Glossary
Agreement: Fee schedule between Management Recruiters of Salt Lake City and client company covering the fee due, if the contractor is hired permanently by client company.
Alternative Staffing: Another term for "Contingent Staffing," includes all nontraditional work arrangements other than direct full-time employment, including: contractors, temporaries, consultants, self-employed, independent contractors and part-time workers.
Back-Office: A qualified back-office supports the front-office by handling all of the administrative duties and payroll functions of a contract placement. Administrative duties includes all the legal contracts, insurance requirements, employee forms, paperwork, etc. The payroll functions include all funding, taxes, unemployment, workers' compensation, etc.
Buy-out Agreement: See "Conversion Fee Agreement."
Candidate: Person to potentially fill a job opening. Usually refers to an applicant who has been qualified for the position and submitted to the client company (may then be known as a "submittal"). In contracting, after the candidate is placed they become the "Contractor."
Client Company: Company receiving services from "Contractors" who are employees of a "Staffing Company."
COBRA: Legislation enacted in 1986 requiring employers with more than 20 employees to offer continuation of health care coverage in the event that an employee is terminated or experiences a qualifying life event. The employer taking tax deduction benefits for sponsoring employee benefits is the employer to look to for COBRA obligations, as legislation is part of the ERISA tax law.
Co-employment: The employment relationship where two or more legally separated employers share potential or actual employer responsibilities with a common employee[s].
Common-law Rules: Defined as "the law of a country or state, based on custom, usage and the decisions and opinions of law courts." Common-law rules are traditional tests that are applied to determine an employee or independent contractor status. A "common-law employer," is an employer who possesses the right to direct and control an employee as to the final results and as to the details of when, where, and how the work is to be done.
Contingent Staffing: Flexible supply of labor to support a core of permanent employees in peripheral, non-core functions and during periods of increased demand.
Contingent Workers: Includes all nontraditional work arrangements other than direct full-time employment, workers including: contractors, temporaries, consultants, self-employed, independent contractors, and part-time workers.
Contracting: Triangular employment relationship where a "Staffing Company" supplies "Contractors" to a "Client Company" for a specific function and time period, at a specified hourly rate.
Contractor: Employee of "Staffing Company" who provides services to a "Client Company" under the day-to-day supervision of the client.
Conversion Fee: Placement fee earned by the recruiter when contractor is hired permanently by client company. Conversion fee is in addition to the hourly fee earned during the term of the contract.
Core Employees: Permanent, "traditional" employees who have the critical skills necessary for an organization's continued existence. These employees guide the company's strategies for the future. Core employees are surrounded by a flexible ring of contingent workers who handle non-core work.
Downsizing: Movement in Corporate America to reduce costs and become more competitive; reducing headcount to lower fixed costs.
Employee Benefits: An indirect form of employee compensation, in addition to wages. Some employee benefits are mandated by law. These include social security, unemployment, and workers compensation. Other employee benefits are sponsored voluntarily by employers. It is usual to talk about health-care, life insurance, retirement, or other welfare benefits in this context.
Employee Leasing: The term employee leasing for the service industry has come to mean a business service whereby a firm specializing in payroll accounting, personnel management, employee benefit, and risk administration, offers its skills and expertise to the subscribing business. The long-term, regular dedicated employees of the subscribing business are transferred to the leasing firm's payroll and benefits resources. The leased-employees return to the subscribing business via the avenue of employee leasing.
ERISA: Acronym for the Employment Retirement Income Security Act. A federal law that governs pension and welfare employee benefit plans. Sets guidelines for these programs. A group of complex and extensive law governing employee benefits.
Fidelity Bond: Protects an insured business against dishonest acts such as embezzlement, forgery and theft committed by employees.
Flexible Staffing: Trend in American companies towards a core of permanent employees with critical skills necessary for a company's survival, surrounded by a flexible ring of contingent staff to handle peripheral, non-core functions. See also "balanced staffing," "contingent staffing," and "just-in-time staffing."
Front-Office: The front-office responsibilities of a contract placement are similar to permanent placements. Recruiters get job orders, then recruit candidates. The front-office is the key contact with the Client Company and the back-office handles the administrative and payroll functions.
F.U.T.A.: Stands for Federal Unemployment Tax Act. "F.U.T.A." is the term used for the payroll tax every employer must pay under this Act. This tax cannot be withheld from the employee's pay, it is solely the responsibility of the employer.
