In today’s complex employment and economic environment, a direct hire does not always meet a client’s needs. Offering a broad spectrum of staffing services that meets ALL your clients’ needs is vital to retain clients over time and continue acquiring new business.
Fortunately, simply adding contract staffing to your business model – by taking on the responsibilities and liability yourself or outsourcing to a contract staffing back-office service – can help you do that with six commonly recognized types of contract placements:
- Traditional contract staffing. From a recruiting perspective, this is much like a direct hire situation: the recruiter gets the contract job order, locates the candidate, and negotiates the rates. The difference is that the contractor becomes the W-2 employee of the recruitment firm or a back-office rather than that of the client company, but the client still gains the valuable skill and expertise of the contractor. This is extremely common when a client has a large project or a critical deadline. The client only pays for the actual hours worked by the contractor; they are not responsible for unemployment, worker’s compensation, benefits, COBRA, or any of the other cost and liability aspects of having employees.
- Temp-to-direct hire conversion. The recruiter finds the candidate as with traditional contract staffing; however, here the intention is to convert the candidate to a direct hire after 6-12 months if they meet the necessary goals and expectations during the contract period. Basically, this gives the client the opportunity to work hand-in-hand with the candidate before making the long-term commitment of hiring them directly. This is also referred to as “try-before-you-buy.”
- Payrolling for non-recruited candidates. In this scenario, the client has a short-term need (3-12 months) for which they have already located their own candidate. They simply want to outsource the employer responsibility for unemployment, worker’s compensation, benefits, COBRA, and all of the other cost and liability aspects of having employees.
- Retiree re-staffing. Companies retain or gain the skills and experience of a retired worker by bringing them on as a contract worker. By utilizing a staffing firm/back-office service, the client refrains from impacting pension plans because the legal employment of the worker is outsourced to a third party. Additionally, the retiree enjoys flexibility, supplemental income, and the opportunity to remain active in the workforce.
- 1099 independent contractor to W-2 employee conversions. Government agencies are cracking down on companies that misclassify W-2 employees as 1099 independent contractors (ICs), and the consequences include lengthy audits, hefty fines and potential back wages. Clients can avoid the risk of misclassification by converting ICs to W-2 employees and outsourcing the employment liability.
- Internships/co-ops. Outsourcing intern employment helps clients avoid the cost and administrative issues associated with short periods of employment. This is a viable alternative to unpaid internships which, like 1099 independent contractors, have come under fire and can only be legal if they meet a strict set of criteria.