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What Employers Need to Know About Expungement

If your business has a criminal background check policy in place to screen prospective employees then you need to be aware of the basics of expungement. Expunged criminal records cannot influence an employment decision in any way. In fact, if a record has been expunged, it isn’t supposed to appear on a background check at all. However, the expungement process doesn’t always wipe away all traces of a criminal record, which can make matters complicated for employers.

Here are answers to some of the most frequently asked questions about criminal expungement, from what it is to who is eligible and beyond.

What is criminal record expungement? Ex-offenders can petition the courts for expungement of their criminal records. Here’s an example: A person has a petty theft conviction on his record dating back 10 years. He is a one-time offender and has had a completely clean record since, but is still losing job offers due to background check findings. This person might apply for expungement. If the court approves his application, then the conviction is essentially wiped off his record as if it never existed at all. In many jurisdictions, courts even order expunged criminal records to be destroyed.

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How might expungement affect the application process? Many employers still have a question on their job applications that asks something like, “Have you ever been convicted of a crime?” Someone with an expunged record can legally and honestly answer “No” to that query — even though he or she technically was convicted of a crime. Expungement wipes the person’s slate clean.

What is the difference between expunging a criminal record and sealing one? For the most part, sealing a criminal record has the same effect for a person as expunging one. These terms are often used interchangeably. With that said,the terms are a bit different in most cases. If someone has her criminal record sealed, that means that it cannot be accessed by normal means. It is no longer public record, and shouldn’t come up on background checks. As with expungement, applicants who have had their criminal records sealed can legally and honestly deny the convictions when queried. Often, individuals with juvenile offenses have their records sealed so that they can start their adult lives with a virtually blank slate.

Unlike with expungement, though, the criminal record is still there and can be accessed by certain entities. It has not been destroyed completely. To access a sealed record, someone would have to obtain a court order — a step usually not possible unless public safety or national security is involved.

There are some jurisdictions in which expunging and sealing a record are essentially the same thing. While certain courts will order that expunged records be destroyed, others simply remove relevant information from the public record and restrict access to the files. In such situations, there isn’t a meaningful distinction between an expunged criminal record and a sealed one.

Who is eligible for expungement? The answer to this question will vary from one state to the next. The vast majority of states allow citizens to submit motions for criminal record expungement. Not all states observe the same policies for expunging or sealing records. Eligibility requirements can differ significantly depending on the state. To check what the requirements are in your state, use MyClearStart.com. The site lets you select a state and read about its laws and policies on expungement and record sealing.

Usually, a state will have a list of criminal convictions that are not eligible for expungement under any circumstance. This list typically includes offenses like murder, rape, sexual assault, child pornography and certain weapons charges.

Even if a person’s criminal conviction is eligible for expungement, there are usually several other requirements that person must meet for their motion to be granted. For instance, there must be a waiting period between when the offense occurred and when the individual seeks expungement. A person can’t apply for expungement a year after being convicted of a crime, though waiting times do vary from state to state.

The individual must also:

  • Have a clean record for the entire waiting period, with no additional criminal activity
  • Have fulfilled all conditions of the sentencing for the original crime
  • Have no criminal charges pending against them
  • Have completed probation without incident

A person applying for an expungement must not have more than a specified number of previous criminal infractions. An individual applying for expungement of a crime will likely be denied if that person was convicted of half a dozen other offenses before that crime took place. The court looks for patterns of repeat criminal activity when deciding whether to grant a motion. As such, the people who are eligible for expungement are usually one- or two-time offenders.

Why do I need to worry about expungement if expunged convictions won’t show up on background checks? This question is a big one for most employers. After all, if expungement eliminates convictions from the public record, then they won’t come up on background checks, right? Unfortunately, this assumption isn’t always true. As criminal records have gone digital, it’s become more difficult for courts to seal or expunge them completely. The result is that background checks will sometimes turn up convictions that have technically been expunged.

Because employers are not allowed to consider expunged convictions when deciding whether to hire someone, this issue creates a potential legal concern for businesses. You could be legally liable if you disqualify a candidate based on information you should never have seen.

To avoid legal concerns, your business or your staffing suppliers should do three things.

