Emergent Blog

To minimize contingent workforce risks, the temporary staffing company needs to behave like the employer of the contingent worker – which means going over and above simply payrolling the worker. Here’s a list of measures you might wish to consider to protect both your company and your clients:

1. Have employees fill out your staffing company’s employment application form, not your client’s application form.
2. All of your contingent workers must complete the I-9: Employment Eligibility Verification form
3. Your company should undertake full criminal background and reference checks
4. Ensure your employees to fill out a W-4: Employee Withholding form
5. Check that they are covered by the correct Worker’s Compensation Coverage
6. Retain responsibility for HR issues such as hiring, tardiness, absenteeism and performance issues
7. Give them an Employee Handbook and make sure they sign an acknowledgement of receipt form to say they have received it
8. If the employee receives any benefits, they should be given in the staffing firm's name.
9. Pay stubs should identify the staffing firm, not the client, as the employer.
10. Ask that client firms include assigned employees in the client company's internal employee e-mail distribution groups, employee rosters, or mailing lists
11. Give all statutorily-required notices for unemployment insurance purposes
12. Report wages and pay unemployment insurance and other payroll taxes to the State and the IRS
13. Give reminders of who the employer is throughout the employment relationship and at the conclusion of the assignment.

Sound like a lot of work? That’s because it is! Let us handle the employer responsibilities while you focus on finding quality candidates and growing your business.

Emergent has an extensive team of legal, insurance, risk management, human resources and finance professionals experienced in dealing with contingent workers.

Emergent is part of a family of companies that is one of the nation’s largest employers of contingent workers, trusted by Fortune 500 companies and small businesses alike.

Ask us about employing your contingent workers today at info@emergent.com or 855 250 5000

DISCLAIMER - Emergent maintains its blog, website and other content as a courtesy for the general informational purposes of our readers on matters of interest in the contingent labor services sector. Nothing on this blog or any part of Emergent's website is intended to create any contractual or other legal relationship between the reader and Emergent or any of Emergent's staff, and none of Emergent's blog or website should be construed as any legal advice or professional opinion for handling a specific factual situation. Though Emergent strives to publish the most current information on topics of reader interest, Emergent cannot guarantee or warrant the accuracy or completeness of posted information in any way. Readers should not act upon any posted information on the Emergent blog or website without consulting with the appropriate legal, financial, or other business professional for guidance and advice.  

Back in the fall, Emergent attended and exhibited at the ASA Staffing World conference in New Orleans. It was a pleasure to meet with so many staffing industry owners and executives face to face.

We found that while many of the business leaders we met came from different states and worked in different industries, they seemed to face many of the same challenges.

Here are the top three challenges that we heard about from small to mid-sized staffing companies and independent recruiters that affect both their business and their ability to compliantly provide workers to clients:

Not being able to help existing clients recruit contingent workers outside of their home state(s).

Problem: Many staffing companies we spoke with would like to service and provide workers to their existing clients in new states however, because of difficult to navigate regulations, many turn down these opportunities. This often means they lose the opportunity to competitors.

Solution: Emergent is able to employ workers in all 50 states. By working with Emergent, small to mid-sized staffing companies can meet the demands of their clients and grow their business. Additionally, client companies who value their existing recruiting relationships can engage Emergent to employ the workers these companies recruit nationwide.

Becoming overwhelmed by administrative tasks at the expense of other core tasks.

Problem: Many smaller staffing companies shared that they are bogged down with administrative obligations and find that they don’t have as much time to focus on sales and recruiting, nor to keep up on changing employment regulations and laws.

Solution: Emergent employs the contingent workers your company recruits. This means that we handle the administrative tasks associated with employing that worker; including HR, worker’s comp, payrolling, legal and state/federal tax withholding. This allows our clients to focus on their core business and tasks.

Recruiters wanting to start or expand their business, but are frustrated by lack of resources including funding, insurance, and legal expertise.

Problem: Many of the successful recruiters we met with, who had worked for large and small staffing companies alike, have had ambitions to start their own business. Others, whom we met, were already working for themselves and have built a business with several million dollars in payroll. Many had problems securing payroll funding, insurance and other operational necessities that would enable them to grow their business.

