The Art of Following Up

Written by Guest Blogger - Steve Catt

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 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.

Temporary Worker Misclassification Crackdown Spreads Across the U.S: Feds Announce Misclassification Alliance

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.

Working with PEOs: Do you know the risks?

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. 

The Difference Between a Recruiter and a Valued Staffing Partner

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

Legal Issues That Could Cause Trouble For Your Staffing Business

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

The California Labor Code and Workers’ Compensation

California law requires all employers to carry workers' compensation Insurance. Workers' compensation provides injured workers with medical care, disability, vocational retraining, and other benefits. Workers' compensation is the "exclusive remedy" and Workers are protected by this coverage, giving up their right to any other remedy for workplace injury. 

Every staffing company that supplies and every company that utilizes contingent workers in California should be familiar with the California Labor Code. This blog provides information on some of the key sections of the Code with regards to workers’ compensation coverage, which applies to all W-2 contingent workers as well as internal staff.

If you are employing or utilizing contingent workers in California understanding these key sections of the Labor Code in concert with co-employer risks is important for any well run contingent workforce program.

Working with Staffing Companies Who Provide Workers’ Compensation Insurance to Workers as Part of Their Service
(Section 3602)

A client company may secure the payment of workers’ compensation on employees provided to their company by agreement with their staffing company by entering into a valid agreement with the staffing company - under which the staffing company agrees to obtain workers' compensation coverage for those employees.

If both companies enter into this agreement, both employers shall be considered to have secured the payment of workers’ compensation - provided there is a valid legal agreement between the employers to obtain the appropriate level of workers’ compensation coverage and that the coverage remains in effect for the duration of the employment provided.

Non-compliance with the above could result in civil or criminal penalties for failure to provide workers' compensation coverage or legal liability in the event of an employee injury.

Every California Employer Must Secure Payment of Compensation in One of the Following Ways (Section 3700)

A.) By being insured against liability to pay compensation by one or more insurers duly authorized to write compensation insurance in California.

B.) By securing a certificate of consent to self-insure either as an individual employer, or as one employer in a group of employers, by the Director of Industrial Relations. To be considered, you must give proof that you have the ability to self-insure and to pay any compensation that might arise to your employees.

Consequences of Failing to Secure the Payment of Compensation (Section 3700.5, Section 3706, Section 3707, Section 3708 )

The failure to secure the payment of compensation is a misdemeanor punishable by imprisonment in the county jail for up to one year, or by a fine of up to double the amount of premium, as determined by the court; or by both imprisonment and fine.

If the employer fails to secure the payment of compensation, any injured employee or his dependents may bring an action at law against the employer for damages.

If Workers’ Compensation Insurance is not provided, it is presumed by law, that the injury to the employee was a direct result of the negligence of the employer, and the burden of proof is upon the employer, to rebut the presumption of negligence.

The employer may not defend their case by arguing that the employee (or the employee’s co-workers) were guilty of contributory negligence or that the employee undertook certain risks as a necessary part of the job.

Emergent  (www.emergent.com) takes care of employer obligations including Workers’ Compensation Insurance, for temporary workers. Please contact us at info@emergent.com or on 855 250 5000 for a free consultation 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. 

Workers' Compensation Basics

Recent research found that many workers hired through staffing companies often have difficulty filing worker’s compensation claims. Industry advocates and commentators have suggested problems are caused by documentation deficiencies and a lack of regulations holding staffing firms responsible for their workers.

Often, the nature of temporary employment can make it difficult to discern who is responsible for providing worker’s compensation insurance for the temporary worker. Ultimately though, it is the responsibility of whichever company is the employer of the worker to make sure that their employee has the appropriate insurance. 


Additionally, in many cases the client company that uses the services of the worker provided by the staffing company may be directing the worker on a daily basis. In this scenario both the client and the staffing company could be deemed co-employers of the worker where both companies could be responsible for ensuring that the worker has proper workers' compensation coverage. 

Navigating Workers' Compensation Issues for Managers at Client Companies

If the client company that uses the workers services would like to directly employ the worker, as opposed to the worker being employed by the staffing company, then they may add temporary workers that they or the staffing company recruits to their existing insurance policy, In this case the client company may have a better insight to the level of risk involved with employing the worker and assign appropriate job classifications. 

However, if the client company does not want to be the statutory employer for the temp workers then they may be better off engaging workers through staffing companies. In this scenario the staffing company carries the workers' compensation insurance for the workers. It is important in this scenario to ensure that the staffing company is properly insured and classifying the workers. Because of co-employment liabilities an error on the staffing company could create risks for the client company as well. 


