1099/Independent Contractor: A tax form given at the end of the year to individuals for whom no taxes, FICA, FUTA, or SUTA were paid by the employer. Highly frowned upon by the Internal Revenue Service for anything other than very short term work with minimal pay. Individuals working under such terms are not covered by an employer’s Errors & Omissions (E & O) or Workman’s Compensation insurance.
Bench: Consultants employed by a staffing company that are in-between client assignments.
Bill Rate: The hourly rate the Client Company pays for each hour a contractor works on his/her assignment. The Bill Rate traditionally includes the contractor’s hourly pay rate, employer’s share of Social Security and Medicare, applicable state taxes like unemployment and Workers’ Compensation, along with any other state specific taxes or benefits. Based on how the contract placement is structured, the Bill Rate could also include Per Diem, and profit to the recruiter and/or back-office provider.
Candidate: A job seeker who has expressed interest in and submitted his or her resume for a specific position. (Not to be confused with ‘Qualified Candidate’ which is a job seeker who has been screened by a staffing professional and is deemed to have the skills and expertise required for the specified position.)
Closed Candidate: A closed candidate is a candidate who has been given all available information regarding a specific position; has agreed upon wages; and is ready to accept an offer. With CDT, this is done prior to submitting the candidate’s resume to the client.
Contingency Placement or Hire: The practice of only charging a fee after referring the successful candidate to the employer.
Contractor: A Contractor is a temporary worker being paid on an hourly or deliverable basis who does not receive any additional benefits, including paid time off. When working for a staffing company, a Contractor would be working on a W2 tax basis; when working for the end client the Contractor works under a 1099 or their own corporation.
Conversion Fee: Placement fee earned by the recruiter when a contractor is hired as a direct-hire employee of the client company. The conversion fee is in addition to the hourly fee earned during the term of the contract.
Conversion Fee Agreement: Fee schedule between the recruiter and client company covering the fee due if the contractor is hired as a direct hire employee of the client company. A conversion fee agreement should be executed for every contract placement. The financial details of each placement could be different, so recruiters need a separate agreement for each contract candidate to protect the fee.
Consultant: Generally, the term Consultant is used interchangeably with Contractor. To split hairs, a Consultant offers consultative services in area where the client has no knowledge.
Direct Hire / Permanent Placement: This is when the client uses the services of a Staffing or Recruiting company to locate, screen, and facilitate the hiring of employees who will work directly for their company.
Employment Agency: Employment Agencies are paid by the job-seeker to find employment. Services and fees for these companies vary widely and may be paid in advance or taken as a percentage of the first-year salary when the candidate is hired. There has been an incursion of state and local regulations created to screen out scrupulous agencies who may take advantage of the unemployed.
Executive Search: The process of recruiting for exempt-level managers or professionals for direct hire, permanent placement, positions within client companies.
Headhunter: Headhunter is a slang term for Recruiter – The person within a Staffing or Recruiting firm responsible for identifying and screening qualified candidates for client companies. Some large companies employ their own full-time Recruiters to work within their Human Resource department.
Hourly Employee: An employee with non-exempt status.
Job Order: Often referred to as ‘the requirement’. A Job Order is the specific information provided by a client company to a staffing or recruiting firm about a specific open position. The Job Order contains experience and skill requirements, job description, length of assignment, and any other pertinent information.
Margin: Dollar amount difference between the client company bill rate and the employee (contractor) pay rate and costs. For example, if the hourly bill rate is $30 and the hourly pay rate and costs are $20, the margin is $10.
Markup: The percentage by which the client company bill rate is greater than the employee (contractor) pay rate. For example, if the hourly bill rate is $30 and the hourly pay is $20, the markup is 50%.
Multiplier: The quotient of the client company bill rate divided by the employee (contractor) pay rate. For example, if the hourly bill rate is $30 and the hourly pay rate is $20, the multiplier is 1.5.
On-Boarding: The process of acclimating a new employee, contractor, or consultant by providing them with all of the tools and information necessary to be productive as quickly as possible.
On-Premise / Vendor on Premise (VOP): Refers to situations where a portion of a client’s employees are on the payroll of a staffing firm but are working at the client’s location. The client company may want to locate, screen, or interview the employees, but they do not want the recordkeeping obligations associated with payroll, tax withholding, benefits, etc. Traditionally, a recruiter does not locate a payroll candidate.
Outplacement: A service retained by companies in the midst of layoffs to prepare, enable, coach, and council former employees for their new job search.