  1. Educate yourself on expungement law in your state so you know which convictions can and cannot be expunged.
  2. Ask your background check company if they are using the Expungement Clearinghouse. This clearinghouse helps consumers remove their expunged criminal records from databases and helps consumer reporting agencies (as well as the companies that operate consumer information databases) make sure their information is up-to-date.
  3. Make sure you are following the Fair Credit Reporting Act. Under the FCRA, you must give applicants a chance to dispute background check findings if those findings result in adverse employment action. By complying with this requirement, you give applicants a chance to dispute your decision and present proof that the conviction in question was expunged or sealed.

MORE: How a credit check can increase your revenue

Four Ways to Improve the Hiring Process

In today’s market, it can be hard to fulfill all of the hiring needs of your clients. With a limit on the number of workers available, staffing agencies and their clients should put themselves in the shoes of their applicants and work to eliminate some of the hurdles that may be in their way.This blog will take a closer look at some candidate-driven recruitment ideas that can be implemented today to improve your organization’s hiring process.

Create Clear Job Descriptions. By offering a clearly-defined role, you can identify better candidates and hire people who are a good fit for your team in terms of experience and culture. Knowing what you need helps you find it faster.

PREMIUM CONTENT: Job Board Market Report: 2017 Update

But listing the correct job title is just the beginning. You need to develop a complete job description with clear guidelines that will set expectations of the company culture and the job itself. The more details you can offer, the more likely it is that you’ll attract the right type of person with the right skills. But remember, every “requirement” you put in your job description has the potential to limit the number of people who might apply for the position.

When you’re finished with the job description, a good way to measure if it accomplishes its purpose is to ask yourself – is this a job that I would want to apply for?

Listen to Client Feedback. When hiring, always have team leaders from the client company involved in the process. No one knows what kind of employee is needed more than the team who will be working with the new hire. And while it is the job of recruiters and HR departments to find and hire talent, the client should support their efforts. This active mindset will ensure everyone plays a role in landing the right candidate.

Consider Every Candidate. With the national unemployment rate at the lowest it’s been in the last sixteen years, it is important to consider every person that comes through your door. This idea can be overwhelming as finding the right fit can sometimes feel like searching for a needle in a haystack. But the work is worth it.You might find a candidate that fits another open position, or they may be a good fit for a position you plan to open in the near future. Sometimes you even discover a candidate so strong, you need to create a new position just for them.

Use Your Internal Network. You know people and your staff knows people! Before engaging in a lengthy search, try streamlining the hiring process and consider people within your own network. If any of your employees are recent graduates, perhaps they know someone looking for a job. Or if you have friends in the industry, maybe they know someone who could make a good fit. Another way to use your network to your advantage is through social media. With a compelling call to action, you’ll be amazed at how far a post can reach.

MORE: How to gather the perfect team

Tap into Interim Talent with the Cloud

‘Gig-economy’ is undoubtedly one of the catch-phrases of 2017 as we witnessed a revolution in the way we work. The phrase might be used to refer to delivery drivers, but it also covers people with multiple clients, working for themselves, choosing to take short-term contracts, whether that’s for variety and to develop new skills or to fit with other responsibilities.

At the same time, organizations of all sizes are coming to terms with the digital era, dealing with agile market disruptors and the constant challenge of managing costs whilst operating effectively. The gig-economy offers an opportunity to tap into highly skilled talent, scaling experienced teams fast and get results, without breaking the bank.

New ways of working require new ways of thinking. However, while the benefits are clear, established businesses overlook the complexity of bringing interim staff on at their peril. Legacy systems, designed to support permanent employees, often struggle with the more fluid nature of freelance staff. If the usual onboarding process takes a few days and input from several employees, including new staff, it’s likely to significantly impact the productivity and effectiveness of a contractor on a six-week assignment.

PREMIUM CONTENT: Largest global staffing firms

One critical area to get right is pay. If new starters cannot be added to payroll until a new cycle starts, unlucky employees might have to wait six weeks to be paid. For contractors relying on timely payments, that could well be too long.

