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.

IT Contracting Predicted to Outpace Direct Hire in 2015

Now is a great time to be working in the Information Technology (IT) sector. According to CareerBuilder’s recent IT forecast, “More than half of IT employers plan to add full-time, permanent staff this year…in addition, 59% of IT employers will add temporary or contract workers.” The survey also found that employers are having difficulty finding candidates with the skills they need, and as a result, they are focusing on enticing talent in various ways. What does all this mean for you, the recruiter? Your services are in demand on both sides. Clients need a good recruiter to match the job openings they have with the skilled candidates they need and can’t find. In-demand candidates need a good recruiter to cherry-pick the most enticing opportunities and present their skills to the client. And according to the above statistic, one of the best ways to position yourself for recruiting success in 2015 is to recruit contract workers. The question is – where can you find the skilled candidates employers need? The type of candidates IT employers are looking to entice also tend to be with those who would benefit most from working on contract. In addition to your standard recruiting practices, below are two strong demographics to pursue for contract work: College Graduates. It may seem counter-intuitive that 70% of IT employers want to hire inexperienced college grads when they are currently experiencing a skills gap. However, these new graduates also bring fresh talent and cutting-edge training into the workplace. Even better, recent grads overwhelmingly belong to the Millennial generation, well known for being independent digital natives with nomadic tendencies – traits which make them perfect picks for contract IT work. Retirees. We’ve already written about the “retiree restaffing” trend gaining ground this year, and the benefits to both employer and employee still apply. In this case, over half of IT employers surveyed will likely bring on retirees this year. They may not have the cutting-edge training of the new college grads, but they have an unmatched level of experience that employers need equally. Setting yourself up as a valuable resource for IT employers and candidates alike is a smart move for 2015. Make sure you’re able to provide all the services they need, from contract staffing to direct hire [...read more...]

8 VITAL Paid Sick Leave Issues to Understand

When it comes to paid sick leave (PSL), it doesn’t matter whether you run contractors through your own back-office or outsource to a back-office service provider – you need to be familiar with this employment law area.  However, unless you place contractors in a geographical area that currently requires PSL or has it on an upcoming ballot, the lack of any PSL laws at the federal level may have left you unaware of this growing issue. This is one case where ignorance is not bliss – since we first reported on this issue in April 2013, the number of cities and states requiring PSL has more than tripled and 21 states are considering statewide legislation. If PSL does not currently impact you, the odds are good that it will soon. If you run your own back-office (particularly if you place contractors in more than one location in the U.S.), the considerations are numerous and complex. Below, we list 8 of the pressing issues to consider: Staying Informed. Keeping abreast of the new locations mandating PSL is easier said than done. Since the requirements are typically enacted at the state or municipal level, finding a single source for updates is unlikely. New legislation is popping up in a piecemeal fashion around the country, so you must be proactive about researching and alerting yourself to new bills on ballots, whether they pass or fail, and the specific compliance requirements that take effect if they do pass. Does it Apply to You? Not all sick time laws affect every employer within the location equally. Some requirements, including whether or not an employer is liable, whether or not the leave time must be paid, and how much time must be provided, vary based on the size and industry of the employer. Differing Regulations. Every location handles paid sick leave differently, and keeping track of the variances can place a large administrative burden on you. Some of the regulations that can vary widely are the effective accrual date, the rate of accrual, the maximum accrual, the maximum usage, the end-of-year carryover, and the rehire provisions and policies. One Law Trumps Another. In some cases, a location may be affected by PSL laws at both the state and local level. For example, San Francisco, CA has a city-specific PSL law, but it is also covered by the California statewide PSL law. The San Francisco ordinance is more generous with respect to the amount of sick time allowed in a year, but the California law is richer in regards to the rehire provision. In this situation, the employer must provide whichever provision or benefit is more generous to the employee. Posting Requirements. Each location with a PSL law requires you, as the employer of record, to post a notification to the employee informing them of their PSL entitlements. Further complicating the issue, some locations provide model notices for employers to use, but in most cases the employer must create their own. Recordkeeping. You will have to track accruals closely and provide employees access to updated records indicating what they have earned and may use. The recordkeeping and retention requirements may vary a great deal from law to law. Rehire Provisions. The guidelines for rehire provisions vary, but they generally state that if an employee is rehired within a certain number of months, the employer must restore any accrued and unused paid sick leave. Again, this reinstatement is not client-specific – it is ­location-specific. Therefore, you may have an employee who ends a contract with one client and begins another with a different client in the same location, necessitating that you (the employer of record) observe the applicable rehire requirements. Handling the Cost. The most common PSL accrual rate is one hour of leave for every 30 hours worked. You must consider how you will handle this added cost. Will your firm account for it up front within your own back-office pricing structure? Will you invoice the cost back to the client? As you can see, PSL is not a clear or easy area of employment law, and this article offers only a brief overview of some of the vital considerations. PSL is likely to become even more complex as time goes on. For example, the issue of potential PSL rehire provision reciprocity between locations has yet to be addressed. Even if a nationwide mandate is someday put into place, it may not simplify things for employers if they are still required to provide the more generous provision or benefit of all applicable PSL laws. If all of this sounds like too much to track and implement within your own office, your best bet may be outsourcing to a back-office service provider. Make sure you carefully select a provider that will put the necessary effort into ongoing tracking and observation of the changes in law – you want to be sure that they will take the burden off of you [...read more...]

