to-peer (P2P) marketplace. Some examples of P2P services include Uber Technologies Inc., CrowdFlower, and TaskRabbit. These services allow the end-user to order up a human service provider such as a driver, data entry person, or errand runner (respectively) through a smartphone app. The technology interface handles the scheduling of these jobs with on-demand freelance workers, often referred to as “micro-entrepreneurs” by those who run the companies. At first glance, these services seem to offer a win-win proposition: the end-user gets quick, painless access to a service he needs performed, while the micro-entrepreneur can work flexibly on the jobs he chooses. However, as The Wall Street Journal points out, “App-enabled workers don’t fit neatly into a regulatory landscape that recognizes only two types of worker: [W-2] employees in traditional work relationships and [1099] independent contractors.” Let’s take a look at the growing pains that on-demand workers and P2P service providers are experiencing as the sharing economy matures.   On-Demand Workers: Micro-Entrepreneurs or Misclassified W-2 Employees? According to The Wall Street Journal, many workers have feelings of ambivalence toward the platforms through which they work. They want to be liberated by the income and flexibility on-demand work allows, but simultaneously feel isolated and confused about their roles with the companies. There are several cons for workers in these arrangements. For one thing, most on-demand work platforms grant the on-demand worker little control over the terms of their labor. Some end up in a grey area with their behavior, work guidelines, and even wardrobe defined by the platform. They are effectively employees, yet none of the traditional W-2 employee protections or benefits apply to them. Moreover, on-demand workers must accept a contract to work with a service platform. The terms of these contracts typically saddle them with all of the risk and liability of independence from a traditional employment situation, but none of the potential rewards of true entrepreneurship. It is clear that a compromise must be found between the platforms and their workers.    P2P Service Providers: Innovators in an Unclearly Defined Landscape As with any innovation, the P2P service providers at the forefront of the sharing economy are operating in unchartered territory. They understandably tend to favor the 1099 independent contractor (IC) model of freelance labor, since it saves cost and keeps them unencumbered by employer tax obligations and legal liabilities. However, their on-demand workers may not be correctly classified as ICs. For example, a recent ruling against FedEx Corporation determined that delivery-truck drivers who were required to wear FedEx uniforms, follow standard grooming rules, and use company-owned vehicles were incorrectly classified as ICs. Many P2P service providers are facing similar suits due to the control they exert over their workers’ schedules, work, behavior, and even wardrobe. The proliferation of P2P services will eventually force the regulatory bodies to adjust, but those adjustments may be a long while off. Meanwhile, their business models have sparked a debate in courts as to whether on-demand workers should be considered W-2 employees. Unfortunately, this discussion often comes as a result of lawsuits leveled by the disgruntled would-be employees. These on-demand workers, since they do not have the autonomy and control over their work that would classify them as true ICs, maintain that they are entitled to the traditional protections and benefits of a W-2 employee. The law seems to agree. On its website, the IRS states definitively: “You are not an independent contractor if you perform services that can be controlled by an employer (what will be done and how it will be done).” Based on these clear rules, experts predict many of the lawsuits will be successful. It is unlikely that this will put an end to the sharing economy, which has been further legitimized by Amazon’s recent announcement of its own addition to the P2P marketplace, called “Home Services.” However, it seems likely that P2P service providers will either have to bring their on-demand workers on as true W-2 employees, give up control over them and their work, or find another solution.   Contract Staffing: A Potential Solution to Level the Sharing Economy Labor Landscape Through a third-party back-office service like Top Echelon Contracting, Inc., these P2P service providers can outsource the W-2 employment of their on-demand workers. They remain free of employer liability and tax obligations because the back-office becomes the legal W-2 employer of record. The P2P service provider pays a flat hourly rate for each on-demand worker, just as they would with an IC. This solution also benefits the on-demand workers, relieving them of the liabilities and financial risks they run without a traditional employer-employee relationship. At the same time, they will maintain the scheduling flexibility that first attracted them to on-demand work. The “sharing economy” presents a host of challenges, but it is also opening up new opportunities for recruiters. By positioning yourself to help solve the problems these fledgling companies are experiencing, you can benefit in the changing [...read more...]