This might seem unlikely, but a recent survey we conducted found that just over half (56%) of UK private-sector decision makers and little more than a third (39%) of their public-sector equivalents believe their payroll can meet the challenges of paying gig-economy workers. This despite 74% agreeing that changing staffing models requires new approaches to payment.

Leashed by legacy. What’s holding them back? A lack of faith in current technology and systems not coping, were two of the barriers, along with a lack of resource to pay people more frequently.

This is a classic example of the friction we’re seeing as organizations go digital. The desire and intent might be there, but the supporting technology isn’t. Whilst embracing change from a cultural perspective is critical, having the infrastructure to effect that change is just as important.

For many, that means cloud. We’re seeing more and more businesses using cloud computing to deliver tangible impact. In our survey, just 16% didn’t have any mission-critical applications hosted in the cloud – that’s the systems that make your organization tick.

What’s driving this acceptance of cloud? Increased flexibility (61%), reducing resource requirements (64%) and reducing payroll reconciliation cycles (41%), a key factor in delaying payments, were some of the reasons given for switching apps to a cloud environment.

A mature way to support new approaches. Businesses that are serious about going digital need to understand that it is not simply a case of updating processes or automating some functions – it’s a root and branch overhaul of every aspect of their operations. That means having a reliable foundation, a fresh approach to business and being committed to moving fast and delivering results faster. Gig-economy talent can help organizations scale quickly, but to secure the right talent, employers need to make sure that they are set up to onboard and pay contractors quickly and accurately. Trying to do that through legacy systems risks impacting their ability to access top talent.

MORE:  When is the gig economy not the gig economy?

Automation: Job Terminators? or How I Learned to Love Automation

In many corporations, human resources is a service that is shared across the organization, a true “shared service” in the literal sense.

This service model allows for reduced operational redundancy, increased efficiency and, ultimately, reduced costs. With the advent of offshore sourcing, it was a logical evolution for HR services and operations to transition to shared service centers offshore.

To facilitate the move to this new offshore model, many HR/HRO functions were first consolidated from a management and process perspective. Core sections of these combined functions were aligned to repeatable tasks. Initial efficiencies were gained from economies of scale by migrating large sections of a corporation’s HR’s commoditized workload to lower-cost shared service center locations.

Initial attempts at offshoring HR/HRO and IT services were often reactive rather than proactive as part of a long-term location strategy. Most significant decisions were still made onshore at the parent organization headquarters.

In this initial model, bespoke HR offices and their corresponding services were historically established in a shotgun or scattered approach by most organizations. These days, however, the HRO shared service offering is maturing beyond a scattered transactional approach based on labor arbitrage, to a more value-add automated self-service offering based on gamification, with a focus on improved customer experience. This has been facilitated in part by the co-location of both IT and HRO in shared services centers.

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Alongside HR/HRO, IT (e.g., development and production support teams) was another of the original shared services. With the advent of co-located HRO and IT teams, close proximity facilitated opportunities for both teams to collaborate and identify improvement and value-add initiatives. Leveraging HR operational business knowledge, combined with IT service models and service catalogs, both teams had the expertise and the core resources to automate IT and HR processes, thus reducing utilization of both teams, increasing capacity for additional work.

As a shared service center location matures, the value proposition will erode as labor costs increase and talent moves on to new roles as part of natural career development. Automation of HR operations, of IT services, and most other shared service teams, is key to increasing the value proposition; freeing up capacity to onboard more complex work. Thus enhancing career development opportunities for the resources that have developed new skills through working on automation projects.

In order for automation to be successful, both management and teams need to focus on Five Key Pillars of Automation:

Culture

  • The move toward automation requires a significant change in culture. Management needs to foster and reward a culture of innovation.
  • They need to dispel the belief that automation is a threat to job security and encourage their employees to innovate and actively seek out opportunities for automation.
  • Failing Fast is better than not trying at all. Reward success, but also acknowledge failed efforts as it demonstrates thought leadership and innovation.
  • Lessons learned from failure will only add to the overall technical and business knowledge needed for successful automation.

Business Knowledge

  • Understanding the business process workflow is vital in identifying opportunities for automation.
  • This knowledge is built up over time in the shared services center and should be leveraged to increase value proposition offered.