Q & A : What Staffing Option Can Help Me to Retain Clients?

In today’s complex employment and economic environment, a direct hire does not always meet a client’s needs. Offering a broad spectrum of staffing services that meets ALL your clients’ needs is vital to retain clients over time and continue acquiring new business. Fortunately, simply adding contract staffing to your business model – by taking on the responsibilities and liability yourself or outsourcing to a contract staffing back-office service – can help you do that with six commonly recognized types of contract placements: Traditional contract staffing. From a recruiting perspective, this is much like a direct hire situation: the recruiter gets the contract job order, locates the candidate, and negotiates the rates. The difference is that the contractor becomes the W-2 employee of the recruitment firm or a back-office rather than that of the client company, but the client still gains the valuable skill and expertise of the contractor.  This is extremely common when a client has a large project or a critical deadline.  The client only pays for the actual hours worked by the contractor; they are not responsible for unemployment, worker’s compensation, benefits, COBRA, or any of the other cost and liability aspects of having employees. Temp-to-direct hire conversion. The recruiter finds the candidate as with traditional contract staffing; however, here the intention is to convert the candidate to a direct hire after 6-12 months if they meet the necessary goals and expectations during the contract period.  Basically, this gives the client the opportunity to work hand-in-hand with the candidate before making the long-term commitment of hiring them directly.  This is also referred to as “try-before-you-buy.” Payrolling for non-recruited candidates. In this scenario, the client has a short-term need (3-12 months) for which they have already located their own candidate. They simply want to outsource the employer responsibility for unemployment, worker’s compensation, benefits, COBRA, and all of the other cost and liability aspects of having employees. Retiree re-staffing. Companies retain or gain the skills and experience of a retired worker by bringing them on as a contract worker.  By utilizing a staffing firm/back-office service, the client refrains from impacting pension plans because the legal employment of the worker is outsourced to a third party. Additionally, the retiree enjoys flexibility, supplemental income, and the opportunity to remain active in the workforce. 1099 independent contractor to W-2 employee conversions. Government agencies are cracking down on companies that misclassify W-2 employees as 1099 independent contractors (ICs), and the consequences include lengthy audits, hefty fines and potential back wages. Clients can avoid the risk of misclassification by converting ICs to W-2 employees and outsourcing the employment liability. Internships/co-ops. Outsourcing intern employment helps clients avoid the cost and administrative issues associated with short periods of employment. This is a viable alternative to unpaid internships which, like 1099 independent contractors, have come under fire and can only be legal if they meet a strict set of [...read more...]