Solution: Emergent works with independent recruiters and seasoned staffing professionals who want to start their own business or grow their existing business. Emergent enables these companies to grow, secure in the knowledge that the workers they recruit will be engaged compliantly and cost-effectively.

If you, your company, or your staffing suppliers face these challenges, Emergent can ensure workers are employed compliantly and cost-effectively. Call us at 855.250.5000 or e-mail us at info@emergent.com.

DISCLAIMER - Emergent maintains its blog, website and other content as a courtesy for the general informational purposes of our readers on matters of interest in the contingent labor services sector. Nothing on this blog or any part of Emergent's website is intended to create any contractual or other legal relationship between the reader and Emergent or any of Emergent's staff, and none of Emergent's blog or website should be construed as any legal advice or professional opinion for handling a specific factual situation. Though Emergent strives to publish the most current information on topics of reader interest, Emergent cannot guarantee or warrant the accuracy or completeness of posted information in any way. Readers should not act upon any posted information on the Emergent blog or website without consulting with the appropriate legal, financial, or other business professional for guidance and advice.  

As U.S. employers know, workers’ compensation insurance is a requirement that can be a large expense for any business. When exploring ways to manage this and other rising employer costs, companies must ensure that the solutions they choose do not leave them exposed to unwanted liability.

Increasingly, staffing companies and their clients are finding themselves involved in lawsuits due to the use of cost-effective, yet tenuous arrangements with third party employers of their temporary and project-based contingent workers.

There have been several legal cases filed over the past couple of weeks that raise questions as to who is ultimately liable when a third party employs temporary workers recruited by staffing companies.

This week, the Texas Supreme Court held that, under Texas law, an employer's workers' compensation policy cannot cover some employees but not others – meaning that temporary workers must be covered by the worker’s compensation insurance of the client if a co-employment status exists between the client, the staffing company and the employee.

In another case, the State of California ordered the California Self-Insurers’ Security Fund to assume workers’ compensation liabilities for hundreds of injured California temporary workers.

The workers were employed by a third party that became insolvent and thus defaulted on its legal obligations to pay the injured workers. Part of the third party employer’s business model included selling its self-insurance coverage directly to staffing companies who in turn contracted with, and delivered temporary staffing services to their clients.

Unsurprisingly, the Fund began a lawsuit to recoup its losses from the insolvent third party employer. However, they ALSO brought a lawsuit against the third party’s clients (including the staffing companies and THEIR clients) – alleging that the companies that acquired insurance from the third party did so in an attempt to avoid their statutory obligation to purchase workers’ compensation insurance for their employees.

The Fund also claims that the third party was a co-employer of the injured workers, due to the fact that their clients (the staffing companies and their clients) actually directed the workers on a day to day basis. Because of this, the California Labor Code and common law considers the companies involved as joint employers of the injured workers - despite the agreement those companies had with the third party.

Although the companies involved probably entered into the arrangement with the third party in good faith, the case is a reminder of the obvious – staffing companies must ensure that they or a third party employer of the workers they recruit is financially stable and that they are employing the workers in compliance with the Labor Code and common law.

Additionally, client companies need to be proactive and become familiar with their staffing vendor’s employment status and compliance practices - they should know if their staffing vendors are utilizing third party employers. Regardless of negotiated agreements between these companies, including third party employers, all may be responsible.

Emergent’s family of companies have been in business for more than thirty years servicing the Fortune 500 and small businesses alike. Emergent is committed to compliantly and cost-effectively employing temporary and project-based workers recruited by staffing and client companies.

To find out how we can help your business lower its costs, call us today at 855.250.5000.

DISCLAIMER - Emergent maintains its blog, website and other content as a courtesy for the general informational purposes of our readers on matters of interest in the contingent labor services sector. Nothing on this blog or any part of Emergent's website is intended to create any contractual or other legal relationship between the reader and Emergent or any of Emergent's staff, and none of Emergent's blog or website should be construed as any legal advice or professional opinion for handling a specific factual situation. Though Emergent strives to publish the most current information on topics of reader interest, Emergent cannot guarantee or warrant the accuracy or completeness of posted information in any way. Readers should not act upon any posted information on the Emergent blog or website without consulting with the appropriate legal, financial, or other business professional for guidance and advice.  

