All About Staffing Contracts
Employers turn to staffing firms for numerous reasons. These range from a short-term solution for backfilling an absent employee to on-boarding new employees "faster, cheaper and better." Staff lease contracts (temporary employment agency contract) and temp-to-perm contract templates offer a quick and low-risk method for staffing your company with employees and independent contractors. However, it is important to make sure that you are using the correct staffing contract template in such situations. This is equally important for temporary employees and agencies. Cutting corners here can lead to big problems down the road.
When done right, using a staffing contracts template is quite simple for temporary agencies (temporary employment agency contract), contract staffing agencies (agreement template for contract staff services), and temporary employment agencies (contract for temporary employment agency). The agency on-boards the employee and is responsible for most or all employee-related administrative tasks. Those tasks are typically outlined in the agency’s contract template. The client company (and end user) also enters into a form of an agreement with the agency and each of those contract templates should be customized. The form of an agreement to use largely depends on the type of industries being served, the specific services being provided, the billing model, and the state or states where the assignment is actually taking place . There are subtle differences between each of these agreement templates and designating the wrong agreement can create serious liability.
Temp-to-perm arrangements are another type of temp agency contract, but require completely different considerations. Temp-to-perm or temp-to-hire relationships occur when the client company, after a qualifying period (usually 30 to 90 days), can hire or transition the employee to its payroll. Like with other types of staffing contracts, agreement templates are available and should be carefully selected and tailored to the position, industry, services, and states involved.
Both temporary staffing agreements and temp-to-perm arrangements also present risks. For example, take Massachusetts. Massachusetts defines an independent contractor by 3 elements (acknowledged explicitly in the statute) that include the requirement that the worker be free of control and direction both by the employer and others. If the worker is free of direction and control by the agency but not by the client company, the economic risk is the client company’s. That’s a hidden issue that lies in wait and can come back to bite the client company. The stakes are even higher if there is a temp-to-perm arrangement. Given the legal implications of a temp agency contract, companies must be extremely careful in drafting and complying with these temporary staffing contracts.
Main Components of a Staffing Contract Template
Staffing contract templates are often very basic, and it’s important to be aware of the sections that should be clearly defined before proceeding. Ideally, your staffing contract template will include the following sections:
Roles and Responsibilities
Who will be working for who? That’s the fundamental question to answer in any staffing contract template. Will you be sourcing the workers, or are you hiring them through a staffing agency? If you’re working with a staffing agency, the contract should clearly establish that relationship and define the roles of the staffing agency, the client, and the employee being hired.
Additionally, each party should clearly outline their responsibilities. For example, an employee may expect certain perks as part of their employment, and they may expect you as an employer to provide things such as:
· Lunches
· Benefits
· Transportation
· Tolls
· Temporary practices
The details listed in the contract can help you avoid confusion or argument down the line regarding these issues.
Compensation
How much is the employee going to make? Depending on the type of employee, this may change. For instance, a temporary employee may not be eligible for the same types of compensation as full-time employees, but that should be outlined in the contract for clarity. On the other hand, a permanent employee’s salary should be clearly listed, along with any bonuses, commission, benefits, or additional compensation they’re eligible to receive.
Bonus: how the employee and employer are going to be taxed should also be listed briefly in the staffing contract template.
Termination
Finally, any staffing contract template should spell out how the employee or employer can terminate the contract. It should be clear and simple, and include any cause for termination (e.g., if the employee cannot meet goals, or if this employee doesn’t align with company culture, etc.).
Advantages of Using a Staffing Contract Template
Staffing contract templates simplify the hiring process. Clients and staffing firms specialize in specific areas, and a staffing contract template gives both parties a clear legal framework. Staffing firm professionals have customized contracts for their field, but those contracts aren’t the same for any client. Client-side hiring managers may not completely understand the separate agreements they’ve signed, especially if they work with several different firms. Contract templates allow both parties to avoid confusion.
They’re able to specify the services offered, the time period involved and all of the exact legal obligations of both parties. There are no surprises on either end of the deal, and everyone knows what’s expected of them.
A staffing contract template allows a client to request specific information or qualifications out of the gate. It has legal language that will allow the firm to terminate employment and/or sue for damages if the system is abused.
