Blogs

How To Avoid Landmines in Staffing Contracts

By Kim Henderson posted 05-19-2025 12:43

  

In staffing we’ve all seen a sales associate land a client contract and sign the document without reading or knowing what was in it. Needless to say, by not understanding a client contract the opportunity for better pricing and favorable terms is squandered. What business terms should we be looking for so we can identify and address them? 

In general, we have two goals. We want to read and understand the terms in client contracts so we can negotiate unfavorable items to our advantage. Second, if we know the commitments we are making, we can create processes to be compliant. We’ll leave all the legal terms to the lawyers to sort out!

Awful business terms usually fall into 3 categories. 

Pricing, Discounts, and Payment 

  1. Pricing – know the bill rates and/or fixed mark up. Can you improve the pricing?
  2. Identify the MSP/VMS fees (if applicable).
  3. Are there tenure discounts for contractors? When does the tenure discount go into effect & how much?
  4. Is there an annual rebate based on spend?
  5. Is there a volume discount or prompt payment discounts?
  6. Understand the right to hire fees and ask for better terms.
  7. What are the payment terms, and are they favorable?
  8. Understand how/when contractors will do timekeeping.
  9. Identify how/when to invoice the client, & will you receive payment for overtime at OT rates?
  10. How will you bill for contractor expenses?
  11. Are you in a state that must bill sales tax?

Performance Criteria

  1. Is there deliverable language to pay at milestones or specific project outcomes (RUN AWAY from this one)! 
  2. Are you expected to write work instructions or do wide scale analysis?
  3. Are there service guarantees? Guarantees may be free work or returning payments.
  4. Understand the rules around direct client contact.
  5. Does non-solicitation language preclude you from recruiting after an active contract?
  6. Know the rules for subcontractor use in the program.
  7. Will the client audit your compliance? What process will you use to stay compliant?

 Acceptance and On boarding

  1. What are the background & on boarding requirements? 
  2. Do you need to use a specific background/drug screen company?
  3. Are there non-disclosures and confidentiality documents to sign?
  4. Understand what will disqualify someone from an assignment.

Enlist a peer or manager to help you review a challenging contract. It's a good practice to negotiate all pricing, fees, discounts, and bad business terms. There may be flexibility. Know that every $ counts, and questions are free - Please ask! 

Conduct conversations live with the client -- not over email.

Kim Henderson, Cobalt Compass

www.cobaltcompasssolutions.com

kh@cobaltcompasssolutions.com

0 comments
9 views

Related Content

Permalink

https://asacentral.americanstaffing.net/blogs/kim-henderson/2025/05/19/how-to-avoid-landmines-in-staffing-contracts