Happy New Year!

January is typically a time when companies look back at the previous year and try to predict what may happen next. Despite the seemingly ever-changing economic outlook, 2012 is no different.

A new CareerBuilder survey released last week found that 35% of U.S. companies are operating with smaller staffs than before the recession and that many are turning to temporary workers to take up the slack.

They found that 36% of businesses will engage contract or temporary contingent labor in 2012, up from 34% for 2011, 30% for 2010, and 28% for 2009. Areas of high demand for this workforce include health care, information technology, clerical, and managerial.

Another survey by Staffing Industry Analysts, found that current buyers of contingent labor plan to increase their use of contingent workers by 26% over the next two years.

40% of buyers in the finance/insurance industries and 42% of restaurant/hospitality buyers are among those planning a significant increase in their contingent staff over this time frame.

The two surveys indicate that the growth predicted in the contingent workforce in recent years is coming to pass. Because of this, companies must get better at defining cost-effective and compliant contingent workforce strategies.

Although this workforce is expanding, through a webinar we did in conjunction with HR.com last year, we found that 64% of companies did not provide their staff with thorough guidance on how to properly engage contingent workers. This leaves their companies open to a variety of potentially costly lawsuits.

If you’d like guidance on the best practices and cutting edge methods for engaging (or supplying) a contingent workforce, please give me a call or send me an email today.

The Emergent team looks forward to helping you grow your contingent workforce compliantly and cost-effectively in 2012.

Best wishes,

Bill Inman

DISCLAIMER - Emergent maintains its blog, website and other content as a courtesy for the general informational purposes of our readers on matters of interest in the contingent labor services sector. Nothing on this blog or any part of Emergent's website is intended to create any contractual or other legal relationship between the reader and Emergent or any of Emergent's staff, and none of Emergent's blog or website should be construed as any legal advice or professional opinion for handling a specific factual situation. Though Emergent strives to publish the most current information on topics of reader interest, Emergent cannot guarantee or warrant the accuracy or completeness of posted information in any way. Readers should not act upon any posted information on the Emergent blog or website without consulting with the appropriate legal, financial, or other business professional for guidance and advice.  

Many recruiters and staffing firms have taken issue with job boards, and with good reason. Paid boards are costly, the number of job boards time-consuming, and the increasingly large applicant pool can be overwhelming. Still, job boards aren’t dead. They just need to be revived.

The Problem With Yesterday’s Job Boards 

For starters, the sheer number of job boards can be overwhelming. There are dozens of highly trafficked general job boards and hundreds of popular niche boards. Recruiters who post jobs to only one or two boards run the risk of missing the best candidates, yet those who utilize every relevant board may spend an entire day creating user accounts and posting jobs.

The latter group faces additional obstacles when they start receiving candidates, as they will need to bounce back and forth from job board to job board, logging in, reviewing resumes, and trying to remember who they found on which board.

Then there is the issue of candidate overload, a commonplace for recruiters using even one mainstream job board.

With unemployment hovering around 9 percent, the average employment ad receives a record number of applicants. The ease of applying online only exacerbates the problem, with some desperate or non-strategic job seekers applying to hundreds of jobs per day. What do they have to lose, after all, aside from the few seconds it takes to click on a job ad and hit “Apply Now”?

A Solution to Yesterday’s Job Boards 

Recognizing the problems associated with traditional job boards, sites such as ziprecruiter.com that distribute job postings to multiple job boards and provide tools for fast candidate screening have proven to be an effective and affordable alternative for small businesses.

These kinds of sites have had an overwhelming interest from recruiters and staffing firms, because they provide a centralized location for rapid job distribution, candidate screening, and candidate tracking – making for efficient and effective recruiting.

To minimize the time it takes to post jobs across the web, ZipRecuiter automatically distributes each job listing to over 20 broad and niche job boards. All applicants are then aggregated in one location.

To screen candidates, recruiters may opt to include a customizable online interview, which is essentially a mini-quiz that allows for various types of questions.