PROSPER – Principles for Success

Guest article by Barbara J. Bruno, CPC, CTS, CEO of Good as Gold Training, Inc. As a recruiter, you must dedicate yourself to discovering principles that will allow you to do your job better, and as a result, increase sales, profits and your income. This article will address seven areas that will help you prosper the remainder of 2015 and beyond. P         Plan and Prioritize R         Results Oriented Activity O        Organize S         Share Expectations P         Principles of Sales E         Elevate Sales and Profits R         Right Things at the Right Time P – PLAN AND PRIORITIZE Any business exists for one reason: to make a profit. Recruiters are not in business to: Provide jobs for their employees Do everything themselves React to issues rather than proactively take control Planning and prioritizing requires a higher level of skill than shooting from the hip. You must: Know and understand your goals and focus Schedule important issues Be precise and detailed Commit to completing your six top priorities daily Coordinate efforts Plan for the entire week (1/52 of your annual plan) Stop preventable interruptions and issues R – RESULTS ORIENTED ACTIVITY Here are some realities in our profession: Constant distractions People on both sides of our sale Everyone’s demands can appear like a top priority Stuff happens Working hard or long hours doesn’t guarantee success Despite these truths, results oriented activity requires that you: Determine actions closest to the profit Understand best business (what business should be written and worked) Create systems and follow them Issue send-outs for most placeable candidates O – ORGANIZE It is simple – prosperity is not drawn to disorganization.  You must be the most organized person in your office.  Organization also greatly assists time management. S – SHARE EXPECTATIONS You should create expectations for the following: Clients What they can expect from your firm What you need from them to attract talent they will hire Candidates What they can expect from you What you need from them in order to find them a job Recruiting is a relationship building business.  Communication is key to your success and sharing expectations up front greatly improves communication. P – PRICIPLES OF SALES Principle #1 – Demonstrate Top Production Behavior Arrive early Address issues that are not in alignment with your firm’s vision and goals Talk with a strength of purpose Maintain a positive attitude Hit or surpass daily minimum results Principle #2 – Always Sell Staffing and Recruiting is a sales profession.  Continue to pre-close throughout the entire placement process to enhance your ability to successfully close deals. Principle #3 – Measure For Success The expression, “What gets measured, gets focused on,” is true.  Measurements of activities in sales provide feedback in order to: Set standards for activities that lead to desired sales results Measure activities at different parts of the sales process Make adjustments to activity areas that need improvement Measure against the new results and then repeat the process Principle #4 – Minimum Standards Sales is a repeatable process. You can accurately predict your production when you know your personal minimum stats and ratios. E – ELEVATE SALES AND PROFITS Most of your focus should be directed at consistently increasing production to enhance sales and profits.  The number that is most important to monitor is your send-out totals and your send-out to placement or fill ratio.  If you consistently increase send-outs you will consistently increase production. R – RIGHT THINGS AT THE RIGHT TIME Define the areas of responsibility that are most important for you to accomplish and focus on top priorities. Determine the 20% of actions that provides you with 80% of your results and then focus on consistently increasing the 20% of your actions that are result oriented. Conduct weekly reviews to keep your sales and business growth on track. What did I do right? How did I waste time? What do I need to change or implement next week? Follow these principles and you will help your business [...read more...]

How Did a Solo Recruiter Earn $101,047 on One Contract Placement?