Risk Appetite

  • Understand both the risk and the benefits automation to your customer’s business.
  • Given the impact of HR operations and IT services to employees and external clients, to an organization’s reputation, as well as the regulatory environment in which the organization operates in, the risks of automating a process should not outweigh the benefits.

Tactical vs. Strategic Approach

  • Know when to invest in short-term wins and when to get support for projects that may cross organizational boundaries.
  • Secure buy-in from key stakeholders and customers for automation initiatives that require both cross-team collaboration and additional investment funds outside of operating budgets (e.g. IT Help Self Service Portal, Gamification Working Model for Managing Infrastructure Alerts, etc.)

Automation Enablers (IT and non-IT Enablers)

  • Business process automation
  • Challenge all existing processes.
  • Just because it’s been done in the past, does not mean it’s still relevant or needed.
  • Build credibility with business clients and stakeholders.
  • Key stakeholders will only consider innovative automation proposals (akin to Google’s Moon Shots Model), if they feel or HR truly understand and appreciate their core business drivers
  • DATA is KING
  • Automated tasks/workload facilitates a deeper understanding overall utilization of resources
  • Understanding the parameters for automation also helps the onboarding process by identifying candidates of work for suitable for automation, and those that aren’t
  • For example, X type amount of new work, is assigned to existing resources. Y type amount of new work, will only be on-boarded via Automation.
  • Quantify data and trends and publish success cases of improved consumer experience, through reduced human error and increased delivery speed

Summary

Change is a constant in today’s world. If you can adapt to change you not only survive but thrive.

Automation is not to be seen or feared as Job Terminators; akin to the robots from the Terminator and Matrix films.

Automation, Robotics, Article Intelligence are to be embraced in order to remain competitive and relevant in today’s digital and knowledge-based service economies. Resources from existing teams that embrace automation will only facilitate and enhance their career development as they will learn new skills. Their jobs may change, but they will remain in demand given their new skill sets and experience.

Automation is key for the customer experience. It reduces manual error, increases speed of delivery, and produces data sets to quantify and identify additional areas for automation and improvements to overall client experience.

MORE: Can automation drive efficiency gains without staffing losing the human touch?

Five Tips for Pitching to Investors

So, you’re looking to grow your staffing agency through acquisition. Now what? There are two next steps that need to happen simultaneously to keep the process on track: identify a firm to acquire and look for potential investors to make the acquisition happen. Last month, I shared three tips for successful staffing firm acquisitions to help you find the right firm to acquire, and now I’m talking step two: securing funding. Pitching to investors can mean a daunting road for those who haven’t traveled it before. But, based on my experience, acquiring two companies in three years, it can also be one of the most exhilarating things you can do as an entrepreneur.

PREMIUM CONTENT: Mergers and acquisitions database 2017

Here are five lessons I learned along the way to help you find success when pitching your company to investors:

  • Poke holes in everything you do from a business model standpoint and make sure all scenarios accurately reflect upside and downside (what would happen if a big client were to leave, for example). Investors will ask more questions than you can possibly prepare for so do everything you can to be ready for as many as possible.
  • Develop your story to show how the combined entity is stronger than each company continuing to operate independently. Two key areas to focus on are the management team of the new organization, and how the company will diversify and expand its client base and revenue.
  • Make sure all your numbers support your story. Investors are in the business of making money from their investments so be prepared to show them how they will.
  • Assemble a seasoned team—consultants, advisors, legal and accounting professionals—to ensure you’re getting the best possible terms for the transaction. This group can help identify items you might not otherwise consider and advise you about the best negotiation strategies.
  • Be patient. The process inevitably takes longer than you expect; I made 50 pitches to end up with two prospective investment firms.

In today’s hyper-competitive, ever-changing business environment, making an acquisition is a smarter strategy than ever. The right investment firm can help you make the deal happen and move your company into its next era of growth and prosperity. Good luck!

Misconduct and Sexual Harassment in the Staffing Industry: A different training paradigm

When it comes to sexual harassment, the lack of confidence plays a huge role, and may even be a root cause as to why sexual harassment has become so wide-spread. Over time, with age and experience, confidence building and life lessons, we begin to be able to stand up for what we want and don’t want, believe in and don’t believe in, and most important, being able to choose what’s appropriate for us.

