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Bait & Switch: Games staffing firms play

In the October 23, 2012 Ask The Headhunter Newsletter, a job hunter asks about bait-and-switch contracts used by “staffing” firms.

A recruiter at an IT staffing firm did something that I think is very unethical. I signed a contract with the firm to perform IT duties at a company where I successfully interviewed just days before. It specified the hourly pay and overtime.

I verbally negotiated the rate prior to signing the contract. Unfortunately, I did not ask for a copy of the contract. Yesterday, the recruiter asked me to sign more forms. There was a new contract, and a significant reduction in pay! The overtime was deleted and the pay was stated weekly instead of hourly.

When I pointed this out, the recruiter e-mailed that, “We lost the original contract.” I called the next morning, and the recruiter insisted I sign the new forms and said she would take care of my concerns. When I balked and declined to sign, she said they would redo the forms but it might be a day or two. Meanwhile, I’m supposed to start work tomorrow!

I find this utterly distasteful and unethical. I’m going to wait and see if the recruiter comes up with the correct terms before I contact the staffing account manager or the company I’m supposed to work for.

My question is, why are they stalling with the new contract? Why couldn’t it be immediately corrected? Maybe they are waiting to find something in my background check so they can report to the company that I am “unsuitable” for hire. Then, they can go out and find someone cheaper. What do you suggest?

Nick’s Reply

What you’re describing is, unfortunately, not uncommon in the IT “staffing” or “consulting” biz. (It’s not just the IT field that uses staffing firms.) These companies recruit and hire people, then “rent” them to their client companies at a profit. Things like this happen because overly-eager recruiters get excited when they find a candidate like you. They want to sign you up and assign you to a client, so they promise you a contract that’s to your liking. Later, the sales rep handling the account you’d be assigned to can’t get the rate the recruiter promised you — so the deal changes. It’s a classic bait-and-switch game.

It is crucial that you read everything before you sign, and make sure everything you negotiated is in the written contract.

No matter what you negotiated and they agreed to orally, what matters is what’s in the written contract. Make sure you get the counterpart of the contract — the copy they signed — and tell them you will not report to work until you receive it. Often, a firm will demand that you sign the contract, then they will “forget” to give you the copy they signed.

(For an insider’s look at staffing firms, see the Consulting Jobs Primer.)

The games some of these companies play are unethical — but they do it anyway. Your protection is to insist it’s in writing, and to politely but firmly decline to show up for work until the written contract is to your satisfaction.

But be careful. If you sign something without reading it carefully, and then you decide you want different terms, too late — you’re already committed. Be very, very careful. Good contracts make good working relationships.

One tactic they may use is to ignore your requests right up until the last minute, maybe the day you’re supposed to show up for work. This puts you on edge and makes you very nervous. You want the job, but you don’t want the terms. They figure you will cave to get the work, so they will push the envelope hard and far. Unless you have a history of good experiences with them, don’t believe anything until it’s in writing in your hands.

You may really need the job, but you must decide in advance whether you will accept lesser terms or such behavior. Then stay calm, don’t complain, don’t get angry. Just state your terms. Your overriding strategy must be to make yourself highly desirable or indispensable to the consulting firm. Make them need you. Then make your reasonable demands calmly and firmly. Then let them decide, and let them reveal whether they are honest and have integrity.

You’re doing the right thing. This can be risky, but you must decide your tolerance for such risk: If they want to play the last-minute game, you can play, too. Just know what you’re doing in advance, and let this play itself out. If they don’t give you the contract you agreed to, then stop working with them. They’re not honest.

Be careful if you go to the actual employer to discuss this. Do not say nasty things about the firm. Be businesslike. It can be as simple as this:

How to Say It

“I enjoyed meeting with you, and I’d like to work on your team. However, I’m not happy with the way the consulting firm has handled the facts of the project. Is there another consulting firm you use that you respect? Can you recommend someone there that I can talk to?”

Not all companies will answer you — they get nervous. They may even have a contract with the staffing firm that prohibits them from discussing this with you. But you must decide whether integrity is important enough to kill a deal. In the end, you may need to meet a new staffing firm, and a good way to do that is to talk with a company where you’d like to work, and inquire which staffing firm they use. There are some very good staffing firms out there: Get a personal introduction to them, and learn to igore the rest. Get a personal introduction.

As more companies try to avoid the fixed overhead of staff, they’re going to look to hire “on contract.” Do you see this trend in your own business? Have your experiences with staffing firms been good or bad? What would you do in a situation like this? What methods do you use to avoid problems and to get a good deal from staffing firms?

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  1. I always request the other party to e-mail me confirmation of any agreement. That way, I always have a written record of our communication. If they won’t e-mail, I request they fedex it in. This is not negotiable in my book. I will not travel out to anywhere just to sign a piece of paper under the watchful eye of some schlump. The piece of paper should have been sent to me for my review days beforehand.