Other key features of ZipRecruiter include free recruiter websites, a searchable resume database, team collaboration from a single account, and one-click social recruiting. 

To welcome you to the job board revival, ZipRecruiter is providing Emergent blog readers with a 30-day free trial of unlimited job posting. Click here to start your free trial today. 

DISCLAIMER - Emergent maintains its blog, website and other content as a courtesy for the general informational purposes of our readers on matters of interest in the contingent labor services sector. Nothing on this blog or any part of Emergent's website is intended to create any contractual or other legal relationship between the reader and Emergent or any of Emergent's staff, and none of Emergent's blog or website should be construed as any legal advice or professional opinion for handling a specific factual situation. Though Emergent strives to publish the most current information on topics of reader interest, Emergent cannot guarantee or warrant the accuracy or completeness of posted information in any way. Readers should not act upon any posted information on the Emergent blog or website without consulting with the appropriate legal, financial, or other business professional for guidance and advice.  

In the staffing business, 80% of success is just following up and this is the area is which so many sales people and recruiters fall flat on their faces. It’s no wonder that most candidates or hiring managers hold so few allegiances to any particular recruiter or remember to call a specific sales person when they have an opening.  

We badger a candidate when we feel we can sell their skill set to a client, want a referral or to persuade them into going for an interview on a Friday afternoon at 4:00 pm across town. Then, after they’ve dutifully provided us with what we need from them, they don’t hear from us again for weeks or maybe months on end! 

Sales people spend hours and hours on the phone “dialing for dollars” repeating a variation of the following; “Hi my name is so-and-so, and I want to place someone in your account so I can make money, do you want anybody? No, well thank you, you won’t hear from us again until I turn your account over to the new guy and he repeats the process”. 

It’s no secret why so many clients and candidates treat us like a commodity; it’s because we treat them like a commodity. Staffing companies must personalize their approach for their clients and candidates – which doesn’t mean that we should just throw them on an e-mail list and send them a thinly veiled advertisement every week. 

If we are going to foster relationships, get referrals and be perceived as valued partner, we need to regularly reach out to our stakeholders in a more personal manner. 

A common objection to this is  “I speak to hundreds of people every week, I don’t have the time to touch everyone personally, let alone often” the secret is you don’t have to touch everyone, but those you DO reach out to, you need to reach out regularly and ensure your communication adds value. 

This is where the art of following up comes into play. When you engage a candidate or potential client, determine that person fits into your core target demographic and add them to your “gold sheet”. The gold sheet is made up of the top 25-50 companies, candidates and managers that you want to work with and who will eventually make up your personal “Eco System”. These are people you must form a good relationship with to be successful.  

This list should contain no more than fifty people (any more is unmanageable). Gold Sheet Members should take up 50-75% your effort and time. Remember the 80/20 rule? Track their interest and personal information in your CRM and reach out to these people with a phone call and email of interest every month and personal note every two months. This will equate to 2 ½ touches per month, not too much to be intrusive, but enough to be consistent. Set it up in your CRM so that you are doing no more than 10-15 touches per week - that way the task is not overwhelming and you can personalize each one. 

An email of interest is a piece of content you have come across that you can forward to your gold sheet member that would be of interest to them. Twitter, TED.com videos and The Harvard Business Review are great sources of content. Accompany with a note like ”thought you might find this interesting” or “came across this and it made me think of you”.  

Phone calls and personal handwritten notes don’t have to be anything more than something like “nothing urgent, I just wanted to let you know I was thinking of you. Wishing you and your family a wonderful Thanksgiving, let me know if I can help you in anyway”. 

After the fourth or fifth touch, you will begin to see a huge change in the way you are perceived. You will stand out because you actually reached out when you didn’t want anything – which makes it much easier to approach them when you do.   

It takes a little time and effort to organize, but it’s well worth the effort for those on the “gold sheet”. However, if you really want to stand out from the crowd, return every call you get, gold sheet member or not. Just think how you feel when someone doesn’t return your phone call. And remember, today’s junior account manager is tomorrow’s CEO! 