General Employer: In joint employer situations or court cases involving multiple employers, the general employer is the original employer who retains the employment agreement with the employee. This is the employer with broad control. The courts and administrative agencies identify the general employer as the employer who is maintaining the employee on the payroll and providing benefits and its responsible for the long-term employment relationship. The borrowing or short-term employer is called the special employer.
Independent Contractor: An Independent Contractor provides services to a company, but is not an employee of that company. The company pays the Independent Contractor without withholding payroll taxes or paying the employer's share of payroll taxes. An independent contractor has the right to decide how the work will be done and may hire others to assist or do the work. Independent contractors also do not receive wages. Independent Contractors are under intense scrutiny from the IRS and states because of abuses costing billions of dollars of taxes.
Liability Insurance: Insurance that covers bodily injury or property damage to others, to third parties.
Margin: Dollar amount difference between the Client Company bill rate and the Contractor salary. For example, if the hourly bill rate is $30.00 and the hourly salary is $20.00, the Margin is $10.00. See also "Markup" and "Multiplier."
Markup: The percentage that the Client Company bill rate is greater than the Contractor salary. For example, if the hourly bill rate is $30.00 and the hourly salary is $20.00, the Markup is 50%. See also "Margin" and "Multiplier."
Multiplier: The quotient of the Client Company bill rate divided by the Contractor salary. For example, if the hourly bill rate is $30.00 and the hourly salary is $20.00, the Multiplier is 1.5. See also "Margin" and "Markup."
Payrolling: A term primarily found in the temporary help literature. Refers to situations where all or a portion of a client-customer's employees are on the payroll of a staffing firm but working at the client-customer's location. The client company may want to screen or interview the employees because of safety or experience requirements, but they do not want the recordkeeping obligations associated with payroll and withholding.
Payroll Taxes: Employers are appointed, as agents of the government, to withhold federal, state and local income tax from employee's wages. These obligations are severely regulated and carry heavy penalties if they are not done correctly.
Outsourcing: Basic outsourcing is where the client company has an entire department staffed by the employees of a staffing company, from top to bottom. Can be done on or off the client company premises. See also "Vendor on Premises."
Special Employer: This term is used in general and special employment. A special employer is a person or organization that is deemed to share an employer-employee relationship with the general employer. It applies more accurately where the general employer momentarily relinquishes control over their employee[s] to another employer.
Sole-Source: One "source" or means of acquiring all of your staffing needs. Commonly referred to as Sole-Source Supplier which allows a Client Company to go to one recruiter (firm) for all their staffing needs. (Permanent, Temp-to-Perm, Contract, Payrolling, Etc.)
Staffing Company: A company, such as Management Recruiters of Salt Lake City , who is the employer of record for contractors and handles the back-office functions associated with payroll and administrative duties.
S.U.I.: Stands for State Unemployment Insurance. Each state imposes a payroll tax on the employer for unemployment benefits. The tax ranges from 1% to over 5% of each dollar of payroll. The employer is entirely responsible for paying the tax, it cannot be deducted from the employee's pay.
Technical Contracting: Contracting jobs such as engineers, programmer analysts, systems analysts, drafters, designers, and technical writers.
Temp-to-Perm: A contractor (employee) is placed on an assignment with a client company based on the assumption that if the client likes the employee, the employee may be permitted to be hired by the client as a direct hire. A "try before you hire" practice.
Traditional Employment: New term for permanent employment. Non-traditional jobs are the contingency positions.
Triangular Employment: Relationship between contractor, staffing company, and client company in which the contractor is the employee of the staffing company but performs services for the client company.
Unemployment Insurance: Government sponsored protection to assist workers who have been laid off or even quit their jobs through no fault of their own. The unemployment income lasts only a few months. This insurance represents a significant contribution on the part of an employer as a percentage of employees' gross wages.
Vendor on Premises: Outsourcing arrangement where a full-time staffing coordinator administers the entire outsourcing process for the client: interviewing, testing and screening applicants, filling job assignments, issuing payrolls, providing on-site management of the department.
Virtual Corporation: New term for maintaining a minimum staff of core employees, surrounded by a ring of contingent staff.
W-2 vs. 1099MISC: At the end of each year, workers either receive a Form W-2 or a Form 1099MISC. An employee receives a W-2 and has all required payroll taxes withheld throughout the year. An Independent contractor receives a 1099 and has no payroll taxes withheld.
Workers' Compensation: Businesses are required by law to obtain workers' compensation insurance for their employees. The purpose of this insurance is to provide medical and other benefit coverage for employees who suffer a job-related injury or illness. Generally speaking, the staffing firm must maintain workers' compensation for their employees, or coordinate coverage through the subscriber.
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