This is why Confidence360 has been developed: to significantly change the types of trainings out there from the impractical and check-box exercises to ones in which participants experience all sides of the equation. I believe we must accomplish the latter if we are going to fully understand the impact/decision-making process, or lack thereof.

The Confidence360 program is designed to be relevant, three-dimensional, and actionable. There is a simple formula we are all taught as children. Where there is smoke, there is fire. And when you come in contact with fire, STOP, DROP and ROLL. With harassment, it’s:

  • Stop harassment before it starts.
  • Address harassment head on.
  • Get help fast when it’s at the line.

There are endless shades of grey in which harassment occurs. Who started it? Who fed into it? Who exacerbated it? Who ended it? This is why the training and code of conduct need to be detailed, specific, all-encompassing, and black and white to be completely zero tolerance. Equip people with enough confidence and tools to make it as simple as possible. Empower people by ensuring they feel supported and strong enough to say STOP or NO. Because in any context, Stop is Stop and No is No. That’s the black and white.

PREMIUM CONTENT: Global staffing company survey — concerns about current and upcoming legislation

People get stuck with how to say stop and no, knowing where the line is, and knowing when it gets crossed. But that is wildly subjective because everybody has a different line — which is why the rules have to be clear, concise and loop-hole free. To illustrate, I have listed a couple of examples that may or may not be sexual harassment. Read them and see how you feel:

  • In an email: “Hi Gorgeous! Can’t wait to see you at the upcoming industry event. You’re my favorite person at your company 😉
  • Before a Skype Call: “Can’t wait to see your beautiful face on our monthly update call.”
  • Phone Call: “Hey, I’m coming to town to visit one of my offices. Can I take you to a Michelin Star Restaurant?”
  • In the sponsor area of an industry event: After many meet-and-greets and hugs at the tradeshow booth, a room key is offered during a hug.

Whether or not you considered the any of the above as examples of misconduct or sexual harassment, the minute one person in the interaction — even in a professional or selling environment, even if you think that you have to do whatever you need to do to get the business — the second it gets uncomfortable, it has to stop. So equip yourself and those you manage with the confidence to stand up for themselves and others. Stop is stop. No is no. No matter what seat you occupy, the context, or the event you are attending.

Let’s make this emotional, complicated and potentially damaging to individuals and companies situation as clear as the way we conduct our EEOC trainings and methods. For those, from day one, recruiters are taught how to say no to discrimination. They have and know how to complete a company statement that starts with, “We will find the best-qualified candidate regardless of …” They don’t need to think or discern what to say or do when a client asks them to discriminate … even if they don’t “intend” for you to discriminate. The answer is NO and your staff has a script to deal with it.

Let’s get there as an industry when it comes to enabling our staff to deal with sexual misconduct situations as well! Join me.

MORE: Sexual Harassment in Staffing: The problem

MORE: Sexual Harassment in Staffing: The failure of anti-harassment training

Recruiting Gen Z Into the Workforce

Generation Z, those born between 1995 and 2009, comprise the largest population group on the planet — and its eldest members are just now hitting the workforce. Despite this rapid integration of young professionals, there is little preparedness in how to best attract and retain new Gen Z talent. Addison Group’s Workplace Survey found that while 89% of employees are generally aware of Gen Z, only 25% of employees have discussed Gen Z strengths with their employer.

Gen Z will quickly become a beaming source of talent and energy for major companies, and the recruitment preparedness gap is alarming. For example, to liken Gen Z with the preceding Millennials generation would be a mistake. Gen Zers grew amid a fast-paced digital environment, insulated by every problem solved with a click. Therefore, recruiters need to engage Gen Z using tools from the Gen Z comfort zone. This group knows the difference between a Facebook “like” and genuine interest. It is going to take a uniquely personalized approach for recruiters to successfully engage them. An innovative way to attract the mind of Gen Z is through job titles and roles. Gen Zers thrive in a “create your own” culture. Thus, it is critical to ebb with the evolving job market flow and create roles Gen Z will gravitate toward.