Steve Catt is a successful entrepreneur and one of most highly regarded staffing professionals in Southern California. Steve's simple, logical approach to helping a client define the outcome they want from every job and then finding the best person to provide that outcome, in the clients environment, has made him the go to staffing partner for companies large and small for nearly twenty years. His latest project, The RiteVu, is revolutionizing the way companies identify, select and manage the contract labor. 

DISCLAIMER - Emergent maintains its blog, website and other content as a courtesy for the general informational purposes of our readers on matters of interest in the contingent labor services sector. Nothing on this blog or any part of Emergent's website is intended to create any contractual or other legal relationship between the reader and Emergent or any of Emergent's staff, and none of Emergent's blog or website should be construed as any legal advice or professional opinion for handling a specific factual situation. Though Emergent strives to publish the most current information on topics of reader interest, Emergent cannot guarantee or warrant the accuracy or completeness of posted information in any way. Readers should not act upon any posted information on the Emergent blog or website without consulting with the appropriate legal, financial, or other business professional for guidance and advice.  

Originally posted on October 26, 2011 

Government agencies have aggressively cracked down on worker misclassification in recent months; but took it an extra step further last week when they announced that the U.S. Department of Labor has entered into an agreement with the IRS and other agencies to crack down on employers that misclassify workers as independent contractors when they should be classified as employees.

The signatory states are Connecticut, Maryland, Massachusetts, Minnesota, Missouri, Utah, and Washington with other states expected to follow suit. Numerous other states, including Pennsylvania and Wisconsin, have already passed worker misclassification laws that impose severe penalties on employers who misclassify their employees in an attempt to recover billions in lost revenue.

If a worker is an employee, the employer must pay the necessary federal and state unemployment taxes AND its share of Social Security and Medicare taxes, in addition to the withholdings of the employee's share of Social Security, Medicare and Income Taxes. The employer must also incur costs related to pensions, health insurance, vacation pay, sick pay, and workers' compensation insurance. In addition to all this, employers face federal and state regulations regarding working conditions and overtime.

With all of these burdensome obligations to handle, no wonder employers try to take a shortcut by classifying temps as independent contractors. However, with the likelihood of getting caught on the rise, the financial implications of incorrectly classifying workers could be financially crippling. If your company is found to be in breach of the rules, penalties include back taxes, PLUS interest AND a fine of up to 35% of the total owed. 

If you utilize or supply temporary workers on a 1099 basis, it’s worth talking to a company like Emergent (855 250 5000) who are able to handle employer obligations including payrolling, tax withholding, workers’ comp and risk management on your behalf.

Unfortunately, the economic downturn has increased pressure on staffing firms and their clients to classifying temporary or contract workers as independent contractors to lower their costs and/or provide a better rate to their clients. Staffing firms tempted to do so are well-advised to first make sure they are complying with federal and state law as well as the IRS 20 Factor test. The majority of workers assigned through a staffing arrangement perform their work under the supervision and control of either the staffing firm or the client, and the assignment usually takes place at the client’s offices –a good indicator that the worker should be classified as an employee rather than a contractor.

Worker misclassification also can lead to other serious issues such as work authorization, overtime pay, benefits eligibility, workers' compensation insurance, state unemployment insurance taxes, and violation of state worker misclassification laws. The entire process can be costly and extremely onerous for businesses. To be safe rather than sorry, contact Emergent today on 855 250 5000 or info@emergent.com.

For additional information on proper classification of workers, see the new 12th edition of the ASA book Employment Law for Staffing Professionals.

Originally posted on September 23, 2011 

DISCLAIMER - Emergent maintains its blog, website and other content as a courtesy for the general informational purposes of our readers on matters of interest in the contingent labor services sector. Nothing on this blog or any part of Emergent's website is intended to create any contractual or other legal relationship between the reader and Emergent or any of Emergent's staff, and none of Emergent's blog or website should be construed as any legal advice or professional opinion for handling a specific factual situation. Though Emergent strives to publish the most current information on topics of reader interest, Emergent cannot guarantee or warrant the accuracy or completeness of posted information in any way. Readers should not act upon any posted information on the Emergent blog or website without consulting with the appropriate legal, financial, or other business professional for guidance and advice.  