Make Better Matches – Barb Bruno Tells You How

Guest article by Barbara J. Bruno, CPC, CTS, CEO of Good as Gold Training, Inc. Whether you are an experienced recruiter or a rookie, matching candidates is one of the most difficult skills to master.  You have worked hard to recruit qualified candidates.  You are in the process of developing rapport and trust with each candidate.  The next step is to match the candidates’ credentials with the hot contract assignments (all levels) and direct hire job orders in your office. In order to make appropriate matches, the following steps must occur: Interview your candidates to find out which direct hire job order or contract assignment opportunity will hit their hot buttons (the real reason they will go through the trauma of a change). Understand the specs of the direct hire job orders and contract assignments in your office so that you can enthusiastically present opportunities to each candidate. It’s very effective to show your candidates how the position being presented is exactly what they described as their next career move (quote words and answers from their interview that hit their hot buttons). Familiarize yourself with the client companies. Learn key selling points and know why they would impress your candidates. It’s not enough just to know about the jobs.  Illustrate the client company’s reputation and share quotes from past placement success stories. Determine if the hourly pay rate/salary range and location are commensurate with the needs and wants of your candidates. How Percentages Make Matching Easier Using percentages is one method that will improve your ability to match the best candidate to each contract assignment or job order. When you receive a request from a hiring authority, take time to break down the duties and responsibilities into percentages.  What amount of time will the person in the role spend on each area of responsibility? In order to obtain this information, you need to show hiring authorities how they benefit from providing you with this information.  The job might be available because they want to increase one specific area of responsibility, which was not the strength of the prior person in the job. If you are made aware of this, you can focus on matching a candidate who has the strength or experience they desire. It is important to obtain percentages from the candidates you interview, too. Find out how much time is being spent on each area of responsibility at their current or most recently held job.  However, don’t assume that the current breakdown of responsibilities is what the candidates want out of their next opportunity.  They might well be making a job change because they want to spend more of their working hours focused on the tasks they enjoy most. Once you have a clear picture of the requisition, as well as your candidates’ preferences, your ability to make better matches will dramatically increase.  This will help you select the best candidates and will also optimize the duration and retention rates of your [...read more...]

New Audio Training – How to Get Started in Contract Staffing

By far, the biggest question we get from recruiters who call inquiring about our contract staffing back-office services is “How do I get started in contract staffing?” We now have a new tool to help answer that question and other common questions. Our new “How to Get  Started” audio training Mp3 is an interview between myself and RecruiterU Founder Mike Gionta. During this 58-minute session, you will learn: What is driving contract staffing growth Why candidates are adopting the contract staffing lifestyle Why client companies are using contractors The benefits of contract staffing for recruiters The differences between direct hire and contract staffing What it takes to run an in-house back-office The 5 most frequently asked recruiter questions Contract staffing trends and top industries Tips for recruiters getting started in contract staffing How outsourcing the back-office can make contracting SIMPLE And more! We cover many of these topics on this blog, but the downloadable audio training gives you the ability to listen to the information whenever and however is most convenient for you. Here is a direct link to the audio training: https://secure.topecheloncontracting.com/audio/Mike-Gionta-interview.mp3. Remember, you can find it and other training tools in our Recruiter Training Center. And as always, you can discuss how to add contract staffing to your business model by calling us at (888) [...read more...]