PREMIUM CONTENT: Global Laws on Co-employment, Deemed Employment and Joint Liability in Staffing Relationships

Like all generations before them, Z faces a set of unique challenges in their careers. Similar to Millennials, Gen Zers will combat old-school mentalities, and a sizable divide with career advice, mentor-mentee relationships, and establishing team cohesion. The pace of technology has reshaped every aspect of society and professionalism, changing how individuals should approach career building, and what it means to be successful. Jobs themselves have become transactional, with position hopping and independent contracting more normalized. However, this modernization of the market and the new group entering it make recruiters invaluable in advising employers, and positioning Gen Z candidates to get what they want.

To that end, here are a few things for recruiters to keep in mind when engaging with Gen Z.

  • Avoid information overload. Growing in the wake of the internet, Gen Z understands online life and its black hole of information. Expect Gen Z to rely more on referral-based job sourcing than applying online through traditional career websites. Recruiters will need to find new ways beyond job boards to get in front of Gen Z, and it’s highly likely that it will be different for each candidate.
  • Ditch cold calls. Cold calling isn’t likely to elicit much response, as Gen Z probably won’t answer a call from a number they don’t recognize. Communication via text or LinkedIn may become more commonplace; however, you’ll need to keep the conversation moving. A quick response time is necessary to avoid things dropping off.
  • What matters. Titles, work perks, and a clear path to promotion will appeal to Gen Z. This generation is used to seeing what their peers are doing on social media, and as a result, tend to be more competitive. They want travel opportunities, the cool co-working space, and nights out that will keep their content pipeline interesting. Knowing their distinct desires is imperative for recruiters to secure a Gen Z candidate’s attention.

While Gen Z has its own characteristics based on their digital upbringing, it’s the recruiter’s job to identify and prepare for a new challenge. Gen Z represents a group of people entirely immersed in immediacy, whereas recruiting has only begun to tap into new technology and capabilities that. It will take some time to find out what works with these younger candidates; just don’t be surprised when the traditional channels seem less effective. Recruiters need to be as fluid and innovative as today’s market and those we are welcoming into it.

MORE: Thrive in a candidate-driven market

MSP/VMS in Healthcare Staffing: How it affects the industry

As a follow-up from my prior blog post, “The Incestuous Nature of Healthcare Staffing VMS/MSP,” I thought it may be instructive to dig a little deeper into the real-world consequences of this growing model in an effort to help you decide if this practice is in fact a zero-sum game. It is critical to measure the considerations of both the candidates being placed around the country, and the temporary staffing firms subcontracting their talent through these arrangements.

This focuses on three areas of the staffing industry and how they are affected by VMS/MSP proliferation.

1. Direct impact on the “supply side” – agency affiliation with the MSP. The first item concerns the agency affiliation through the various Managed Service Providers (MSPs). This is a two-edged sword. Acquisition of new clients is one of the most expensive and time-consuming activities of a staffing firm. Since most MSPs hold contracts with multiple clients, the temp firm connecting with the MSP can, by proxy, provide candidates to the hospital client. This assumption is based on the MSP “clearing” the agency to connect. Most MSPs are interested in leveraging their reach to candidates, as clients are always mindful of the “fill rates” provided by the MSP.

The downside to this is firms that previously had agreements with the client hospital no longer can communicate or negotiate with the client. The fees charged for these pass-through invoices can also be a downside. A benefit to this arrangement is smaller staffing firms can leverage the MSPs to indirectly work with clients they may never have acquired. There has been an uptick of staffing start-ups devoted to utilizing the MSP model to pass through candidates. However, many times they find they are placed in a lower “tier” for job releases, as they do not have the database of candidates the larger firms enjoy.

PREMIUM CONTENT: Workforce Solutions Webinar – VMS/MSP Landscape

2. Direct impact on the “demand side” – hospital engagement. The second item of interest is demand, or, the orders for talent requested. The client advantage is “one-click” distribution of requests is pushed to dozens of available vendors. What used to take non-stop phone messaging and communication now becomes a one-stop-shop. This funneling of orders through a broadcast network is an efficient model for maximizing fill rates. Many of these VMS platforms have been around for years and hospitals are very familiar with their execution. Many in the industry have complained that since many in the staffing world are paid on commission, the orders that come through the system could be “cherry picked.” Recent lawsuits have brought that into question including claims that candidates coming through the system are poached. This will ultimately be a question for the courts to decide.