One New York-based solo recruiter offered his client a contracting solution in January 2014, and that decision has certainly paid off. His first placement through Top Echelon Contracting, Inc. (TEC) has netted the recruiter $101,047. Even better? The candidate is still working, so the recruiter is still making money. For the average recruiter commanding a one-time 25% fee on a direct hire placement, those earnings would require placing a $404,000+/year candidate. How did he do it, and what wisdom can he offer to other recruiters? We asked him to answer those very questions. What were the circumstances of your contract placement? The client was a large corporation that needed a specialized person to fit a very specific role. The candidate was not easy to find, and that rarity benefitted me. I spent the majority of my career getting to know this industry and building relationships within it, so I was uniquely suited to search for this particular candidate. How much experience do you have with contract staffing, and how did you come to use TEC as your back-office? I worked in contract staffing throughout most of my career with large staffing corporations, so I had a solid base of knowledge when I eventually went off on my own. Because I had experience with contract staffing, I knew that handling the back end of contract placements was much more than I wanted to deal with by myself, so I asked for recommendations. A close friend and colleague referred me to TEC as a “perfect match,” and he was correct. How was your experience with our service/ using a back-office? My experience using TEC as the back-office has been stellar. Your company makes it realistic to venture out on your own as a recruiter making contract placements, because TEC takes care of the hardest, most complicated part—the legal, monetary and organizational headaches of the back end. What advice would you offer to someone looking to break in with a well-established client company? First and foremost, you need to learn how the organization works. What do they need, and what are their pain points? Talk to employees, past and present – they often have the clearest viewpoints to offer. Then, you can offer the client something that nobody else can – a true understanding of their needs. But remember that testimonials on your behalf are always more effective than representing yourself. What insider tips do you have for recruiters who are just starting out? The single most important thing you can do is truly differentiate yourself from your competitors. Also, when you are talking to a hiring authority or gatekeeper within a client company, you need to understand what’s in it for them—that individual specifically, not just the company in general. Then, address their need. Don’t be broad – be specific. Finally, even when you succeed in making a direct or contract placement, don’t lose touch with your client or candidate. Continue your relationships with them and make sure it is a fit for both parties. Would you recommend contract staffing to direct hire recruiters? I would absolutely recommend it. If you can improve your services and set yourself apart, then go for [...read more...]