6 Recruiting and Contract Staffing Trends for 2015

Contract staffing had quite a year. The “temporary help services sector” added jobs and broke records month after month in 2014. This growth continues even now that direct hiring has finally bounced back from the recession. So what does 2015 hold for contract staffing? Happily, we are expecting even more growth. Here are the anticipated contract staffing trends for 2015: Continued adoption of blended workforce models - One of the biggest trends we have observed is the transition from a traditional, direct hire workforce to a blended workforce model that incorporates both direct hires AND contractors. In the blended workforce model, companies typically maintain a small core of traditional, direct hire employees supported by an outer ring of contractors that can be adjusted to meet business needs. This provides companies with flexibility, cost savings, and reduced liability. This trend has been growing over the past several years and promises to accelerate even more in 2015. Growth of technology - The growth of the Internet and mobile devices has changed employment, allowing employees to work remotely and giving rise to “virtual teams.” In fact, the number of people working from home at least one day a week increased by 80% between 2005 and 2012, according to Fast Company.  These remote workers are the perfect candidates to take on the type of project-based work that is common to contract assignments. Generation Y and Generation X choose contracting lifestyles - These younger workers like contracting because it provides them more flexibility, variety, and more control over their careers. Therefore, we will continue to see more workers in these generations consciously choose contract assignment over traditional jobs. Boomers retiring - At the other end of the spectrum, Baby Boomers are finally feeling comfortable enough financially to retire, creating a knowledge deficit for many industries and companies. This will fuel an already growing trend known as retiree restaffing where companies bring retirees back as consultants on a contract basis to retain their knowledge and skills. Boomers also like the flexibility of these arrangements which allow them to stay active in the workforce and supplement their retirement income. Obamacare impact - The employer mandate of the Affordable Care Act (ACA or Obamacare) began rolling out January 1, 2015. This provision requires employers with 50 or more full-time employees to provide affordable healthcare insurance to those employees. Those with 100 or more employees must comply this year or be penalized, while employers with 50-99 full-time employees have a reprieve until 2016. We predict that the phasing in of the employer mandate will further spur the use of contractors as employers try to decrease their full-time employee headcount. Top contract staffing industries stay the course - We expect contract staffing to remain strong in Information Technology (IT), which has always been the ideal industry for contracting, as well as in Engineering/Manufacturing, Healthcare (white collar professionals with 4-6 years of education), and Accounting/Finance. However, contract staffing has been growing and will continue to do so for a wide range of business professionals. In fact, we don’t foresee any industry going untouched by contract staffing. If the growth in the economy continues as predicted, it could be a very good year for recruiters. Contract staffing is a key part of that growth. Therefore, one of the best ways to ensure a successful 2015 and beyond is to make sure you are offering contract staffing as an option to both your clients and [...read more...]