3. Direct impact on the financial outcomes of subcontracting agencies. The final item of discussion is the financial impact of the MSP model. The fees that are associated with the MSP model are in some ways similar to the percentages that agencies are charged for their workers’ compensation coverage with one major difference. The insurance fees are usually calculated as percentages of actual payrolls, whereas the VMS fees are applied to the gross revenue generated. The MSP fees are calculated for each invoice and are subtracted from the gross.

On the surface, it seems like a pretty fair percentage considering the time and effort required to acquire a new client. The basic accounting principals for staffing firms has not changed since its inception. The gross margin is the amount that is left after all labor costs for the temp staff have been calculated (i.e. a bill rate of $100 with total costs of labor at $75 will yield a gross margin of $25, or 25%). Examining the financials of the largest staffing firms in the industry show gross margins anywhere from 25% to as much as 32%. Overhead for these firms can run from 8% to 12% of total revenue. Smaller companies may not enjoy the economies of scale of larger companies, and are also tied to a bill rate they did not negotiate with the hospital.

If a smaller company with fewer resources can only manage a margin of 25%, along with operating expenses of 15%, their profit as a percentage of revenue might only be 10%. If vendor management fees are pulled out of revenue at 5%, earnings are now cut in half, with VMS fees taking 50% of profit! This is probably a worst-case scenario, but it not unusual for VMS fees to take as much as 33% of earnings.

Considering the impact to profit, and working against fixed billing rates, the agencies only have two choices to recover profit levels; cut overhead, or cut temp labor pay. Cutting the wages of the temp workers to offset the impact of the VMS fees creates an invitation for the temp workers to move to greener pastures. In the MSP world, it makes sense that higher pay rates should be available at those agencies that do not have to pay those fees, hence the big sucking sound of candidates moving to the agencies holding the MSP contracts who do not pay those fees.

It will be interesting to see how the market evolves over the next few years within this paradigm.

MORE: Maximize success in an MSP partnership

Misconduct and Sexual Harassment in the Staffing Industry: The Failure of Anti-Harassment Training

In my last post, I discussed how the staffing industry is similar to Hollywood in that its very nature leaves room for sexual misconduct, being a people business — and a highly competitive one at that. In this post, I discuss why one HR’s primary tools in preventing sexual harassment in the workplace falls flat.

Have you taken the online anti-harassment training required by your company? Did that training leave you feeling confident you could identify and deal with sexual harassment? I’m guessing that the majority of you don’t think so. It’s not surprising.

The problem is that all those online, timed-by-section anti-harassment training programs are completed by most in the quickest and off-hand fashion possible just so employees and companies can check off a box. These trainings are two-dimensional and not effective. Not to mention ridiculous. The examples usually provided are ludicrous and unrealistic, and induce more laughter and immaturity about this critical topic and gaming of the system than a genuine focus on the task at hand deserves.

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I admit I don’t know the methodology behind the development of such training and why the questions typically asked are presented the way they are. What I can tell you, however, is the aforementioned response to them is real — I’ve felt it, as have others I have talked to and managed. Whatever the reasoning behind those trainings, it’s getting lost in the sea of those off-the-shelf, hypothetical examples. And the timed questions? I’d bet money most people answer the question and then go on to answer emails or do other work while the time runs out. This important hands-on training is not getting the attention it deserves.

I think it can be done a better way. Instead of a slew of automated questions, for the training to have real impact, examine real-life examples happening at your organization, with clients, on skype, etc. I also encourage you to review and update your organization’s code of conduct and sexual harassment rules. And while you are doing that, remember that sexual harassment is not just an internal issue. Many times, code of conduct and sexual harassment rules only cover internal harassment, foregoing the external. Further, when delivering training and roleplays, the examples must not only be believable, but they must also put everyone into the shoes of all involved. As embarrassing and down-right uncomfortable it may be, people need to experience being the offender, the offended, and an observer, as they rotate through real-world, practical and actionable scenarios.