Hit Your Targets With Contract Staffing

Any recruiter can ramp up contract staffing services in 3 easy steps! It’s undeniable: contract staffing is here to stay. In a recent survey by CareerBuilder, 46% of employers reported that they plan to add more contract and temporary workers in 2015, despite the fact that the economy has rebounded from the recession. With the progression of the blended workforce model, it’s becoming clear that contract workers are an integral part of the modern business world. If you don’t already offer contract staffing as an option to your clients, there has never been a better time to start. After all, you don’t want to miss the mark with contract staffing and the cash it provides. You may be surprised to find that you already have the resources you need to get started with contract staffing. It’s simpler than you think to hit your targets! Just follow these steps: 1. Put Yourself on the Map. First, focus on making “contract staffing provider” part of your brand. After all, nobody will come to you for contracting if they don’t know your firm handles it. Website. Add a paragraph or a full page to your website describing the new services you offer. Use keywords so those using search engines can find you easily. Make sure to direct separate messages to clients and candidates. While they both benefit from contracting, their needs differ and it’s your job to make the advantages clear to them. Social Media. Add a line to your email signature, your LinkedIn and Twitter profiles, your Facebook and Google+ “About” sections, etc. If you are actively involved in industry groups or conversations on social media sites, post an announcement. If you have a business blog, write a post about your new offerings and continue to post regularly about them. Anywhere that you have a business presence is an opportunity to advertise your contract staffing services. Marketing. Get your business cards, fee schedules, and other printed or electronic marketing materials updated. You never know when a chance encounter might lead to a recruiting prospect, so be prepared! 2. Communicate with your Direct Hire Client Base. Many direct hire recruiters new to contract staffing are apprehensive about building a contracting client base from scratch. What they don’t realize is that their existing client base is ripe with contract opportunities; statistically, 80% of your contracting business will come from current clients. You may find you only need to inform them of your new services to receive your first job orders (sending a marketing message can be very helpful for this purpose). Remember, there are three main reasons client companies utilize contractors: Contract staffing is flexible. If the client has a special project, they can bring in a contractor with a specific skill set to hit the ground running. As a business’ workload fluctuates, so can its workers (think IT upgrades, accountants during tax season, etc.). Clients can also “try out” a prospective direct-hire employee with no long-term commitment through a contract-to-direct hire arrangement. Contract staffing eliminates liability. All the risks of bringing on a W-2 employee (workers’ compensation, discrimination, compliance, tax and HR issues) are taken on by the employer of record, NOT by the client. This solution also erases the risk of misclassification-related consequences if the client was considering bringing the person on as a 1099 independent contractor. Contract staffing is cost effective. The client pays one flat hourly bill rate and incurs none of the overhead costs associated with direct hire employees, including benefits, unemployment, etc. (an estimated 35 – 45% on top of salary). They also don’t have to waste valuable time tracking legal and administrative issues like Health Care Reform; they simply pay the invoices. 3. Start a Dialogue with your Candidates. Will you need to source brand new candidates to find all of your contract workers? Probably not. Any candidate can benefit from a contract arrangement.  Again, the key here is ample communication. In every conversation you have with a current or potential candidate, ask him if he is willing to work on contract. Make sure to mention the top four candidate advantages of contract arrangements: Contracting is flexible. The lifestyle lends itself more readily to the work-life balance that people need. Contractors tend to have more flexibility in hours and location and they can schedule time off around their assignments. More and more candidates are choosing to work long-term as contractors because of this advantage. Contracting is lucrative. In fact, it can be more financially rewarding than direct hire employment. Unlike salaried employees, contractors are paid for every hour worked and can typically earn overtime on any hours over forty in a week. Contracting leads to job satisfaction. A contractor can spend time in a company without committing to long-term employment, then leave at the end of a contract without having to explain why he “job hopped.” Even better, the skills and experience he adds with each contract assignment only increase his marketability for future placements. This leaves more room for career exploration and growth. Contracting through a back-office grants access to benefits. Many full-service back-offices offer health insurance at group rates, in addition to dental, vision, life insurance, and 401(k) options. Since all qualified individuals are now required to have health insurance under Health Care Reform, this is a major incentive for many workers. Front-Office (Recruiter) and Back-Office Tasks Contract staffing can seem intimidating at first glance, but from the recruiter’s perspective, the front-office tasks are essentially the same as they are in direct hire recruiting: get the job order, locate the candidate(s), and facilitate the placement. At that point, either your firm or a third-party service will become the employer of record. This entity will handle the back-office tasks of employing the candidate on a W-2 basis while he works for the client company on the contract assignment. Don’t get hung up on the administrative, legal, and financial tasks of the back-office. If you outsource your contract placements to a reputable back-office service, they will handle these details and complexities. Then, you’re left with only the front-office tasks you know and enjoy—recruiting! What If You Are Unsure About Outsourcing? If you decide to set up your own in-house back-office, be aware that the complex ramp-up and ongoing tasks are costly in terms of both time and resources. Among other requirements, you must: Purchase adequate liability insurance. Register for applicable state and federal taxes, state unemployment insurance(s), and Workers’ Compensation insurance. Write and process contracts with your clients and employees. Handle employee onboarding, including background checks and I-9 verification. Collect timesheets and fund and process payroll regularly. Issue invoices and handle collection efforts in the event of nonpayment. Administer benefits and handle Health Care Reform issues. Additionally, you are obligated to comply with all applicable employment laws and regulations, not to mention dealing with the various human resource-related tasks that crop up when you have employees. If this sounds like too much to handle on your own, refer to the “Top 10 Questions to Ask Providers” in the 4th quarter 2014 issue of the Contracting Corner for guidance on evaluating back-office service providers. The Bottom Line: Get the Word Out! Successfully ramping up contract staffing services can be easy and profitable. It just comes down to getting the word out to existing clients and candidates. Remember, you’ve already done the work of finding them, getting to know their needs and wants, and earning their trust. With just a little extra effort, you can reap twice the reward! This article was also published in hard copy format via our quarterly Contracting Corner newsletter. If you would like to view a PDF version of the newsletter, please click [...read more...]