    In this day and age, I find it hard to believe anyone would refuse to e-mail, and if they did–I would ask myself whether I really want to work with a company that is so mind-boggingly inefficient and technologically incompetent. This goes triple, maybe even quadruple for an IT firm

  2. I had this happen. I explained that the change in terms are clearly unacceptable and you will have to abide by the original. If you cannot or will not then the deal is off. Plain and simple.

  3. Lately I’ve been barraged with calls from staffing firms that are obviously not local because they don’t realize that Wisconsin or Rhode Island isn’t close to Seattle, and they speak over poor phone connections with such heavy accents that it’s difficult to understand them. I’m a senior technical writer, and the universal reaction to my (standard market) rate is that it is far higher than what their client is willing to pay for the position (even though it requires a senior person like myself). I wonder if their strategy is to low-ball contractors so they can get a bigger cut of the fee, or if they’re trying to under-price local firms to win business away from them. It would be interesting to know whether others are having this experience.

  4. @Megan: There are probably multiple explanations. But you must keep in mind that your point of contact is usually a recruiter – a sales person. His or her job is to identify marketable talent. The more impressive you are, the harder they will sell to you. They will promise a lot, whether they can deliver it to you or not — just to get you to sign that contract. It’s their foot in the door.

    If they can get you on a contract, the other sales rep — the account manager who handles the client company that actually needs you — can then pitch you to the client. Makes them all look good if they can present someone as highly-qualified as you. But then the problems start. They’re trying to close a deal, and the client is trying to push down the rate. The sales rep doesn’t want to fight, just to close the deal. So the rep may “sell” you at a lower rate than was quoted to you, and now the recruiter has to “deliver” you at the lower rate. And the fun begins. It turns into a game of how clever they can get, and how much they can intimidate you into a different deal.

  5. I wonder if this candidate wasn’t the “bait” in another kind of bait-and-switch where the agency presents the qualifications of a highly qualified candidate, then sends a less-qualified and cheaper candidate to fill the job.

  6. This kind of crap is happening in science and engineering too, and the wages these firms want experienced candidates to work for are generally inappropriately low.

  7. @Jim V: The sales strategies of these firms are not very sophisticated, and you’ve hit on one of the angles. In general, it’s about over-selling one candidate (who’s too expensive) to a client in order to “place” a candidate who is paid less. Or to over-sell a position and talk a hungry candidate into a lower pay rate. There are good firms that don’t do this. They’re rare. The problem is, these firms act as an insulator between the market players — the actual employers and the actual labor. The firms manipulate pay rates to close deals. In one way, it’s a very efficient market, but in another way, they force down pay rates because everyone wants to play — and that’s the only guaranteed way to play.

  8. Nick,

    It is an honor to talk with you. I bought your book, “Reinventing the Interview to Win the Job”, and e-book, “Keep Your Salary Under Wraps”. It has taught me so much and I think I am on my way to getting myself in the door with a particular company using your methods. Thank you!

    However, you are so dead on about HR, staffing firms, and these “job-sites”. I’m sorry, but they are just downright unethical and do nothing for talented individuals. If people continue to stand firm on their ethics and not low-ball themselves and get lulled into undermining positions, it will force these people to change their practices. Though it may take time, I think it was time that someone reminds us not to undervalue our worth. For that Nick, you have my respect and unwavering admiration. Do these staffing firms and companies realize they are allowing an individual to resent them and not produce their best work because of this? In the long term, nobody wins.

  9. I have seen this happen before. You have to be very careful on who you work with and straight up, otherwise if they cannot or will not accept your demands then the deal is off.

  10. Hi Nick,

    The last temp agency I work for had two copies of a contract. They had me sign papers on the day I’m scheduled to work, and because they were in a hurry, they had two copies of the contract all signed. The question is, should I still insist on signing one of the copy and ask for a copy / scan so that both have the same copy of the contract? I only signed one of the contracts and they eventually encryped it in a zipped file and emailed it to me. In hindsight, I’m thinking it might not have hurt to sign both copies of the contract seven though both have different signatures since after all both copies have signatures. What crossed my mind was that the two contracts may have different terms and since I didn’t have time to go over them both to compare (and holding it up to the light didn’t seemed like a good idea), I let it slide.

    The other handout was if I’m willing to wave my rights volunteerily to not take breaks after 6 or x hours.. I put a no there because I felt that I was put in a corner to sign everything away. I didnt’ like the rush from the company.

  11. Employers need to wise up that the agencies are gouging them. The standard markup is no more than 30%. Agencies are typically marking up close to 100% now and they need to be called on it or contractors wages will stay frozen.

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