A well-drafted and reviewed staffing contract template helps staffing firms comply with federal and state laws. By using contract templates that have been carefully reviewed for compliance issues, firms can avoid agency misclassification lawsuits, minimum wage claims and overtime pay lawsuits. Templates help firms comply with the Fair Labor Standards act, and they can address credit checks, background checks and nondiscrimination clauses.
When it comes to a permanent placement staffing contract template, compliance issues really come to the front of the table. Some states recently passed laws allowing temporary employees to earn permanent placement benefits after a specific length of time. Employment laws relating to permanent employees differ from laws for temporary employees, so having compliant language in place in a contract template is essential.
Using a staffing contract template takes some of the risk out of the hiring process, but it doesn’t guarantee success. There are other things that hiring managers must do as well, and these include using an applicant tracking system to handle incoming job applicants and their resumes because this puts potential hires into a database that’s easily searchable. The applicant tracking system spares HR staff the burden of reading every single resume that comes across their desk. It saves time because the system will take care of scoring applicants, which will leave the most promising candidates for the manager to review.
The applicant tracking system backs up candidate responses. If the systems stops working or makes a mistake, the entire search is on record and traceable. It’s hard to walk back some mistakes made in the interview process.
Once a contract template is created and in place, it is possible to negotiate salaries, or benefits, or other issues.
Altering Your Staffing Contract Template
Once you’ve chosen a staffing contract template that best fits your business, it’s time to put the finishing touches on your specific needs. If you’ve purchased a basic template outline, use it to ensure that you include all of the relevant sections. If you’ve purchased a staffing contract template for your specific industry, go through it and check that it covers all eventualities that apply to your business. Remember that each industry and type of staff may require different contractual agreements, so whilst it is tempting to simply download a generic template and issue to everyone in the business, this could be more damaging than helpful. Spend some time going over your existing contracts and identify any loopholes, strong clauses or policies that you would like to incorporate into your new template and update them accordingly. When it comes to customization, think about: To help you start off, it might also be useful to use a previous contract as a template. However, even this will likely need to be updated to ensure that it complies with all relevant laws such as the General Employment Regulation (GER) and any other applicable legislation or guidelines. For example, temporary workers are protected under the European Agency Workers Directive (AWD), which came into effect in 2011 and means that temporary workers should not be treated less favourably than permanent employees from day one of their assignments in certain key areas. Other important factors to consider are health and safety requirements related to your business. For example, if you operate a location-based business and are sending staff to client sites, you should have clear Health and Safety Guidelines for these employees. Other industries such as the construction industry may also require Health and Safety Guidelines and Statements. The key is to personalize your contract so that it is as unique as your business.
Mistakes to Steer Clear Of
A majority of companies fail to include the most basic provisions in their staffing contracts. Those provisions are necessary to the enforceability of the contract or the company’s ability to enforce the contract. As such, it is imperative that you include the following items in your staffing contract:
- Term. Without a specific start and end date, the contract is not only unenforceable, but your business could be stuck in a perpetual contract situation where you are paying for services you are not receiving. Make sure to include specific dates on when the contract starts and ends to avoid any confusion.
- Contract termination. Terms and conditions for how the contract may be terminated, without cause (a.k.a. "for failure to perform a material term"), must be included. Without a termination provision, your business will be bound by the contract even though the service provider is providing unsatisfactory service or failing to comply with the terms of the contract. The benefit of a contractual termination provision, however, is that it benefits both the business and the service provider. It provides both parties with an out of the contract that satisfies the needs of the business.
- Standard of care. Providing a standard of care will ensure compliance of the contract while providing a clear measure of performance. Defining what a "good and workmanlike manner" or a "reasonably satisfactory manner" means will help you determine whether you are receiving what you bargained for.
- Scope of work. If there are particular services that need to be performed, or services that should not be performed and require advance written approval first, they must be clearly included in the scope of work.
- Prohibited actions. Any actions that are prohibited without advance approval or written agreement should be expressly stated. For example, if the service provider is not allowed to bond an individual at a certain level, or if your business requires the provider’s employees be required to wear uniforms, those conditions or restrictions must be expressly stated in the contract and agreed upon before the contract is executed.