PEO’s (Professional Employer Organizations) comprise a nearly $10 billion industry in the United States. These companies provide valuable services to clients who want to leverage a 3^rd party employer to handle the statutory employer responsibilities as a co-employer of their workers.

PEOs essentially hire their clients’ workers, thereby becoming their employer of record for tax and insurance purposes, charging a service fee (usually between 4 – 12% of payroll) in return for taking over the payrolling and HR functions of the workers performing services for their clients.

In recent years many staffing companies have looked to PEOs to help employ the workers they recruit who perform services at client sites. This relationship is a bit more complex that a direct one between a PEO and a client company because there may be three employers rather than two – the staffing company, the client company, and the PEO.

Some staffing companies are attracted to using PEOs because they be able to leverage the PEO’s workers’ compensation coverage at a much lower rate than their company could obtain directly through a broker or through State insurance.  However, many staffing companies that use PEOs are unaware of the risks involved in using these resources to lower workers’ compensation costs.

Problems occur when staffing companies attempt to obtain a lower worker’s compensation rate by “piggybacking” off of another PEOs insurance policy.  In California piggybacking was barred in 2003, but some staffing companies and PEOs do not understand the complexities of this type of engagement which may be primarily based on saving on workers’ compensation insurance.

Recently, California’s State Compensation Insurance Fund (SCIF) won a case that found a staffing company and a PEO in violation of subverting payment of millions of dollars worth of worker’s compensation premiums.

According to sources close to the case, the damages and penalties could end up costing upward of $300 million dollars – due in part, to Code Section 756 which says an employer is liable for 10 times the amount of premium it avoided paying due to its fraudulent actions.

Because of the potentially ruinous penalties, consult your legal counsel if you are considering engaging a PEO to make sure that the arrangement you undertake is in compliance with federal and state law and that the PEO has a proper arrangement with their insurance carrier. The rules and regulations for employing contingent workers can be complex and it can be easy to fall into non-compliance of them.

Emergent is a trusted employer of temporary and project-based contingent workers throughout the U.S. Our family of companies services are utilized by Fortune 500 companies and small businesses alike. Emergent is not a PEO, we screen and employ the workers staffing companies recruit, looking after employer obligations such as HR, Legal, Risk Management, Payrolling and Worker’s Compensation.

To find out more about how Emergent can help your business today call us at (855) 850-5000 or e-mail us at info@emergent.com.  

Originally posted on August 30, 2011 

DISCLAIMER - Emergent maintains its blog, website and other content as a courtesy for the general informational purposes of our readers on matters of interest in the contingent labor services sector. Nothing on this blog or any part of Emergent's website is intended to create any contractual or other legal relationship between the reader and Emergent or any of Emergent's staff, and none of Emergent's blog or website should be construed as any legal advice or professional opinion for handling a specific factual situation. Though Emergent strives to publish the most current information on topics of reader interest, Emergent cannot guarantee or warrant the accuracy or completeness of posted information in any way. Readers should not act upon any posted information on the Emergent blog or website without consulting with the appropriate legal, financial, or other business professional for guidance and advice.  

Written by Guest Blogger - Steve Catt 

Any good recruiter knows that the key to finding the right contractor for a client is having the opportunity to  talk directly with the hiring manager; gathering information that will give his or her company a competitive advantage while using the opportunity to build rapport and creditability with the client. Yet, the vast majority of recruiters who get this opportunity squander their advantage by asking the wrong questions and by taking the wrong kind of job order.

The problem is that recruiters and hiring managers are trained to think of contractor requirements in terms of years of experience, education, duties, task and responsibilities etc. and not in terms of the specific desired outcome they want to temporary resource to provide. When a company hires a contractor, they bring that contractor in to do something that provides a desired outcome. If the client did not need that outcome, why would they need a contractor in the first place?

But what questions do we ask? Mostly, they are questions that give us no insight into what the client really needs, such as how many years of experience the contractor should have, whether or not the contractor has an MBA etc. But what does it really matter if someone has 8 or 10 years of experience as opposed to 6 or 12 years of experience?!

