The Recruiter’s Contract Staffing Blog

Generally speaking, you must be extremely careful about the questions that a candidate is asked during an interview.  This is so that you can avoid accusations of discrimination and possible lawsuits.

For every subject that recruiters would like to address, there are legally permissible questions and illegal ones that should obviously be avoided completely.

Citizenship

• What You Can Ask a Candidate – Whether he or she is legally eligible to work in the United States.  Don’t ask for proof of eligibility until after the position is offered.
• What You Should Avoid Asking a Candidate – Whether he or she or is a United States citizen.

Don’t just assume that your clients will only consider direct placements.  After all, nearly 80% of all companies utilize contractors, so it is likely that they are already using some contractors or have at least considered it.  And if they haven’t, all it may take is a suggestion from you to change their thinking.

Ask your client if they would consider temp-to-direct arrangements where they can bring potential employees in on contract assignments to assess their skills and qualifications before hiring them permanently.  After all, in this economic climate, more employers choose to “test drive” employees before making the direct-hire commitment.

In past blog posts, we’ve talked about how easy it is to market contract recruiting services and provided a few of the most common marketing methods recruiters use.  Since this is one of the most common questions we receive from recruiters, we thought it would be helpful to provide a few of the more unique tips that have worked for successful recruiters doing contracting:

Deciding whether or not to add contract staffing to your business model is primarily a business decision, but it’s one that can also have profound effects on your personal life.

One of the biggest advantages of contract staffing is that it offers a steady cash flow.  This can do way more than just help you pay the bills.  Think about it, when was the last time that you took a REAL vacation, one where you weren’t  constantly checking email or taking client phone calls?  When permanent placements are your only source of income, being away for a whole week can really hurt.  But when you have contract placements, the money keeps rolling in whether you are working or not, so you can vacation without stressing out over the permanent placement opportunities you may be missing.

When negotiating a contract candidate’s pay rate,  it may feel like you are between a rock and a hard place.  After all, both the client and the candidate are your customers.  You have to make your client happy if you hope to get future job orders, and a satisfied candidate will likely turn to you for future contract opportunities and may even refer friends looking for contract work.

So where do you start?  A common rule of thumb is to divide the annual salary for a comparable direct position by 2,080 (the number of hours typically worked in a year).  That will give you a starting point that you can then adjust based on the circumstances of the particular contract placements.

The federal government has already increased it’s enforcement on misclassifying employees as Independent Contractors and on illegal immigration.  Now it appears it is setting its sights on background screenings.

On this blog, we have advocated background screenings for contract candidates .  Well, some pending regulations and laws may make it a little harder for employers to use background screenings and credit checks, according to the Society for Human Resources Management (SHRM).

The organization recently reported that Acting Equal Employment Opportunity  Commission (EEOC) Chairman Stuart Ishimaru wants his agency to issue some new regulations on nondiscriminatory background screenings within the next 12-18 months.  It is expected that those regulations would require employers to provide “empirical evidence” when using business necessity as a defense in discrimination cases.

Workforce Management recently reported on an Employee Benefit Research Institute survey that found that nearly 25 percent of workers are putting off retirement this year.  Surprise, surprise, 29 percent are blaming the economy for changing their plans.  Others cited changes in their employment status, inadequate finances, and the need to make up stock market losses as reasons for working a little longer.

We’ve dedicated a lot of space on this blog to the importance of correctly classifying contract candidates as either W-2 Employees or 1099 Independent Contractors and warned of the government’s crackdown on the misclassification of workers.  Well, the Federal Employment Law Insider’s recent interview with Secretary of Labor Hilda L. Solis makes it clear that all of this talk about increased enforcement is not just hype.

“The WHD (Wage and Hour Division) will increase its number of investigations, continue to train investigators in the detection of workers who have been misclassified, and focus them on industries in which misclassification is most prevalent,” Solis said in the interview.

We’ve already discussed on this blog how baby boomers make great contract placement candidates, but what about their children and grandchildren?  How do they stack up as contract workers?

Well, if you are to believe the media hype, Generation Y (encompassing those born roughly in the mid-70′s to the early 2000′s) is filled with a bunch of job hopping multi-taskers who have zero loyalty to the companies they work for.  While this may make them the least desirable candidates for permanent placements, it makes them ideally suited for contract work because it allows them to build up the experience they are looking for and provides an automatic exit strategy.

If you have a contract candidate who has always been classified as a 1099 Independent Contractor, you may receive a little pushback from that candidate if you try to classify him/her as a W-2 Employee.  You can try educating the worker on the tax implications of being misclassified (they may have to amend tax returns and even pay penalties) and the benefits of being a W-2 Employee, but what do you do if they still balk?

Let the IRS settle the argument!  The candidate can complete IRS Form SS-8 , which you can then submit to the IRS for review.  After considering the facts and circumstances, they will determine the worker’s status. 

The U.S.  Citizenship and Immigration Service (USCIS) recently announced in a news release that they will begin accepting H-1B visa petitions subject to the fiscal year (FY) 2011 cap on April 1, 2010.  H-1B visas are commonly used in contract staffing to place foreign workers in specialty occupations that require theoretical or technical expertise in specialized fields, such as scientists, engineers, or computer programmers.

We’ve already discussed the challenges that arise when the client dictates the bill rate.  But what about the opposite extreme when the client sets NO limit on the bill rate?

This can be just as frustrating because you have no idea what they consider reasonable.  If you keep your income low and provide them a lower bill rate than they expect, they’ll be happy, but you’ll be cheating yourself.  Select a rate too high and you could end up losing the deal and damaging your reputation.

We’ve already discussed on this blog how important it is to correctly classify a worker as a W-2 employee or 1099 Independent Contractor, but that’s not the only classification you need to worry about.  If a contractor is working as a W-2 Employee, you also have to determine whether that worker is exempt or non-exempt.

Per the Fair Labor Standards Act (FLSA), if an employee is nonexempt, he/she must be paid overtime  (OT) – which is one and half times the regular rate – for any hours worked in excess of 40 in a workweek.  Please note that the state in which the employee operates may have even more stringent rules.  For example, in California, you must pay nonexempts OT for any hours over 8 they work in a day.

We recently posted that while permanent hiring still remains flat, there has been a marked increase in temporary/contract staffing.  Well, a recent USA Today article reports more good news: temporary/contract staffing firms are also noticing that more of these temp hires are turning into permanent placements.

The article states that temporary jobs increased by 48,000 in February and have spiked by 284,000 since September.  This is a good sign because companies usually use temporary/contract positions to stick their toes in the water before diving into permanent hiring.  While the transition to permanent hiring isn’t happening quite as fast as everyone might hope, temporary/contract staffing firms are reporting an increase in temp-to-direct conversions.

OK, you’ve received a job order from your client and have located a great candidate.  Now it’s time to get down to the bottom line:  How much is the client willing to pay, and how much is the employee willing to take?

There are many ways this can play out, but one common scenario is when the client company sets a firm bill rate.  This can be frustrating for a recruiter because, ultimately, it shrinks the pool of candidates you can provide to the client.  For example, if the client will only pay $40 per hour, that means you can only give them candidates around the $28 per hour salary range or less if you want to make a decent profit.