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Contracting Corner The Perm Recruiter’s Contracting Resource
Fourth Quarter 2014
A Recruiter’s Guide to Contract Staffing Back-Office Options Critical Tasks to Consider and the Top 10 Questions to Ask Potential Back-Office Providers 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 in contract staffing?” 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 for handling all the employment tasks and the liability required when you have W-2 employees: 1. In-House: Hire the contractors as your own W-2 employees. 2. Outsource: Use a contract staffing back-office service to handle the W-2 employment. This is not a decision to be taken lightly. How the back-office
tasks are handled can have a significant impact on your ability to protect and grow your firm. Therefore, it is important to make sure the financial, legal, and administrative tasks are carried out with the utmost efficiency and accuracy, whether you are doing them yourself (in-house) or outsourcing them to a back-office. Setting Up an In-House Back-Office Let’s first look at what it takes to set up your own back-office. There are a number of decisions to make and tasks to perform before you can start taking contract placements, including:
‘Outsource the employment of contractors to avoid the liability that’s associated with having employees and running your own back-office.’ 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 followup 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. How much will this cost? · State-Specific Considerations and Tax Filings Your firm must register for applicable taxes, state unemployment insurance, Workers’ Compensation
· 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 Copyright © 2014 Top Echelon Contracting, Inc.
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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.
Outsourcing: Top 10 Questions to Ask Providers Let’s say you decide NOT to take on those time-consuming tasks and liability and instead choose to outsource the back-office tasks. By outsourcing the employment of your contractors, you can 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
· 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.
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 10 questions will help you determine which back-office is the best for your firm:
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.
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What types of positions will the back-office accept?
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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
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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.
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Do you have the time and resources? 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)? Your clients want to know that you are 100% focused on getting them the best talent possible. That can be difficult if you are distracted by back-office tasks.
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. Can they do business nationwide? If not, this could restrict future growth.
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’ll also want to determine if the recruiter is held responsible for “uncollectible” invoices and 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. 2
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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 backoffice does not do any recruiting or staffing. Ideally, the back-office should handle the administrative tasks, and the recruiter should work with the client for all recruiting needs.
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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. 10. 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 backoffice provider is a reflection on your firm and has a direct impact on your reputation?
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
Q&A—Should I consider outsourcing the back-office to TEC?
Top Echelon® Contracting, Inc. (TEC), the recruiter’s back-office solution, helps recruiters offer contract staffing to clients and candidates. As a contract staffing service provider since 1992, TEC becomes the employer and handles all of the employee paperwork, legal contracts, timesheet collection, payroll processing and funding, tax withholding, benefits, Workers’ Compensation, invoicing, collection of accounts receivables, background checks, etc. TEC does business in 49 states and specializes in technical, professional, and healthcare contract placements. For more information, Call: (888) 627-3678 Web site: www.TopEchelonContracting.com Blog: www.TopEchelonContracting.com/blog
Email:
[email protected] President: Debbie Fledderjohann
How does Top Echelon Contracting measure up to the standards we established in the previous article? For starters, TEC was created in 1992 for the sole purpose of helping recruiters make contract placements. This is all we do and all we ever have done for the past 22 years. Furthermore, as a full-service back-office, we: · Handle all the employment tasks, including timesheet collection, payroll funding, payroll processing, tax deposits and filings, invoicing and collections, unemployment claims, Workers’ Compensation, employment paperwork, and employee issues and terminations. · Take responsibility for all the liability and compliance issues, including COBRA, EEO, immigration, IRS (1099 vs. W-2), maintaining the certificate of insurance, and more. · Place professional, technical, and healthcare contractors under a variety of Workers’ Compensation codes in 49 states. · Negotiate a master agreement with the end client and an employment contract with the candidate. · Do not require a contract with the recruiter. You may use TEC for every contract placement or just one. · Do not recruit, so we do not compete with you. · Offer contractor benefits, including ACA-compliant healthcare insurance at group rates and with an employer match. · Have an experienced staff with an average tenure of 13 years. This staff includes trained and certified human resources professionals. · Are endorsed by NAPS, Accredited by the Better Business Bureau, and a member of the American Staffing Association (ASA). Top Echelon Contracting provides FREE contract staffing training and marketing tools: · ·
Recruiter Training Center
www.topecheloncontracting.com/contract-staffing/training Contract Staffing Marketing Center
www.topecheloncontracting.com/contract-staffing/marketing
Experience the Top Echelon Contracting difference. Call us at (888) 627-3678 to find out how we can help you get started with NO upfront financial investment or ramp-up time. 3
Recruiters’ Roundtable: The Contract Staffing Back-Office Self-Audit While contract staffing can be very profitable, the back-office duties associated with employing contractors present a lot of risk and hassle when recruiters take on those duties themselves. That is why many recruiters choose to outsource the employment of their contractors to a contract staffing backoffice provider, such as Top Echelon Contracting. By doing so, they can avoid the liability, administrative burden, and additional overhead. Should you outsource your back-office? If you do choose to outsource, which provider should you select? We address those questions in this issue’s main article. To help you make a truly informed decision, we are also offering a free Contract Staffing Back-Office Audit. This comprehensive checklist
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documents all the traditional back-office tasks tied to being the legal employer of your contractors. You can use this self-audit to determine if you have the time and resources to run your own back-office or to evaluate another provider. Specifically, the checklist outlines required tasks related to the following areas: · Federal and state unemployment laws · Payroll, overtime, FLSA, taxes, per diem guidelines · Workers compensation tracking and compliance · Immigration, I-9’s, and E-verify requirements · Healthcare reform and benefits administration · Legal contracts, background checks, and payments · Employee onboarding and administration · Employer risk and liability protection For a Contract Staffing Back-Office Audit, go to https://secure.topecheloncontracting.com/ recruiters/forms/back-office-audit.aspx or scan the following QR Code:
A Back-Office Option Guide!
Q&A
You’ve got questions about a recruiting back-office? We have ALL of the answers!
Should I consider outsourcing the back-office to Top Echelon Contracting (TEC)?
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