If you want a real advantage in your search, differentiate yourself from the competition and add real value- start by asking the hiring manager these four key questions:

• What is the desired outcome you want the contractor to provide?
• Who is the contractor providing the outcome for and what are their expectations?
• What happens if the outcome isn’t accomplished by that date it’s required?
• How are you going to quantify that the engagement was successful and that the contractor did a great job?

Once you have the answers to these questions, you have changed the game and you will have a huge leg up on finding exactly the right person to solve your client’s needs. Why? Because you know what the problem is because you took the time to learn the outcome the client wants the contractor to provide!

Now when all the rest of recruiters are asking candidates questions like “Do you have 5-7 years Oracle or or “on a scale of 1-10, how would you rate your Excel skills?”  You are asking your candidates questions such as:

“My client needs a person who can provide this specific outcome, for this type of stakeholder who expects that the following needs to be done within this timeframe or this bad thing will happen and this is how they will quantify success”. Please describe where you have you provided a similar outcome and how would you go about providing the outcome in this instance?”

You will quickly ascertain the players from the pretenders. Also, both your candidates and clients will see you as a partner rather than just another recruiter.

In future, when you present your candidates based on the outcomes they provided and/or can provide in the future, rather than on nebulous skills and education, you sell value as opposed to individuals.

Remember, to become to client’s desired recruiter you need to concentrate on the desired outcome…. 

Steve Catt is a successful entrepreneur and one of most highly regarded staffing professionals in Southern California. Steve's simple, logical approach to helping a client define the outcome they want from every job and then finding the best person to provide that outcome, in the clients environment, has made him the go to staffing partner for companies large and small for nearly twenty years. His latest project, The RiteVu, is revolutionizing the way companies identify, select and manage the contract labor. 

Find Steve Catt on LinkedIn at http://www.linkedin.com/in/stevecatt or at www.theritevu.com 

Originally posted on August 29, 2011 

DISCLAIMER - Emergent maintains its blog, website and other content as a courtesy for the general informational purposes of our readers on matters of interest in the contingent labor services sector. Nothing on this blog or any part of Emergent's website is intended to create any contractual or other legal relationship between the reader and Emergent or any of Emergent's staff, and none of Emergent's blog or website should be construed as any legal advice or professional opinion for handling a specific factual situation. Though Emergent strives to publish the most current information on topics of reader interest, Emergent cannot guarantee or warrant the accuracy or completeness of posted information in any way. Readers should not act upon any posted information on the Emergent blog or website without consulting with the appropriate legal, financial, or other business professional for guidance and advice.  

As anyone who has been in the staffing industry for any length of time knows, the rules and regulations surrounding the industry are complex and change frequently. As well as federal laws, each State has unique employment rules and regulations that make it challenging for staffing companies with limited resources to work across multiple states. Staffing companies that operate in California, New York and Massachusetts in particular, can have their work cut out trying to accommodate the unique rules and regulations of those States.

Some staffing companies provide solid, compliant solutions for Clients companies where reducing co-employments risks are important, However, the level of employer compliance when employing temporary workers, varies widely from company to company.

Some smaller to mid-sized staffing companies and independent recruiters engage the services of companies like Emergent (www.emergent.com) to serve as the employer of the workers they recruit helping them provide  cost-effective, compliant and lower risk staffing solutions for the temporary workers they supply to Clients. 

Some small to medium size staffing companies attempt to manage back office functions, insurance, payroll funding, and risk management with limited resourcse. Others, often unbenownced to their clients straddle potential misclassification issues by delivering workers on 1099s even though the Client is directing their work on a day-to-day basis.  With these scenarios in mind, here are just some of the key issues that staffing companies need to look out for.

Discrimination and Background Checks 

Discrimination complaints filed with the Equal Employment Opportunity Commission can lead to expensive litigation and costly settlements for a staffing company. In some cases, staffing companies are leveraged by clients as a way to outsource tests or screening functions that may create EEOC issues for them. However, staffing companies must resist pressure from their clients to apply any potentially unlawful or high-risk methodologies which may include screening.

Becoming more popular is the use of publically available social networks and websites to screen candidates, however that can land staffing companies in trouble. Employers may be accused of overlooking the online profiles of people based on prohibited criteria such as race, creed, color, nationality, sex, religious affiliation, marital status, or their medical condition.

