We discussed in the previous blog post the critical considerations and tasks associated with setting up an in-house contract staffing back-office. But let’s say you decide NOT to take on the time-consuming back-office tasks and liability and instead choose to outsource the back-office. This allows you to avoid the back-office headaches and instead focus on your recruiting tasks and growing your business.
Now the question is “Who?” Not all back-office support solutions are created equal. For example, some providers only handle payroll funding and/or processing, which leaves you with the other employment tasks and liabilities. The only way you will avoid all of that is to use a full-service back-office that will become the contractors’ legal, W-2 employer taking on all the employment tasks.
Questions for Back-Office Service Providers
There are a number of other differentiating factors between back-office services. Asking these questions will help you determine which back-office is the best for your firm:
- What types of positions will the back-office accept? Can they accept nationwide placements? Some back-offices only place individuals in office environments due to Workers’ Compensation restrictions. Make sure the back-office can accept the types of positions for which you want to recruit. Also, make sure they are set up to accept placements in the states in which you focus. If not, this could restrict your growth.
- Does the back-office have a master agreement with the end client that defines the legal scope of the contract placement? The back-office service provider’s master agreement with the end client should confirm that the back-office will be the Employer of Record and will take on all the employer responsibilities. Without this, the door to co-employment is left wide open and you and/or your client could end up retaining some liability.
- Does the recruiter have to sign a contract to use the back-office? If so, you may be obligated to use that back-office exclusively and/or for a certain period of time. You will also want to determine if the recruiter is held responsible for “uncollectible” invoices and find out when the recruiter gets paid.
- What happens if a client fails to pay an invoice? Again, you want to find out if you could be held responsible for uncollectible invoices. Also, what are the standard invoicing terms? Does the back-office have standard procedures to confirm that the client received the first invoice and to collect on open invoices?
- Does the back-office run background checks on all contractors? Ensuring that staffing background checks are run for every contractor can help protect your firm from liability and maintain your reputation. It will also help protect your client. You may want to confirm that drug screenings can also be handled.
- Does the back-office recruit candidates and fill its own job orders? To ensure that the candidate remains “your” candidate, you may want to confirm that the back-office does not do any recruiting. Ideally, the back-office should handle the administrative tasks, and the recruiter should work with the client for all recruiting needs.
- Does the back-office offer group benefits to contractors? To attract and retain the best contract candidates, make sure your back-office offers a rich contract employee benefits package with group healthcare insurance as well as dental, vision, and life insurance and 401(k). Does the back-office contribute a portion of the healthcare premiums for the contractor?
- Is the back-office compliant with the Affordable Care Act (ACA or Obamacare)? The group healthcare insurance for contractors should meet the ACA’s Minimum Essential Coverage (MEC) and Minimum Value (MV) requirements.
- Does the back-office have certified human resource professionals on staff? As mentioned earlier, an experienced and knowledgeable HR staff is vital to handle any potential employee issues, including terminations, Workers’ Compensation issues, benefits questions, and more.
- How long has the back-office been in business? What is their reputation? Be sure your back-office provider has an impeccable reputation and experience. Don’t be afraid to ask for references. Remember, your back-office provider is a reflection on your firm and has a direct impact on your reputation.
By performing this “due diligence,” you can ensure that the back-office you select is the right solution to help you grow and protect your business.
This general summary of law should not be used to solve individual problems since changes in fact situation may require a material variance as to the applicable law. This article is for information purposes only and should not be construed as legal advice.