How Independent Recruiters Can Avoid Client Defection

What would happen if even just one of your top clients stopped giving you job orders? Are you leaving that money on the table for your competitors to take? If you think that couldn’t happen to you, consider this: Companies are streamlining every aspect of their businesses, including their recruiting functions. If you are not meeting all their needs and providing the best value, they may go elsewhere. It’s called client defection, and it can have a major impact on your recruiting firm. The worst part? By the time you notice that you haven’t received job orders from a client in awhile, they may have already defected. Why is client retention so important? What causes client defection? With the help of industry experts Barb Bruno, CPC, Owner of Good as Gold Training and Development, Inc., and Amy Bingham, Managing Partner of Bingham Consulting Professionals, we will examine these issues and their possible solutions, including the important role of contract staffing services in client retention. Importance of Avoiding Client Defection Client defection, also known as client attrition, is a key metric for any business, but it can be even more important for recruiters. According to Bruno, 75% of a recruiter’s business typically comes from only five clients. This shows how devastating it can be if a recruiter loses just one top client. Statistics also show that it costs five to seven times more to acquire a client than to retain one. The divide may be even greater in the recruiting industry, considering the complexity of client development. “When you think about all the blood, sweat and tears it takes to get a new client, it is extremely costly,” said Bruno. “When you have an established client, you know the hiring authority, the culture, and what it takes to be successful there.  All of that enhances your chance of a placement. You don’t have that with a new client.” Bingham agreed, noting that while new client acquisition is vital to the growth of a recruiting firm, retaining existing business is just as important. “It is always easier to nurture existing business than to acquire new clients,” said Bingham. “Consider all the time and energy it takes to get a potential client’s attention, sell a solution, and close the business. It can take at minimum 30 days and up to 6 months depending upon the complexity of the direct hire placement. Once the relationship is established, the process is a lot faster for direct hire and contract staffing services.” Red Flags of Client Defection Your clients probably won’t inform you they are taking their recruiting business elsewhere. More likely, you will simply notice that you haven’t gotten job orders from a certain client in a while, by which point it may already be too late. “Recruiters often buy the excuse that clients aren’t hiring new employees, but they need to take a minute and see the red flags,” said Bruno. Some of those red flags include: No job orders, sometimes despite the client posting jobs online The hiring authority delegating your calls to HR or elsewhere The client no longer using you as a “sounding board” A lack of referrals from the client The bottom line? “If you are not communicating with or generating any income from them, they have checked out on you,” Bruno said. Causes of Client Defection Client defection is particularly high in the recruiting industry due to the large number of recruiters competing for the same business, Bingham noted. However, there is good news: The main reasons for client defection are largely under your control. According to Bingham, clients usually look elsewhere due to unsatisfactory service, price, or because the recruiter is not offering all the services needed. While lowering your price may not be an option or a wise decision, you can always give clients more value by providing excellent customer service and offering all of the staffing services they need. Contract Staffing: The Big Trend Being a total service provider involves anticipating your clients’ needs by keeping up with trends in the industry. Right now and for the foreseeable future, the biggest trend is contract staffing. The use of contractors has grown steadily since the recession as companies replace the traditional workforce model with a blended workforce that includes both direct hires and contractors in their long-term business strategy. As a result, contract staffing has been responsible for 10% of the jobs in the economic recovery and has been breaking records month after month. “I speak at industry events all across the country, and the hiring trend I’ve heard about everywhere is contract staffing,” Bruno said. “A Careerbuilder survey found that 42% of employers planned to hire contractors this year. By 2020, experts predict 50% of the workforce will be contractors.” Yet there are still a number of recruiters who fail to recognize this reality, offering only direct hire services. They believe that their clients will remain loyal to them for direct hire business even if they have to go elsewhere for contract staffing, but Bruno disagreed. As larger companies streamline their hiring processes and limit the number of approved vendors, they often don’t have enough room on their list for a direct hire recruiter and a contract staffing recruiter for each discipline. They tend to only select recruiters who can do both. “Here’s the bottom line – you can’t ignore that 50% of the workforce is going to contract staffing,” Bruno said. “Failing to provide a service your clients need does not make sense. You are leaving money on the table.” How to Get Your Client Back Getting a defected client to come back to you can be difficult, but it is possible. Bingham and Bruno both recommend facing the issue head on. “To win a customer back, we need to first find out why they left us, resolve any issues, and ask for another chance,” Bingham said.  “A straightforward approach to asking for feedback is best.  Just ask your client if there has been an issue with the service or if they have a need that cannot be met through your firm.” “Schedule a call or appointment with them. Ask the tough questions,” Bruno added. “Don’t focus on ‘This is what we do’ but rather on what’s in it for them. Then you can get them back.” Offering contract staffing services is a great way to help lure them back and keep other clients from defecting. You can add contract staffing services to your business model with no ramp-up time, no additional staff, and no upfront financial investment when you utilize a full-service contract staffing back-office such as Top Echelon Contracting, Inc. (TEC). The back-office will become the W-2 employer of your contractors, handling all the financial, legal, and administrative issues associated with contract placements. Keep Your Clients Close Getting and keeping quality clients takes effort – don’t let a lack of contract staffing services make it more difficult. As the old adage says, “People do business with people they like.” By providing the options they need and the quality customer service they deserve, you can be their recruiter of choice. Combined with your own expertise, contract staffing services will help ensure that your clients have no reason to [...read more...]

Contract Staffing in 2014 Spanned All Industries

Statistics show that contract staffing continued to grow across all technical, professional, and healthcare industries in 2014.  This supports the blended workforce model where a company typically maintains a small core of traditional direct employees which is then supported by a larger outer ring of contractors. According to Top Echelon Contracting’s (TEC) placement statistics for 2014, contract staffing nationwide was particularly popular in these top six areas: Healthcare (28% of placements) – The Affordable Care Act is mainly credited with the surge in demand for white collar healthcare contractors with 4-6 years of education. The law increased the pool of patients by requiring most Americans to be covered by health insurance and also implemented change initiatives that required more man-power. Engineering/ Manufacturing (18%) – Automation, re-shoring, and the retirement of experienced Baby Boomers is creating a skills shortage in many areas. Highly skilled engineers and technicians are particularly in demand. Finance and Accounting (15%)  – There has been a greater focus on accounting due to the numerous corporate and financial scandals in recent years. Stricter regulations and laws have been passed in response to these scandals, and the importance of audits has been elevated. Business Professionals/ Support Staff (15%) – Contract staffing is being used in a variety of professional capacities, for positions up to and including the C-Suite, as a result of the blended workforce model. Information Technology (14%) – This is always a hot sector for contract staffing due to its project-based nature. Facing its own war for talent, companies are looking to fill IT positions as quickly as possible, and contracting helps them meet that urgency. HR/Recruiting/Legal (8%) –Healthcare Reform, in addition to the blended workforce model, is increasing the need for HR, legal, and recruiting skills across companies of all sizes. Regardless of your niche, if there’s one thing that could impact your recruiting business in 2015, it’s contract staffing. Consider how easy it could be to add this valuable service to your business [...read more...]