Another option to limit risk is to have a staffing company source the temporary worker and have an compliant, stable employer for the workers during their assignment. Emergent is an employer of temporary and project based labor recruited by staffing companies and client companies alike. The Emergent family of companies is one of the largest employers of temporary labor in the U.S. and has over 30 years experience. With Emergent client companies can utilize the best recruiting resources to locate temporary workers while leveraging Emergent's compliant contingent workforce employer solutions to lower risk and cost. 

In any case client companies should work with their staffing company or Emergent to ensure that they have the appropriate insurance and are correctly classifying the temporary workers. They should also endeavor to see that the the temporary and project workers are working in a safe environment. 

Navigating Workers' Compensation for Staffing Companies

When staffing companies employ temporary labor, they must take care that they take they assign the proper job classifications for their employees – which can be tricky if the staffing company does not have dedicated risk management and insurance resources or if they are not ensuring that their employees are performing the type of tasks outlined for the worker. 

Staffing companies may gain by being diligent in tracking the assignments, the type of work being done before it is performed and the risk history of their clients and their locations. In some cases it may be prudent for the staffing company to perform a site visit at the client site to verify that the workers will be in a safe environment. 

Purchasing workers compensation coverage can be challenging for temporary staffing companies as the cost of the coverage can be expensive For some higher-risk industries, insurance may be hard to obtain as well. Increasingly, many smaller staffing companies are finding it either harder to get coverage for their workers, or finding that the cost is expensive and challenging to their business model.  Also, handling risk assessment and work comp claims can be time consuming, and may require additional administrative support.  Working with Emergent, staffing companies are able to benefit from our economies of scale in obtaining workers comp insurance, assessing risk and handling claims.

For Staffing Companies and Client Companies

A big worker’s compensation risk for both staffing companies AND client companies is if the worker has been erroneously classified so that neither is the employer of the worker.  If the temporary worker has been mis-classified on a 1099 basis both the staffing company and/or the client company could be liable. 

How Emergent Can Help

Emergent’s family of companies is one of the nation’s largest employers of temporary workers. We employ the temporary workers you recruit – handling time-consuming and expensive employer’s obligation’s including worker’s compensation insurance and claims management.

We can help you lower the cost and risk of engaging the contingent worker’s you recruit. Contact us today at 855-250-5000.


DISCLAIMER - Emergent maintains its blog and other website 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. 

The Rise and Risks of the Contingent Workforce

Last week, Emergent was invited to host a webinar for HR.com and the Institute of Human Resources on "The Rise and Risks of the Contingent Workforce".

If you'd like to hear the webinar or receive a copy of the presentation, please click here where you will be taken to HR.com and prompted to create an account (it's quick, easy and takes just a minute) so that you can view our webinar on the HR.com site. Alternatively, you can e-mail info@emergent.com and one of our team members will send you a copy.


During the webinar, we asked the attendees to take part in a short poll and we found that co-employment, along with 1099 misclassification, were the top two concerns for companies hiring temporary workers. 

Co-employment is worrying for many companies that use contingent workers as the rules can be complex, change often, and can be challenging to sort out. Co-employment occurs when the company that utilizes the contingent worker’s services (the client company) manages the workers on a day-to-day basis, becoming a co-employer or joint employer along with the staffing supplier.

Co-employment could mean that the client company may be held liable for the decisions and mistakes of the staffing supplier and vice versa. Client companies and staffing suppliers must be clear about who is the employer of the worker and what responsibilities each company has towards the worker. These can vary from state to state, so companies must make sure that they are familiar with local as well as federal laws. Remember, it is both the staffing supplier AND the client company's responsibility to familiarize themselves with the law. Don't simply rely on the other party to tell you what you need to do - they might get it wrong...

Of course, it is relatively easy for a seasoned hiring manager or staffing supplier to become familiar with the laws around employing contingent workers, and they must also make sure that line managers throughout the organization of the client company know the rules and best practice surrounding the treatment of contingent workers, should they have any under their supervision. This can often prove challenging. 

We suggest that companies and staffing suppliers - after thoroughly researching best practice and obtaining legal advice - create a guide book that managers can refer to on how to properly engage contingent workers. Interestingly, when polled during our webinar, 64% of HR professionals said their companies did not issue any such guidance for hiring managers. 


Another concern for our webinar attendees was the misclassification of temporary staff as independent contractors. 46% of contingent workers classified as 1099 independent contractors are found by the IRS to be misclassified and one in three companies fail their worker classification audits.


