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Staffing agency employees may have to be compensated for interview time with clients according to a federal court in California.  On October 16th, 2009 in Sullivan v. Kelly Services, Inc., the court ruled that according to the state's wage and hour law, a staffing agency employee must be paid for the time spent interviewing with clients.  The court rejected the employee's claims for travel and preparation time, but according to the decision, since the agency setup the interview, placed its name and logo on the employee's resume, and provided interview preparation tips, the staffing agency controlled the process and knew that work was being performed.

The ramifications of this decision could be huge for staffing agencies if they are now forced to compensate employees for interview time and could change a great deal of the process in how staffing agencies present candidates to potential employers.  It is recommended that staffing agencies consult with legal counsel for guidance on how to address the liabilities raised by this decision.

Many staffing agencies will face higher unemployment taxes going forward.  With unemployment at its highest levels in recent memory, states are depleting their unemployment reservesat subsequent record levels.  As with many of the employer mandates enacted by the American Recovery and Reinvesment Act of 2009, various new efforts to assist the unemployed have been introduced, potentially causing an increase in both the length of time and number of recipents eligible for unemployment compensation. One such program in particular is the Emergency Unemployment Compensation program which increases the number of weeks an unemployed individual can collect benefits from 20 weeks to 33 weeks as well as the amount of benefits paid during this period will increase by $25 per week.

Since the amount of unemployment taxes paid by each employer is determined by the number of existing unemployment claims awarded against the company, this amount will increase as more personnel qualify for unemployment benefits. It is important to note that as states deplete their unemployment reserves, they are ultimately forced to increase the unemployment taxes charged to the agency to keep the unemployment fund afloat. Many states have even had to borrow money from the federal government at an interest rate of 4.4% to add to their unemployment trust fund.  Because of this borrowing and increase in the number of unemployed, many states have already announced unemployment tax rate hikes for employers in 2010.  The tax rate in Maryland alone will more than TRIPLE and could be higher if you have laid off personnel in the past thee years.  In Idaho, the rate may increase by up to 70% over 2009 rates. Michigan, one of the hardest hit states in the country, will trigger nearly $63 million in new unemployment insurance taxes next year. Many states including Louisiana, Indiana, South Carolina, and Virginia have announced unemployment tax increases--in many cases not only increasing the amount of salary that an employer must pay unemployment insurance on (from the first $8,000 of an employee's salary to the first $12,000 possibly in South Carolina for example), but an increase in the rates as well.  In many states, they are also reducing the maximum weekly unemployment benefit an employee would qualify for as well to help alleviate the drain on the fund.

This news simply illustrates how much it behooves all staffing agencies to actively manage their unemployment claims as well as strive to re-employ staff coming off assignments as quickly as possible.

As someone who deals with and in the staffing industry on a daily basis for the past 12+ years, I know first hand how many agencies are barely scraping by or even closing their doors in this economy.  Everyone seems to be waiting for a sign that we have turned the corner and the ship is going in the right direction.  Hopefully some small ray of sunshine may have appeared in the September U.S. Bureau of Labor report for the staffing industry.  In year-to-year comparisons of the data, the nonseasonally adjusted number of positions in staffing has improved monthly since this spring, providing yet another encouraging sign regarding where staffing employment is headed. 

In speaking with our clients, we at BWSI are seeing the same kind of trend, although not across all industries.  Positions in construction and manufacturing/light industrial are down in most areas of the country and many government-related positions are being caught up in the various budget crunches.  However, information technology and, of course, healthcare seem to be trending upward.  A rebound for the staffing industry is a great harbinger for the employment market in general as many businesses historically add temporary workers before hiring fulltime following a downturn.