Oh, and by the way, this is not a cue to go and tell your HR team to figure out a better method. This is not just HR’s job. This is everyone’s job. It’s a top-down, bottom-up, side-to-side issue — and everyone must participate. It is also important to remember that HR has dual-loyalties, they listen to the employees, but their main job is to protect the company. According to a recent NPR article, this stance is “not evil, it’s self-preservation … One lawsuit can kill a company.” So, if the whole company works to educate and de-normalize sexual misconduct, it helps HR help everyone, the company and the employees.

It’s why I have designed my own anti-sexual harassment training, Confidence360. Stay tuned for my next post to learn more!

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Tax Reform Proposals Will Influence Staffing Agency Reimbursement Policies

If you have been following the progress of the tax reform proposals, you will find one provision common between the Senate and House versions that will likely change how staffing agencies approach their per diem reimbursement policies for employees working assignments away from home. Under current law, when a staffing provider is working away from their tax home and incur travel expenses of transportation, meals and lodging, they can deduct the expenses that are greater than the reimbursements provided as an employee business expense on their tax returns.

Under the current tax reform bills, ALL employee business expenses (save a limited teachers deduction and reservists travel expenses) will no longer be deductible.

This has marketing and perceived value implications for the provider, especially in the industrial and healthcare staffing segments. In many healthcare staffing contracts for “travelers,” the transportation reimbursements are capped. Common caps are $300. Additionally, most meal reimbursements in these contracts are not the maximum found in the GSA tables, the difference of which the traveler can deduct (lodging deductions are only based on actual expenses).

PREMIUM CONTENT: US Staffing Industry Forecast: September 2017 Update

How can this affect staffing agencies? Here are some examples:

  • Provider drives 2,000 miles to the assignment and receives $300 for travel. The potential deduction is $1,070 for the mileage and around $350 for the lodging incurred in route. This $1,120 deduction ($1,070 + $350 less $300 reimbursement) would no longer be allowed under the new rules. When it dawns on the traveler that they cannot deduct this, the perceived value of the assignment drops.
  • Hospital-based seasonal traveler program provides lodging and transportation, but the amounts are paid under a non-accountable plan, meaning that they are treated as taxable income. Under current law, the traveler can deduct the lodging, the transportation and the meal per diem for the area. Under the new proposals, none of this is deductible.
  • Staffing agency model of reimbursement is to provide housing and a capped transportation allowance but nothing for meals. Under current law, traveler can deduct the full meal per diem for the area plus the excess of transportation over then travel allowance. Under proposed, law, zero.
  • Because the provider will not be able to deduct ANY licenses, uniforms, CEUs under the proposed law, the provider will look to the staffing agency for reimbursements to cover these expenses.
  • Traveler’s contract is canceled and incurs travel expenses, car shipping expenses etc. Under current law, these are deductible, under the proposed law, zero. The perceived loss of income is will be greater with canceled contracts than before.
  • In industrial staffing, many providers incur high amounts of mileage without full reimbursements. This ability to deduct these expenses will be eliminated under proposed laws.

As of this writing, the tax reform bill has already passed the house and a similar bill is pending a vote in the Senate. These separate bills will have to be reconciled and passed before the going to the president for his signature. The probability of passage is great, as the Republicans are using the budget reconciliation procedures, where only 51 votes are required in the Senate. This is the same scenario that allowed the Affordable Care Act to be passed without one Republican vote. This time, it is the Democrats who cannot stop the process on their own.

If passed, the new rules would take effect on Jan. 1, so staffing agencies will need to review their reimbursement policies for both perceived and absolute value quickly. The various categories of expenses that are currently deductible may require a reshuffling of lodging/meal deductions to transportation, licenses and CEUs in a fixed bill rate environment. Even if the absolute amount of the reimbursements is the same, the provider’s perceived value of their assignment may be greater when all of these expenses are addressed instead of a narrower list. With the possibility of a corporate tax cut, there is also the possibility that the reimbursements can increase without affecting the overall agency profit or the taxable base wage.

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