Again, the rules are complex, so we suggest taking the 20 point IRS test to carry out an assessment of your contractors. If you don't meet the required criteria, your contractors may be more appropriately classified as W2 employees. If so, you should give us a call....


Emergent employs the contingent workers your company recruits or supplies. We are part of a family of companies that is one of the largest employers of contingent labor in the U.S. - trusted by many Fortune 500 companies to employ their contingent workforce.

Talk to us today to find out how we can help you manager your contingent workforce, maximize your profit and minimize your risk. Call us on 855 250 5000.

For Staffing Companies: Temporary Staffing Sales are Booming, Here is How to Present Your Services to Clients

Earlier this week, the American Staffing Association reported that contingent workforce sales totaled $87.4 billion in 2010 – that’s 21.3% more than in 2009. With figures like that, it’s no wonder more and more staffing companies and independent recruiters are looking to increase their contingent workforce services to clients. However, staffing companies and independent recruiters, who would like to ride the contingent workforce wave, may be wondering how to communicate the value of these services effectively to clients. Here are a couple of tips:

IF THE SUPPLY TEMPORARY WORKERS AND CONTRACTORS IS A NEW SERVICE FOR YOUR COMPANY it may be effective to simply put in a call to your clients to tell them about your new service, even if you think they may not use this type of labor. If you've worked with a manager for many years, they may simply assume that you don’t recruit temporary workers because you have not done so in the past, and could be overlooking your company and passing business to other staffing companies. 

IF YOU HAVE NEVER PROVIDED CONTINGENT WORKFORCE SERVICES TO A CLIENT BEFORE or you haven't asked them about it for some time don’t assume that just because some of clients have never recruited for temporary positions in the past, that they would not be interested in doing so now. Research suggests that 34% of hiring managers are looking to hire contingent workers this year AND the contingent workforce is growing at twice the rate of the permanent workforce currently – meaning that companies are demanding more temporary labor like never before. 

WHEN MARKETING TO NEW CLIENTS it may make sense to suggest using temp- or contract-to-hire workers for companies who don’t have the budget for new internal headcount. Contingent workforce spend often comes out of a different cost center for clients than internal hires. This allows companies to scale up to meet their immediate needs without blowing the budget allotted for employees on the internal payroll. Mentioning that your company can offer contingent workforce services as temp- or contract-to-hire situation can help your clients – especially since lots of companies are uneasy about recruiting for a direct hire position in the current economic climate.

On the phone, clients may ask you about your new offering, here are a few questions we’ve heard asked of staffing companies we work with:



Why is your company different? Small to mid-size staffing companies and independent recruiters usually have a distinct advantage over large staffing companies -- they are experts in their niches and passionate about what they do. Usually this translates to higher quality workers delivered faster to clients than larger services. Where these companies sometime fall short is handling employer responsibilities. Large staffing companies have vast and dedicated resources for risk management, insurance, legal and finance. With Emergent staffing companies of any size gain big company resources (the Emergent family of companies is one of the largest employers of contingent labor in the U.S.)to compliment their service expertise and dedication. 


Why does your company supply contingent workers? Statistics have shown that the direct hire placement business declined 50% between late 2008 and 2010!  The economic environment has made it essential for companies to leverage cost effective ways of doing business. Contingent workers allow companies to easily and flexibility tap into the skills they need to execute tasks and projects for a period of time potentially saving a large amount of money over internal hires.  


Why should my company use temporary workers or contractors? Many companies may have excess workload and need help immediately but cannot get approval in time for internal headcount. By engaging contingent workers clients will expediently gain the skills they need now without having to make a long-term commitment to the worker.  Additionally companies that are unsure about bringing on full-time, internal workers can utilize contingent workers until they gain clarity on hiring strategy. At this point they may convert the contingent worker to direct hire. 

How does your company employ contingent workers?

In general clients will want to be sure that the contingent worker your company supplies is delivered in compliance with Federal and State laws and regulations. Engaging contingent workers on a 1099 basis can be risky for both the supplier and the client if all the items in the IRS 20 Factor test are not met. By working with Emergent staffing companies recruit the workers and then Emergent handles the statutory employer responsibilities that come with engaging contingent staff on a W-2 basis, leaving you to look after sales and client services.  
See our blog post on 1099s and Independent Contractors: What you need to know for more information


Do you provide contingent workers for most skill types? In all States? The answer to this will depend on your companies specialties, insurance, risk management strategy, financial capacity and whether your company is set-up to employ workers in each State.  For staffing companies Emergent makes it easy to do business in new States and skill areas by becoming the employer for the workers for the duration of their assignment. 

