Contract Staffing & Billing Practices Flashcards
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Read the first 7 Contract Staffing & Billing Practices flashcards as text
Which contract clause protects a staffing firm from damages claims that far exceed the fees earned on an assignment?
Answer: Limitation of liability clause
A limitation of liability clause caps the staffing firm's financial exposure—typically to total fees earned—protecting it from claims that would far exceed the value of the contract.
A 'pay-when-paid' clause in a staffing subcontract arrangement means:
Answer: The subcontracting staffing firm is paid only after the prime contractor receives client payment
A pay-when-paid clause makes the subcontracting firm's payment contingent on the prime contractor receiving funds from the end client, shifting cash-flow risk down the supply chain.
A staffing agency charges $32/hr and pays workers $22/hr with an employer burden rate of 18% of pay rate. What is the approximate gross profit per hour?
Answer: $6.04
Employer burden = 18% x $22 = $3.96; Gross profit = $32 - $22 - $3.96 = $6.04.
Which of the following is a common contractual requirement a staffing firm must fulfill before a temporary worker begins an assignment?
Answer: Providing certificates of insurance to the client
Most client service agreements require the staffing firm to provide certificates of insurance (workers' compensation, general liability, professional liability) before placement commencement.
What is the typical purpose of an 'exclusivity' clause in a staffing services contract?
Answer: It requires the client to use only one staffing firm for specified job categories
An exclusivity clause obligates the client to use only the named staffing firm for certain roles or departments, giving the staffing firm guaranteed revenue in exchange for preferred pricing.
Under a Vendor Management System (VMS) arrangement, the staffing firm's effective margin is most directly reduced by:
Answer: The VMS platform's transaction or program management fees
VMS platforms typically charge a program management fee (often 2-4%) funded by the staffing suppliers, which reduces their effective margin and must be factored into bill rate negotiations.
Which of the following best describes 'co-employment risk' in the context of staffing contracts?
Answer: The legal risk arising when a client exercises so much control over temporary workers that it may be deemed a joint employer
Co-employment risk arises when a client company controls a temporary worker's day-to-day activities so extensively that it may be treated as a joint employer, exposing the client to liability for benefits, discrimination claims, and other employment obligations.