6 Critical Contract Staffing Back-Office Considerations

Are you thinking about moving forward with adding contract staffing to your business model? If so, step one is figuring out how you will handle the “back-office” tasks – the legal, financial, and administrative issues involved in being the contractors’ legal W-2 Employer of Record. This involves more than your traditional recruiting, or “front-office,” tasks. For the back-office tasks, there are two options: In-house: Run your own back-office and employ the contractors on a W-2 basis. Outsource: Have a contract staffing back-office take on the W-2 employment and tasks. Before you decide, it is important to know what is involved in running the back-office. Here are some critical considerations: Financial Risk. If you run your own back-office, you must have cash on hand or a line of credit so you can float the payroll for 30, 60, or even 90 days until your end client pays. You must pay the candidate consistently whether or not your clients pay you on a regular basis. For clients that are slow to pay or fail to pay their invoices, you need to have an invoicing and collections process in place. Payroll Process. Payroll must be run at least every two weeks, if not weekly. You have to decide how you will collect, verify, and track timesheets, including making sure that each timesheet has an authorized signature from the client company agreeing to the man-hours worked. The actual mechanics of running payroll involve handling state and federal taxes and following the specific payroll laws of each applicable state. Legal Liability. The legal W-2 Employer of Record must handle a variety of responsibilities, including: Federal Compliance. Equal Employment Opportunity Commission (EEOC), Fair Labor Standards Act (FLSA), Immigration (I-9 and E-Verify), IRS, COBRA, etc. State and Local Laws. These are becoming increasingly complex, and the ongoing changes can be difficult to track. For example, you must stay current with which cities and states have enacted mandatory paid sick leave laws. Contracts. The contractor should sign an employment agreement with the back-office defining the terms of his/her employment. There should also be a master agreement between the employer of record and the end client defining the terms of the assignment and the relationship between the parties. This helps protect the client from potential co-employment liability. Certificate of Insurance. Most clients require the employer of record to have general liability limits as high as $6-8 million, with special situations sometimes requiring up to $10 million. Human Resources. This includes onboarding procedures (background screenings are particularly important), employment paperwork, terminations, employee matters, etc. Workers’ Compensation. You need to set up Workers’ Compensation and find out which jobs/industries your Workers’ Comp insurance carrier will allow you to place. For example, anyone can place contractors in an office environment (Workers’ Comp code 8810), but if you want to place engineers, you must find out if your Workers’ Comp carrier will allow that and if they restrict any environments or industries. Remember, rates vary by Workers’ Comp code (job description), so you need to make sure you will earn a high enough profit to justify a steep rate. Unemployment. In each state where you are going to have contractors, you must set up unemployment insurance. Keep in mind that the cost varies per state; it is critical to make sure that the total cost of employing a contractor in a specific location does not erode your income from the placement. Contractor Benefits. Benefits are important to attract and retain candidates in the professional and technical sector, especially now that Obamacare (also known as the Affordable Care Act) requires most Americans to have health insurance. In addition to health insurance, a good benefits package typically includes dental, vision, and life insurance and a 401(k) plan.  The final decision about a contract assignment could hinge on the benefits and the employer contribution. If you choose to outsource the back-office, the provider you select should take on all of these tasks and liability, letting you spend your time on the front-office tasks. These are basically the same as direct hire:  matching the CANDIDATE and JOB ORDER. Whichever choice you make, be sure all the employment tasks are handled with precision and accuracy. Your reputation as a recruiter depends on it. To evaluate your own firm or an outsourcing provider’s ability to handle the back-office responsibilities, download our Contract Staffing Back-Office Audit at [...read more...]

6 Essential Principles of Recruiting Success

Guest article by Barbara J. Bruno, CPC, CTS, CEO of Good as Gold Training, Inc. There are six essential principles that all successful staffing and recruiting firm owners have in common.     PRINCIPLE #1 – AN ENTREPRENEURIAL MINDSET How you perceive your business and your life determines your reality. Entrepreneurs embrace change and take calculated risks Owners with an entrepreneurial mindset don’t think like a “worker bee” Entrepreneurs are willing to fail to eventually win You can do your best and still experience frustration by a lack of progress or difficult periods in your business. Entrepreneurs avoid negative thinking You were not born an entrepreneur.  You build your success through constant study and tenacity. PRINCIPLE #2 – A DEFINED BRAND Your brand is the personality of your company and service, but you need to embrace what makes the express brand great.   Your brand can also accomplish the following: Enhanced performance Transparency of your company Project a sense of social responsibility Ensure business continuity during difficult times It’s up to you as the business owner to embrace and promote your brand. PRINCIPLE #3 – RICHES IN NICHES Successful business owners understand they can’t be everything to everyone.  Having a narrowly defined group of customers will help you grow and prosper. Imagine the benefits of only placing “six primary titles” where your database of candidates would match the business you write.  Other candidates surfaced or job orders out of your niche can be filled through your partners in the Top Echelon Network.  PRINCIPLE #4 – OUTSTANDING CUSTOMER SERVICE Successful entrepreneurs understand that excellent customer service will keep customers coming back. In this age of Social Media, outstanding customer service is more important than ever. How you handle clients and candidates directly affects your company’s performance.  Proper utilization of Big Biller can track the value of each customer to your business.  Tools like auto responders can ensure a strong follow-up and touch program. PRINCIPLE #5 – GOOD BANKING RELATIONSHIPS AND FISCAL DISCIPLINE It is advisable to build relationships at two banks separating your personal from your business assets.  It is wise to nurture relationships with the bank manager and head teller. Successful business owners utilize budgets and realistic sales projections to run their business.  They understand how to use a line of credit and use it for short-term cash needs, not long-term funding needs like marketing expenses. Also, if you place contractors and handle the payroll and funding yourself, you may want to consider outsourcing that liability and responsibility to Top Echelon Contracting. This would significantly reduce your line of credit and funding needs. PRINCIPLE #6 – EMBRACE TRAINING AND PROFESSIONAL ADVISORS Successful business owners realize retention of top performers is enhanced by providing consistent training.  A conversation with the right trainer or advisor can be more valuable than years of formal education. Develop relationships with other entrepreneurs who can provide insight and guidance into running a successful business.  Surround yourself with people more successful and knowledgeable than yourself.  If possible, join a Mastermind Group that can provide insight and advice.   Implement these six principles and you will enjoy higher level of sales and better [...read more...]