Immigration Issues  

If your staffing company is placing a foreign national, the staffing firm must address government immigration requirements carefully, because even unintentional violations can have costly repercussions. When starting a job, employees AND contractors are required to prove that they are legally entitled to work in the United States and the staffing company must only accept original documents. Employers must verify the identity and eligibility to work for all new employees. An I-9 form must be completed and kept on file by the employer.

SUTA Dumping 

SUTA dumping is a practice sometimes used by companies doing business in the U.S. to circumvent paying unemployment insurance taxes that may have been increased because of previous experience employing workers with a large number of unemployment claims. If an employer’s payroll is subject to a high unemployment insurance tax rate, the employer sometimes tries to reduce that rate by shifting its payroll to an entity with a lower unemployment insurance tax rate. Some companies get multiple account numbers with a state unemployment insurance agency, and shuffle employees around to the account number with the lowest unemployment insurance rate each year. Another tactic is to buy a business with a lower unemployment insurance rate and shuffle employees to that other business to pay the lower tax rate. The federal government addressed the issue in 2004, but the practice still occurs – even though it’s highly scrutinized.

Worker Misclassification 

State unemployment insurance reserves have fallen due to the recession which is one reason worker misclassification has become a high priority for government agencies. The IRS has clamped down on Independent Contractor Misclassification, allocating $25 million dollars to indentify misclassified employees.

Many staffing companies engage temporary workers on a 1099 basis because it’s the easiest and ‘cheapest’ way to engage temporary and project-based contingent staff. However, 46% of temporary workers classified as 1099 contractors are found by the IRS to be misclassified. Also, as many as one in three companies fail their worker classification audits.

Staffing companies sometimes face complex compliance issues related to worker classification, and the risks associated with misclassification have increased dramatically – when a  company is found to be in breach of the rules, penalties include back taxes, PLUS interest AND a fine of up to 35% of the total. These penalties can easily stretch into millions of dollars. Defending these cases can take years and also absorb thousands of dollars and a hours.

No hard and fast definition of what differentiates an independent contractor from an employee exists but the IRS 20 point test is a good barometer, included on our article on 1099 misclassification. If independent contractors do not meet one or more of these criteria, they may be more appropriately classified as W-2 employees.

Worker classification audits can be triggered in many ways. An independent contractor might file an application for unemployment benefits or fail to properly report income taxes. Workers might also challenge their own classification if other employees in similar positions received higher compensation or better benefits. The IRS has provided the SS-8 form for workers to submit directly to the agency who are not sure if they are classified properly. Staffing companies and independent recruiters must classify workers correctly to protect themselves and their clients from the risk – although many staffing companies feel pricing pressure the urge to deliver 1099 workers who should be properly classified as W-2 workers should be resisted.

Wage and Hour Regulations 

Companies may pressure staffing firms to classify workers as exempt from overtime pay. Staffing firms must resist this pressure as the staffing company – as well as the client - may be liable for the violations.  See our article for more information on wage and hour laws in California.

Emergent reduces the cost and risk of supplying temporary and project-based workers to Clients. Emergent is one of the largest employers of contingent labor in the United States and handles employer obligations such as payroll, tax remittance, human resource management, invoicing, accounts receivable, and workers' compensation insurance at a significantly lower cost. Call (855) 250-5000 or email info@emergent.com to speak with a representative about how we can help your today. More information is available atwww.emergent.com 

Originally posted on August 16, 2011 

DISCLAIMER - Emergent maintains its blog, website and other content as a courtesy for the general informational purposes of our readers on matters of interest in the contingent labor services sector. Nothing on this blog or any part of Emergent's website is intended to create any contractual or other legal relationship between the reader and Emergent or any of Emergent's staff, and none of Emergent's blog or website should be construed as any legal advice or professional opinion for handling a specific factual situation. Though Emergent strives to publish the most current information on topics of reader interest, Emergent cannot guarantee or warrant the accuracy or completeness of posted information in any way. Readers should not act upon any posted information on the Emergent blog or website without consulting with the appropriate legal, financial, or other business professional for guidance and advice.