- Commitment to meeting the contract . If you anticipate that your vendor will not meet the terms of the contract, or that its resources will be diverted to another client, this expectation should be clearly set forth in the contract. If you anticipate that your vendor will need to hire additional contractors to perform the job, those expectations should be included in the contract. It is not acceptable for a vendor to hire contractors to perform more than a minimum number of hours without advance written permission to do so. It is important to note that using a contractor at an hourly rate is not the same as hiring an "employee" at an hourly rate.
- Indemnification. Your business should be indemnified against claims brought against the other party. If your business is providing the service, the service provider must indemnify your business against any claims of negligence brought against your business by the provider. Likewise, if your business is the one hiring the vendor, the provider must indemnify your business in the case of negligence on the part of the provider or its employees or agents.
- Confidentiality/confidential treatment. If your business needs to keep the terms of the contract, including pricing, confidential, those conditions must be expressly stated in the contract. If your business must keep confidential any proprietary information of the provider, that too must be expressly stated and included in the contract.
- No work with competitors. If your business does not want to compete with your vendor, or have your vendor compete with your business, that provision must be expressly stated in the contract. In many cases, your business may want to require that your vendor notify you before the vendor responds to a bid from one of your competitors.
- Verification of matters requiring a sworn statement. If the parties intend to bind the contractor to facts that require a sworn statement, have your confidence verified by an attorney. Translated, if you intend to hold the contractor responsible for the scope of work, you need the sworn testimony of the contractor that those facts are material to the business agreement and that the parties agreed to them.
Legal Aspects of Staffing Contracts
When drafting a staffing contract, it is essential to ensure that it complies with all applicable labor laws and regulations. Staffing agencies are required to adhere to laws governing issues such as discrimination, wage and hour laws, and workplace safety. The contract should outline the agency’s obligations to comply with these regulations and should be reviewed regularly to ensure compliance with any changes in the law.
Another important legal consideration when drafting a staffing contract is confidentiality. Employers often need to share proprietary information with their staffing agencies, such as trade secrets, customer lists, and other sensitive business information. A confidentiality agreement should be included in the contract to ensure that the staffing agency agrees to keep this information confidential and to return or destroy it when the contract is terminated. The agreement should also specify under what circumstances the staffing agency is allowed to share this information with third parties.
In addition to compliance with labor laws and confidentiality agreements, it is also important to consider any liability issues that may arise from the use of temporary workers. The staffing contract should specify which party is responsible for any claims that may arise from the actions of the temporary workers. For example, if a temporary worker is injured on the job, it should be clear whether the staffing agency or the employer is responsible for providing workers’ compensation insurance. Similar questions can arise regarding unemployment insurance claims, discrimination claims, and other potential liability issues.
Overall, when drafting a staffing contract, employers should carefully consider all legal issues that may arise, from compliance with labor laws to confidentiality agreements to potential liability issues. By ensuring that all of these concerns are addressed, employers can help to prevent costly legal disputes down the road.
Sources For Trusted Staffing Contract Templates
Finding reliable staffing contract templates can be a challenging task, especially for those new to the staffing industry. With an abundance of companies offering free or low-cost downloadable contract templates online, it’s important to tread carefully through your options, to ensure that you receive quality contracts that sufficiently protect your business. The following options are a few sources that provide reliable, secure staffing contract templates.
Many websites providing legal services offer staffing contract templates that include all necessary terms of an agreement required by law. While some websites such as Rocket Lawyer allow you to easily customize your agreement for free, others charge a small fee (typically between $10-$50) for contract templates that can easily be created and downloaded from your smartphone . Some other online services, such as LegalZoom, provide free consultations between you and a qualified attorney to ensure that your staffing agreement has all of the additional clauses necessary to secure your staffing position.
Hiring an attorney to draft your staffing contract for an HR Manager can be beneficial for those businesses seeking a more comprehensive agreement at a reasonable cost. Experienced attorneys can help you draft an agreement in a few hours, and customize it to your specific needs. Many lawyers even offer discounted rates on contract templates to entice you to return whenever you need additional assistance.