5 Common Recruiter Questions about Contracting

As a contract staffing back-office service, we get calls every day from recruiters who want to add contract staffing services to their business model. For other recruiters who may be interested in contract staffing, here are the “Top 5” questions we receive and our answers to them:  How do I get started in contracting? This definitely our top question. The most difficult part of getting started is handling the initial set-up and ongoing employment of the contractors. If you outsource this part to a third-party back-office service, you are only left with the front-office recruiting tasks. This means your biggest job is just spreading the word about your new service. Statistics show that 80% of contract job orders come from a recruiter’s current client base, so start by notifying all your direct hire clients that you now offer contract staffing. Also, ask current candidates if they are willing to work on contract. This will help you build a pool of contract candidates. Finally, make sure your existing marketing vehicles (website, social media profiles, business cards, marketing documents, etc.) contain your contract staffing message. How do I figure out the bill rate and pay rate? Negotiating rates can seem daunting, but it’s not as hard as it sounds. First, note that most contractors are paid on an hourly basis, so the bill rate charged to the client and the contractor pay rate will both be hourly. We recommend obtaining a range of bill rates the client would be willing to pay up front so that you can negotiate with confidence. Then, you will need to determine the contractor pay rate. Start by taking the annual salary for a comparable direct hire position and dividing it by 2,080 (the average number of full-time hours per year). You can then multiply that pay rate by a markup to get the hourly bill rate. The average markup for professional, technical, and healthcare nationwide is currently 1.63, but that can vary based on industry, location, demand for the position, and other factors. The spread between the bill rate and the pay rate covers taxes, unemployment, Workers’ Compensation, professional liability, administrative costs, and your recruiter profit. Still confused? Don’t worry. A quality back-office provider will help you through it. For instance, by asking some simple questions, Top Echelon Contracting, Inc. can generate a recruiter “Quote” that includes a matrix to help you negotiate the bill rate and pay rate. It covers a $20 bill rate spread and $11 pay rate spread, so if the client or contractor try to negotiate a different rate, you can see how that will impact your recruiter profit (which is also hourly). What if a client doesn’t pay the invoice for hours already paid to the contractor? If you run your own back-office, this is one of the biggest risks you take on. Collecting on unpaid invoices will be your responsibility, and if they prove uncollectible, you will have to take the loss. If you are outsourcing, be sure to ask the back-office about their collection practices.  Some service providers involve the recruiter in the process and may hold you responsible for all or a portion of unpaid invoices. This is one area where it pays to do your homework when selecting a back-office – in this case, it all comes down to the money. Do I have to sign a contract with a back-office? That depends on which back-office you select. This should be one of the main questions you ask, because a contract could tie you into using their services exclusively or for a certain length of time. You could also be opening yourself up to potential co-employment liability, depending on how the terms are phrased. You need to be very certain which entity is functioning as the legal W-2 employer of record for your contractors. How should I explain why I have outsourced the back-office? Simply tell your client that you have outsourced the administrative tasks so you can focus on the recruiting aspects of the placement. Depending on the back-office, they will become the contractors’ legal W-2 employer, handling payroll, legal compliance, Workers’ Compensation, unemployment insurance, and all the employment tasks, and giving the contractor access to group benefits that you could not provide on your own. Most importantly, assure your client that YOU will still be their main [...read more...]