Payrolling: Refers to situations where a portion of a client’s employees are on the payroll of a staffing firm but are working at the client’s location. The client company may want to locate, screen, or interview the employees, but they do not want the recordkeeping obligations associated with payroll, tax withholding, benefits, etc. Traditionally, a recruiter does not locate a payroll candidate.
Per Diem: Latin for ‘By the day’. Per Diem can mean that someone is working and being paid on a daily basis or, more commonly, it is a daily allowance paid to an employee, contractor, or consultant for temporary living arrangements while working out of town.
Permanent Employment: What is often referred to as “Permanent” generally means long-term, not temporary or project-based, employment. For the foreseeable future: perhaps. Actual permanence: highly unlikely!
Placement: When a staffing firm brings together a job seeker and an employer for the purpose of an ongoing working relationship, the candidate has been placed.
Placement Fee: The fee due to a staffing firm when a referred candidate is hired by the customer. Fees are typically 15-35% of annual salary depending on the level of the position.
Professional Employment Organization (PEO): A business places its workforce onto a co-employment arrangement with another company, the PEO, who handles all payroll, benefits, and human resource issues on behalf of the business.
Recruiter: The person within a Staffing or Recruiting firm responsible for identifying and screening qualified candidates for client companies. Some large companies employ their own full-time Recruiters to work within their Human Resource department.
Recruiting Firm: A recruiting firm is a company that identifies and refers qualified candidates for clients seeking to hire employees to their organization. Different from a staffing firm, a recruiting firm generally does not offer temporary or contractor services.
Request for Proposal: An invitation for vendors and suppliers, often through a bidding process, to submit a proposal on a specific commodity or service.
Requirement: Often referred to as ‘the Job Order’. A requirement is the specific information provided by a client company to a staffing or recruiting firm about a specific open position. The requirement contains the necessary experience and skill levels, job description, length of assignment, and any other pertinent information.
Resource Management System / RMS: An RMS is software used specifically for the purpose of managing candidate resumes from outside vendors.
Resume/Candidate Sourcing: The process of developing lists of potential candidates for a specific assignment.
Retained Search/Fee: Service provided by a search, staffing, or recruiting firm to locate candidates for a specific position with a client company. The fee for this service is due whether or not a hire is made.
Sub-Contractor: A Sub-Contractor is an individual working for a staffing firm who has a contract with another staffing firm to provide services to the client. Sometimes, the Sub-Contractor is owned by the individual contractor performing the services.
Staff Augmentation: Staff augmentation is the process of temporarily augmenting a company’s internal staff usually for a specific deliverable or project.
Staffing Firm: While staff augmentation is generally the core offering of a Staffing Firm, many, like CDT, also provide Permanent Placement, Temp-to-Perm, and Outplacement services.
Staffing Specialist: Generally a Staffing Specialist is a Recruiter. Certain companies may have slight differences in responsibilities, for example resume sourcing/screening, resume formatting or candidate screening.
Statement of Work (SOW): An SOW attaches to the services contract between a staffing firm and the client. It outlines the specifics of the contract including the contractor’s name, bill rate, work hours, and client manager. In the case of project based work the SOW will detail the scope and deliverables.
Submittal: The formal process of representing a qualified candidate to a client by forwarding the candidates resume through e-mail, mail, fax or in-person resume delivery.
Temporary Staffing: Workers being paid by a Staffing Firm working for a client on a temporary basis. The duration of the work may have specific parameters such as time or deliverables or it may be undefined.
Temp-to-Perm: Temp-to-Perm, Temp-to-Hire, Rent-to-Own, Try-Before-You-Buy is when a client has a position available on their direct staff but chooses to bring a person into this position first as a consultant for a predetermined evaluation period.
Time & Materials (T&M): Time and materials is a type of contract between a staffing company and their client wherein the client agrees to pay for the consultant’s time worked and any materials or expenses required.
Travel & Living (T&L): T&L is additional monies paid to an employee, contractor, or consultant for temporary living arrangements while working out of town.
Vendor Management Office / VMO: A Vendor Management Office or Vendor on Premise is when a staffing firm works on the client’s site as the central contact for all client management and outside staffing vendors. When done properly, the VMO reduces costs to the client by relieving management of the vendor interactions, negotiating best rates, and managing the on-boarding process.
Vendor Management System / VMS: A VMS is software used specifically for the purpose of managing outside vendors.
W2 Employee/Contractor: A W2 is the form provided to employee by their employer for the purpose of annual tax reporting. W2s are given to those employees for whom the employer has deducted and paid all applicable payroll fees and taxes.