Top 10 Questions to Ask Potential Contract Staffing Back-Office Providers

We discussed in the previous blog post the critical considerations and tasks associated with setting up an in-house contract staffing back-office. But let’s say you decide NOT to take on the time-consuming back-office tasks and liability and instead choose to outsource the back-office. This allows you to  avoid the back-office headaches and instead focus on your recruiting tasks and growing your business. Now the question is “Who?” Not all back-office services are created equal. For example, some providers only handle payroll funding and/or processing, which leaves you with the other employment tasks and liabilities.  The only way you will avoid all of that is to use a full-service back-office that will become the contractors’ legal, W-2 employer taking on all the employment tasks. There are a number of other differentiating factors between back-office services. Asking these questions will help you determine which back-office is the best for your firm: What types of positions will the back-office accept? Can they accept nationwide placements? Some back-offices only place individuals in office environments due to Workers’ Compensation restrictions. Make sure the back-office can accept the types of positions for which you want to recruit. Also, make sure they are set up to accept placements in the states in which you focus. If not, this could restrict your growth. Does the back-office have a master agreement with the end client that defines the legal scope of the contract placement? The back-office’s master agreement with the end client should confirm that the back-office will be the Employer of Record and will take on all the employer responsibilities. Without this, the door to co-employment is left wide open and you and/or your client could end up retaining some liability. Does the recruiter have to sign a contract to use the back-office? If so, you may be obligated to use that back-office exclusively and/or for a certain period of time. You will also want to determine if the recruiter is held responsible for “uncollectible” invoices and find out when the recruiter gets paid. What happens if a client fails to pay an invoice? Again, you want to find out if you could be held responsible for uncollectible invoices. Also, what are the standard invoicing terms? Does the back-office have standard procedures to confirm that the client received the first invoice and to collect on open invoices? Does the back-office run background checks on all contractors? Ensuring that a background check is run on every contractor can help protect your firm from liability and maintain your reputation. It will also help protect your client.  You may want to confirm that drug screenings can also be handled. Does the back-office recruit candidates and fill its own job orders? To ensure that the candidate remains “your” candidate, you may want to confirm that the back-office does not do any recruiting. Ideally, the back-office should handle the administrative tasks, and the recruiter should work with the client for all recruiting needs. Does the back-office offer group benefits to contractors?  To attract and retain the best contract candidates, make sure your back-office offers a rich benefits package with group healthcare insurance as well as dental, vision, and life insurance and 401(k). Does the back-office contribute a portion of the healthcare premiums for the contractor? Is the back-office compliant with the Affordable Care Act (ACA or Obamacare)? The group healthcare insurance for contractors should meet the ACA’s Minimum Essential Coverage (MEC) and Minimum Value (MV) requirements. Does the back-office have certified human resource professionals on staff? As mentioned earlier, an experienced and knowledgeable HR staff is vital to handle any potential employee issues, including terminations, Workers’ Compensation issues, benefits questions, and more. How long has the back-office been in business? What is their reputation? Be sure your back-office provider has an impeccable reputation and experience. Don’t be afraid to ask for references. Remember, your back-office provider is a reflection on your firm and has a direct impact on your reputation. By performing this “due diligence,” you can ensure that the back-office you select is the right solution to help you grow and protect your business. This general summary of law should not be used to solve individual problems since changes in fact situation may require a material variance as to the applicable law.  This article is for information purposes only and should not be construed as legal [...read more...]