What are your fees for providing contingent labor?

Generally, contingent labor pricing can be offered is offered in the following ways:
(i) with a markup rate on top of the worker’s pay rate
(ii) as a pre-negotiated bill rate
(iii) as a pre-negotiated pay rate and markup rate
(iv) as a statement of work.
See our blog post on The Basics of Staffing Markups for more information. 


Call Emergent today on 818.955.6870 to find out how we can help you grow your business! 

Wage & Hour Laws - Meal Penalties in California

Federal and State Wage and Hour are important to follow for the companies that supply and use a contingent workforce. Not following or understanding these laws can lead to costly violations that can be easily avoided. 


California, for example, is a State that has many Wage and Hour law considerations.  If you operate a business in California or utilize California residents to perform work in other States there are several important things to consider for meal breaks. 

Employees in California are entitled to an unpaid 30-minute, duty-free meal period after working for five hours and a paid 10-minute rest period per four hours of work. 

California Labor Code section 226.7 prohibits employers from requiring employees to work during any mandated meal or rest period. Employers who fail to provide the mandated meal period or rest period must pay the employee one additional hour of pay at the employee's regular rate of compensation for each work day that the meal or rest period is not provided.


A minimum of thirty (30) minute meal is required every five (5) hours unless the scheduled shift ends at six (6) hours and is mutually agreed upon between client manager and worker.  If meal is not received the employee is due one (1) hour of their wage as a meal penalty.  Employees only receive one (1) meal penalty per day regardless of how many are incurred. 

The only exceptions to the rule are when

The nature of the work objectively prevents an employee from being relived of all duty

AND

The on-duty meal break is agreed to in writing by the employee and his or her employer

AND

The employee is paid for the meal break

To ensure that your company complies with the labor law, you should:

Review meal and rest period policies for contingent workers to ensure they meet with the law

See if any positions qualify for “on-duty” meal periods and ensure that the appropriate agreements are signed

Make sure all employees read and acknowledge in writing that they understand your company’s meal and rest break policy

If a worker is not able to take their required break, you must pay the additional hour of pay they are owed

Ensure that your managers and supervisors monitor employees to make sure that they are taking their statutory breaks and mark the breaks on their timecards

Make sure you keep good records! 

The Basics of Staffing Markups

The total size of contingent workforce payroll in the U.S. is expected to rise to $164 billion by 2018. The opportunity for companies to capitalize on this trend, increasing the productivity and flexibility of their workforce, has become more widely known in recent years. Additionally, companies are using contingent workers in more highly skilled roles to augment internal staff and in these roles the bill rates - hourly rates including all costs and fees charged to the client company by the staffing supplier - increases as the pay rate does.

In many cases, the companies that supply contingent labor to clients on an hourly basis use a fee model that based on a percentage of the pay rate, often referred to as a markup. This 'markup' consists of several components, including:

• “Burden” (employer taxes, payroll costs, workers compensation insurance, etc.)
•  Recruiting personnel and expenses
•  Overhead (general and administrative costs)
•  Profit margin

The pay rate (aka hourly rate) of the worker plus the markup is called the bill rate. Markups can range from 30% to 60%+ with an average in the high thirtieth percentiles across all skill disciplines. Some staffing suppliers promote rates below 30% and, conversely, some services may charge 75% to 100%+ markups.


The Burden costs vary based upon the worker’s skill specialization, the risk of the job, the State in which the worker is employed, the total volume of payroll with a client, and the payment terms. Recruiting costs and pay rates may differ from assignment to assignment, as different factors such as the availability of talent, ‘going’ market pay rates and length of assignment come into play. 

For example, if a contingent worker is engaged on a three (3) month assignment (12 weeks at 40 hours or 480 total hours) the following total costs would apply relative to the pay rate of the worker and markup:

		Total Payroll + Staffing Markup ("Billings")
Pay Rate	Total Payroll	30%	35%	40%	45%	50%
$15	$7,200	$9,360	$9,720	$10,080	$10,440	$10,800
$25	$12,000	$15,600	$16,200	$16,800	$17,400	$18,000
$50	$24,000	$31,200	$32,400	$33,600	$34,800	$36,000
$100	$48,000	$62,400	$64,800	$67,200	$69,600	$72,000

There are other ways that contingent labor is delivered to clients including fixed markup costs, statement of work or milestone based pricing, per unit or task pricing, or fixed bill rates. For the most part however contingent labor in the is delivered with a markup on pay rate. If your company is using or supplying contingent labor then it is helpful to understand how the marketplace prices these services in order to maximize profits and productivity.