Using Contract Agencies
Purpose of Process (see below how HRSource™ can help):
The purpose of this process is to acquire contract agency employees in an expeditious and cost effective manner to fill temporary job openings.
Recommended Steps in the Process:
Consider the advantages and disadvantages
of using contract workers.
Establish a group of preferred Contract Agencies:
- Collect information on local Contract Agencies and determine
which agencies can best fulfill temporary needs when they are
available. When selecting a contract agency, consider the size
of their contract employee pool, the rates they charge, their
reputation for quality of workers, and their responsiveness and
speed in supplying qualified workers.
- Generate agreements with those agencies (see sample agreement form).
Execute the contract process:
- A manager identifies a need for an individual to perform a
one-time task or a task for a temporary period of time.
- If there are no regular employees to perform the task due to
their lack of available time or lack of specific skills, the
manager completes a Job Opening form and checks the temporary
personnel line (See sample form).
- The requesting manager obtains upper management approval and
sends the form to Human Resources.
- Upon receiving the Job Opening form, enter the requisition
number, job ID, and salary range on the form, and then forward
it to the appropriate contract agency or agencies.
- Screen the resumes received from the agency(ies), identify the
salary required, and forward qualified resumes to the hiring
manager.
- The manager reviews resumes, identifies qualified candidates
and notifies Human Resources if interviews are necessary.
- If interviews are necessary, contact the agency(ies) or
candidates to schedule interviews.
- The manager informs Human Resources of which candidate is
selected and specifies the start date. Enter this information on
the Job Opening form, along with
salary and assignment length. Track the assignment expiration
dates.
- Provide the Contract Agency Employee with necessary
information regarding company Ethics and
Conduct Rules, time card record-keeping, general safety,
and Equal Employment Opportunity and
Anti-Harassment Policies. Note that
if the company controls the means and manner of the temporary
worker's work performance, then the company is responsible for
prohibiting discrimination against the contract agency employee
on the basis of race, color, religion, gender, national origin,
ancestry, age, marital status, sexual orientation or disability.
Depending on the contractors' access to company proprietary
information, you may wish to have them sign a Nondisclosure
Agreement.
- The manager signs the Contract Agency Employee's timecard on a
weekly basis and submits it to the Contract Agency. The Contract
Agency pays their employee and submits a bill to the company for
the Contract Agency Employee's wages plus an administrative
mark-up.
- If the manager determines that the work performance of the
Contract Agency Employee is not acceptable, then contact the
Contract Agency and request that they replace the individual or
terminate the assignment.
- Inform the manager of the assignment expiration shortly before
it occurs. If the manager determines that the Contract Agency
Employee will be needed beyond the original assignment, document
the new (extended) assignment end date on the Job Opening form.
- When the manager decides to end the assignment, notify the
Contract Agency prior to the end of the assignment. Normally the
manager informs the Contract Agency Employee of the assignment
end prior to their last day.
- Have the manager collect all company equipment from the
Contract Agency Employee on their last day, including keys and
badges, and ensure that Contract Agency Employee's timecard is
completed, signed, and submitted.
- The manager may want to hire the Contract Agency Employee into
a regular full-time position. If so, ensure the following:
- The initial Contracting Agency obligation has been fulfilled (the typically agreement is that an employee can be hired by the contracting company after completing at least a three month assignment). If less than the agreed period of time, the Contracting Agency may allow the company to hire Contract Agency Employee after paying a fee equal to the Contract Agency's commission on the remaining period up to three months.
- A valid opening for a full-time regular requisition has been posted for a period of no less than five (5) working days, during which internal candidates could apply for the position. All qualified internal candidates for a posted position must be interviewed and considered during this period. (See the Process on Posting Job Openings.)
- If hiring the Contract Agency Employee, follow the normal Offer process and New Hire Orientation process.
Process Tips:
Avoid blurring the distinction between Contract Agency Employees and regular employees. There is a risk that if Contract Agency Employees do the same work as regular employees, and/or are treated the same as regular employees, then the Contract Agency Employees may claim that they in fact are employees of the company and, therefore, eligible for company health and retirement benefits. The risk grows as the length of the assignment extends. To avoid this risk limit the length of assignment to 3 to 6 months.
Reasons for Using Contractors*:
- Meet business/workload fluctuations
- Replace a temporarily absent staff person
- Complete project work
- Provide a source of regular employees
- Help contain costs associated with wages and benefits
- Increase efficiency by having contractors handle routine or repetitive tasks
- Secure an expert in a particular field of endeavor for a specific project
- Offset difficulties in finding qualified, regular employees
Reasons for Not Using Contractors:
- No need - fully staffed
- Positions to be filled are too complex for a contractor without extensive training
- Cannot locate adequately skilled temporary help
- Contractors can be expensive
- Cannot locate reliable or dependable temporary help
- Workspace is not available for temporary help
- Union contract prohibits using contractors
- May lose intellectual property to contractors
- May become jointly liable for the temporary workers' actions or injuries
- Limited flexibility in termination of the contractor (determined by written agreement)
- Increased risk of government auditors checking for
misclassifying employees as independent contractors
*Adapted from the HR News Magazine, and Forbes
HRSource™ can track contractors and alert you to upcoming contract expiration dates.
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