Setting Up an In-House Contract Staffing Back-Office

As contract staffing continues to grow, the question for many recruiters is no longer “Should I offer contract staffing?” but rather “How do I get started?” Along with getting job orders and identifying contract candidates, one of the most important steps is deciding how to handle the back-office tasks associated with employing the contractors. There are two options: In-House:  Hire the contractors as your own W-2 employees. - OR – Outsource: A contract staffing back-office service handles W-2 employment. In this article, we will focus on the first option: Running your own in-house contract staffing back-office. Getting Set Up If you are considering running your own, in-house back-office, be aware that there are a number of ramp-up tasks to perform and critical decisions to make before you can start taking contract placements, including: Payroll Funding. Will you fund your own payroll or outsource the funding? Keep in mind that you must pay contractors on a regular (weekly or bi-weekly) basis, and payroll must be processed before most clients ever pay an invoice for the man-hours worked. What if a client suddenly stops paying invoices or they are a slow pay? If you are funding your own payroll, this can be devastating. Collecting Timesheets and Processing Payroll. How will you collect and track timesheets from contractors? Which payroll system will you use? Who will be responsible for actually processing the payroll, and who will be that person’s back-up in case of emergencies? Payroll is a critical, time-sensitive task. Delays or inaccuracies in payroll can damage your firm’s reputation faster than almost anything. Invoicing and Collections. What system will you use to invoice clients for the man-hours worked? How will you verify the accuracy of the information?  How will you handle expense reimbursements? How will you monitor and follow-up on unpaid invoices to ensure you recoup the money you have already spent in payroll and expenses? Certificate of Insurance. You need to secure sufficient liability insurance. Clients may ask to see your certificate of insurance and require certain levels of coverage before they will use your services. State-Specific Considerations and Tax Filings. Your firm must register for applicable taxes, state unemployment insurance, Workers’ Compensation insurance, etc. There are fees and reporting requirements tied to many of these tasks. The payroll taxes you withhold each pay from the W-2 employees must be remitted and filed to the various tax agencies. You must also verify different state laws for things like mandatory sick time, disability funds, etc. Employee Benefits. Don’t buy into the myth that contractors don’t get or expect benefits. Benefits are especially important now that the Affordable Care Act requires most Americans to carry healthcare insurance. Benefits can be crucial to attracting and retaining contractors. How will you secure a quality benefits package? Can you get group rates?  How much will you contribute to the cost of each employee’s health insurance? Contracts. Legal contracts with both the contractor and the end client are critical to define the relationship and establish the duties of each party.  You will need an employment attorney to draw up these agreements.  Clients are concerned with co-employment liability, so this needs to be clearly documented.  Liability Issues to Consider Along with the initial set-up tasks, you are taking on a significant amount of potential risk and liability when you run your own back-office. Employment regulations are growing on the federal, state, and even local level, making it increasingly difficult to stay compliant. It is important to have experienced human resource (HR) professionals on staff to handle compliance issues, including Equal Employment Opportunity (EEO), COBRA, IRS, Immigration (Form I-9 and E-Verify), along with the traditional issues that come with any employer/employee relationship. Failure to comply with employment laws may result in government audits, employment lawsuits, and other stressful tasks that take time and money, not to mention the impact on your firm’s reputation. Even if you are doing everything right, having to defend yourself in an audit or lawsuit can be very expensive and disruptive to your business.  Time and Resources The set up process for an in-house back-office can take several months. Once you are up and running, there are ONGOING tasks to complete on a daily, weekly, monthly, and annual basis, such as the aforementioned payroll and tax issues and the onboarding of employees. Then there are the numerous issues that arise when you least expect them. Do you have the time and resources needed? More importantly, is this the best use of your time and resources, or would they be better utilized on revenue-producing tasks (i.e. actual recruiting)? Outsourcing the Back-Office Again, the other option is to outsource the employment of your contractors to a contract staffing back-office service.  Outsourcing this responsibility can allow you to get started with no ramp up time, no additional staff, and no upfront financial investment. However, you should do your proper due diligence to select the right back-office service for your firm. In our next blog article, we will look at the Top 10 Questions to Ask Potential Contract Staffing Back-Office Providers. This general summary of law should not be used to solve individual problems since changes in fact situation may require a material variance as to the applicable law.  This article is for information purposes only and should not be construed as legal [...read more...]