(Please note: This is simply a "proposed guideline" to help you conduct business and is NOT a formal Top Echelon Network Policy.)
Issue: Splitting contracting placement fees
Please use the following information as a guideline of what Top Echelon Network
has found to be a "fair" distribution of monies to each of the two
parties involved in a split contracting placement.
Scenario #1: When one of the two agencies involved in a split contracting placement wishes to put the contractor on his payroll as his employee, he is doing more work, taking a much larger risk, and will need to receive more of the placement dollars. Here’s an example of how Top Echelon Network recommends you split the money . . .
| Rate charged to Client Company Contractor’s Total Compensation (including per diem, expenses, etc.) |
$50/hr -- $30/hr |
| The Spread | $20/hr |
| Employer’s Share of
Payroll Taxes: (Social Security, Medicare, State Unemployment, Federal Unemployment, Workers’ Compensation, etc.) This number will vary depending on the position and location of the job. As a general rule of thumb, you can expect this number to be approximately 15% of the contractor’s hourly salary. |
-- $4.50/hr |
| Gross Margin | $15.50 |
| 30% Administrative Fee The agency who "employs the contractor" will have additional expenses and liability such as: Funding the payroll, cutting payroll checks, handling taxes, record keeping, business liability insurance, day-to-day account maintenance, billing, all accounting functions, etc., etc. |
-- $4.65/hr |
| Net Margin | $10.85 |
| The "net margin" is then split as
follows: 6% brokerage fee to Top Echelon Network 47 percent to the recruiter with the job order 47 percent to the recruiter with the candidate |
$0.65/hr |
In this example, the agency acting as "the employer" of the contractor would actually receive $4.65/hour plus $5.10/hour, totaling $9.75/hr.
Scenario #2: The recruiter providing the contracting candidate to a job order recruiter will need to know all of the financial details of the contracting assignment (example: company bill rate, contractor’s salary, expected contract length, etc.) Without this information, the recruiter supplying the candidate will be unable to verify whether or not he’s receiving the proper amount of the contracting fees being earned. If the job order recruiter has demonstrated that he’s uncomfortable sharing this information, we suggest that the recruiter supplying the candidate requests the contracting assignment be handled by a third party service bureau, such as Top Echelon Contracting, Inc. Top Echelon Contracting provides both recruiters with all of the financial details of the contract placement.