Contract staffing issues with staffing agencies

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Companies entering into contract staffing agreements with staffing agencies supplying contract staff must bear in mind the legal provisions under a slew of federal and state laws that has to be complied with as an employer.

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Contract staffing issues with staffing agencies:

Contract staffing issues with staffing agencies Companies entering into contract staffing agreements with staffing agencies supplying contract staff must bear in mind the legal provisions under a slew of federal and state laws that has to be complied with as an employer. Organizations must bear in mind that staffing firms are not insurers and they should not be expected to cover the risks beyond those inherent in the staffing business. The general risks include that of related to being an employer such as payment of wages and benefits, payrolls and taxes etc and liability for client loss or damage caused by the staffing firms failure to properly screen or otherwise qualify the assigned employee for the job.   While entering into a contract with a staffing agency supplying the company with workers or as an independent contractor, organizations must specify who has control over which aspects of work that needs to be done. Organizations must clearly define the employment relationship to limit control over the contract staff by spelling out the particulars in a contract. In general, the more control an organization have over the employees and the more aspects of the employment relationship that concerned organization has responsibility for, the more likely that organization would be considered as an employer of that employee even in case of temporary employees. This would in turn make the organization/employer liable for implementing federal laws and state laws.

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When negotiating a contract with a staffing agency, organizations must keep in mind by following the below mentioned basic guidelines:- Enter into an agreement as an organization and a staffing agency not as between two personalities, 2. To remain careful in drafting clauses to protect themselves from the liability of employees, 3. Specify job descriptions, 4. When entering into a contract with an independent contractor, an organization must observe that the agreement clears or fulfills the test created by the Internal Revenue Service or IRS to investigate if a worker is an employee or an independent contractor. This test is popularly known as multi-factor test. 5. Where the independent contractor has formed a limited liability company or LLC, then the agreement must be structured as being entered by two business entities rather than between an organization and an individual, 6. Organizations must not undertake any activities that make the contract staff appear to be under employer/employee relationship. These include not paying benefits, paying for Social Security and Medicare taxes under the Federal Insurance Contributions Act (FICA) or paying federal and state unemployment taxes under The Federal Unemployment Tax Act (FUTA), keeping personal files or preparing 1-9 forms. 7. Require the contractor or contract staffing agency to invoice the client organization for all their staffing services.

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