Today’s guest blog is a post from People 2.0, a leading provider of back-office solutions for staffing and recruiting organizations, nationally and globally. They offer a variety of support services, including payrolling, payroll funding, risk management, etc., and serve as a strategic resource in helping you efficiently and profitably place talent. People 2.0 is an NPAworldwide Endorsed Program.
Every business endeavor entails risks, and contract staffing is no exception. When compared with permanent placement, the compliance and liability risks of contract staffing can be daunting for a firm without a comprehensive resource for dealing with these risks. But with the right resources and advance planning, these risks shouldn’t keep a staffing or recruiting firm owner from taking advantage of the revenue potential of contract staffing. Primary areas of risk every staffing or recruiting firm need to consider when doing contract placements include the following:
Worker Classification Compliance
Misclassifying workers as independent contractors who are later deemed employees can lead to stiff penalties, fines and back payroll taxes, not to mention benefits the affected workers might claim they are owed. A recruiting firm placing independent contractors must clearly understand local and federal worker classification rules, and maintain strict compliance with those rules to avoid misclassification.
Employment Standards Act Compliance
Keeping up-to-date on payroll legislation and putting processes in place to ensure compliance can be a full-time job. Recruiting firms need to work with knowledgeable lawyers and HR consultants to draft employment documentation that will stand up in court.
Health and Safety Compliance
Staffing and recruiting firms that place contract employees must know the ins and outs of workplace safety, and they must have access to affordable, comprehensive insurance. Staffing and recruiting firm owners also must anticipate the time costs of keeping up to date on health and safety legislation, investigating workplace injuries, following up with government agencies, and health and safety training. Because of the potential cost of making a mistake with regard to health and safety, recruiting firms need access to legal and HR professionals that can provide inside knowledge and guidance about the latest regulatory issues.
When employing independent contractors, a recruiting firm must know the best practices involved in designing contracts that protect the rights of all parties.
Large companies expect their independent contractors and staffing and recruiting firms to be covered by a comprehensive, general liability policy that protects against errors and omissions or other negligence on the part of the contractor. Staffing and recruiting firms may find accessing affordable coverage a challenge.
Subject Matter Expertise
Staffing and recruiting firms recognize they lack the experience and battle scars to effectively protect themselves against these risks; that is why they retain lawyers and HR experts costing hundreds of dollars an hour to ensure their practices are in compliance.
Ultimately, this legal and HR know-how is essential. Investigating and defending against a workers’ compensation or wrongful dismissal claim can add thousands of dollars in consultancy fees, and hundreds of hours of a staffing or recruiting firm owner’s time. What’s more, if the proper legal groundwork had not been properly laid out at the outset, the resulting judgment against the recruiting firm could wipe out everything the owners worked to build.
Fortunately, there are third-party providers that offer comprehensive back-office solutions to help you not only navigate potential areas of risk, but ensure compliance with all local, state/provincial, and federal laws for all of your national and international contract placements. What’s more, finding a back-office provider that also serves as the employer of record (EOR) can alleviate any potential risk that comes from misclassification of workers’ compensation claims, and so forth.
To learn more about how a back-office provider like People 2.0 can help your staffing or recruiting firm reduce compliance risk, contact us today!