CSP Contract Staffing & Billing Practices 2 — Questions and Answers
Question 1: Which of the following best describes a 'direct placement' fee structure commonly used by staffing firms?
- A flat hourly rate billed weekly until the position is filled
- A one-time fee, typically a percentage of the placed candidate's first-year salary (Correct answer)
- A monthly retainer paid regardless of whether a placement is completed
- A per-resume fee charged for every candidate submitted
Correct answer: A one-time fee, typically a percentage of the placed candidate's first-year salary
Direct placement fees are typically a one-time charge equal to a percentage (commonly 15-25%) of the hired candidate's first-year annual salary, paid upon successful placement.
Question 2: A staffing agency charges clients $28/hr and pays workers $20/hr. What is the markup percentage?
- 28.6%
- 40% (Correct answer)
- 71.4%
- 8%
Correct answer: 40%
Markup = (Bill Rate / Pay Rate) - 1 = ($28 / $20) - 1 = 1.40 - 1 = 0.40 = 40%.
Question 3: Under the Fair Labor Standards Act (FLSA), who is responsible for ensuring that temporary workers receive at least the federal minimum wage?
- The client company exclusively
- The staffing agency as the sole employer of record
- The temporary worker's union if applicable
- Both the staffing agency and client company as joint employers (Correct answer)
Correct answer: Both the staffing agency and client company as joint employers
Under the FLSA joint employer doctrine, both the staffing agency and the client company can share responsibility for minimum wage compliance when both control aspects of the employment relationship.
Question 4: What is the primary purpose of requiring client signatures on worker timesheets before invoicing?
- To satisfy IRS payroll documentation requirements
- To verify hours worked and create an agreed-upon basis for the invoice (Correct answer)
- To transfer workers' compensation liability to the client
- To confirm the worker's employment eligibility under I-9 rules
Correct answer: To verify hours worked and create an agreed-upon basis for the invoice
Client-signed timesheets verify that hours billed were actually worked and approved, reducing billing disputes and providing documentation supporting the invoice.
Question 5: A 'retained search' billing arrangement means the client pays:
- Only after a successful hire starts working
- An upfront fee or installments regardless of whether a placement is completed (Correct answer)
- A monthly subscription for unlimited job postings
- A per-resume fee for every candidate submitted for review
Correct answer: An upfront fee or installments regardless of whether a placement is completed
In a retained search, the client pays upfront (often in thirds: at engagement, at candidate presentation, and at placement), committing the firm's exclusive focus to the search.
Question 6: When a client contests a staffing agency's invoice, what is generally the most appropriate first step for the account manager?
- Immediately escalate to legal counsel and threaten collections
- Send a corrected invoice without discussing the dispute
- Review the signed timesheets and contract terms to identify discrepancies (Correct answer)
- Issue a full credit memo and re-bill the following month
Correct answer: Review the signed timesheets and contract terms to identify discrepancies
Reviewing signed timesheets and contract terms allows the account manager to identify the source of the discrepancy and resolve it based on documented facts.
Question 7: A staffing firm's 'gross margin' is most accurately calculated as:
- Total revenue minus total worker pay rates
- (Bill Rate - Pay Rate) / Bill Rate (Correct answer)
- Pay Rate divided by Bill Rate
- Total placements multiplied by average bill rate
Correct answer: (Bill Rate - Pay Rate) / Bill Rate
Gross margin = (Bill Rate - Pay Rate) / Bill Rate, expressing the portion of the bill rate remaining after paying the worker, before employer burden and overhead.
CSP Contract Staffing & Billing Practices 2
Which of the following best describes a 'direct placement' fee structure commonly used by staffing firms?