Staffing agencies within the hotel industry perform many important functions. Therefore, hotel staffing compliance is important. Supplemental labor can help balance the needs of a property while maintaining a stable level of service throughout high and low seasons.  Staffing agencies often have access to a qualified pool of talent and can also help streamline the hiring process. Also, since employees from staffing agencies work for the agencies not the hotels, unemployment costs are the responsibility of the agency.  Often they can find employment for that worker elsewhere so this is not an issue.

Hotel and resort staffing agencies are not however, a way to skirt existing rules and regulations from the IRS, the Department of Labor, or a myriad of other state and local regulating bodies.  In fact, using staffing agencies in this way could endanger a hotel brand and bring severe penalties in the form of fines and brand degradation.

Warning Signs

Most hotels and resorts are not intentionally trying to break the law.  They are trying to run a business in the most economically competitive way possible.  In fact, when a hotel is working with a staffing agency that is not following rules about labor classification, background checks, and work status, they often do not know that they have been in violation until it is too late:
Here are some warning signs that a staffing agency may not be compliant with all the rules and regulations from local, state, and federal bodies:

Extremely Low Bill Rates

A low bill rate might seem like a good thing.  However, when you look at state and local minimum wages, these bill rates might indicate that workers are not being properly classified.   If a staffing agency is paying workers and issuing a 1099, they are misclassified.  The lower taxes that employers are paying allows them to give lower bill rates by skirting tax obligations. This however is illegal. It is also harmful in the long run to employees who could potentially face penalties from the IRS, since they have no clue that they now have different tax reporting responsibility.

New in the Business

Many staffing firms work in the marketplace until they run afoul of rules and regulations, declare bankruptcy and open under a different name. This is a warning sign that their internal practices may be corrupt, and partnering with these types of agencies should be avoided.

No Safety Team

Why Is This Important Now?

As the labor market tightens and we near universal employment, the business of staffing looks extremely lucrative.  Hotels and resorts as well as other businesses are relying on staffing agencies to access an ever-shrinking pool of talent. Making sure hotel staffing compliance is crucial. In addition, the use of contingent labor has grown tremendously in the last 10 years.  For these reasons, new players have entered the market.

New competition is not a bad thing.  However, many of these new players may not understand the intricacies of the business.  After all, the impact for bending or breaking rules may not come for months or even years.

In addition, these new players may not push back against clients who: believe that staffing agencies shield them from liability when it comes to misclassification of labor, little or no background checks, or worker eligibility.  Agencies like OSHA and the Department of Labor are very clear on the responsibilities of staffing agencies and the places of employment.  It is the responsibility of agencies and hotels to follow these rules and regulations as partners.
It is a critical time for this industry because while the staffing business is booming, there are many chances for serious missteps that could it tarnish it.

“I think a big concern that I have has to do with the number of staffing agencies that have started business recently. They’re driven by the market demand but don’t necessarily understand the needs of the hospitality industry. They also may not have the long term branding concerns that we have either, they may not care to improve hotel brand reputation. This can lead to cutting corners on things like background checks and employment eligibility. As an industry we need to guard against this trend.”

David Vallillo
Area GM for three properties on International Drive in Orlando, Hilton

A Matter of Brand Quality

Brands have become more and more important to consumers as they make choices based on internet reviews and broad perceptions.  National and international brands are aware of the need to be law-abiding partners in the community.  Staffing agencies should stand alongside these brands as partners in success, especially when dealing with hotel staffing compliance.  There are no ways to offer a backdoor into unethical or illegal behavior that erodes the spirit behind brand integrity.  It is also a tactic that can and will backfire eventually as large scale brands are associated with staffing scandals.  In addition, many times branding is associated with a geography: think International Drive in Orlando or the Magnificent Mile in Chicago.  These geographies are often home to hotels that have a major impact on that geographic brand. One negative incident at a hotel in those areas could hurt the entire brand experience that relies on millions of visitors every year.

A Matter of Safety

In addition to concerns about branding, safety is another major concern.  Staffing agencies that are cutting corners in order to offer an impossibly low bill rate by not properly vetting employees are presenting a safety issues.  Hotels must be vigilant about who is working in their hotels, tey need to keep a high hotel staffing compliance to keep guests and other staff safe. It pays to ask what the employee verification process is at an agency and ask to view the process throughout your relationship with the firm.

A Matter of Turnover

Working with a staffing agency that has reputable business practices, such as hotel staffing compliance, will have positive long-term relationships with both employees and hotels.  Following these business practices leads to a lower rate of turnover since employees are happy, safe, and fairly compensated.  Lower turnover leads to higher quality scores and, often great efficiencies.  Staffing agencies can also help reduce overtime by recommending the right number employees to have on staff. When there is hotel staffing compliance, there tends to be lower turnover.  This can save money in the long run since hotels are paying less overtime, spending less time recruiting, and are prepared for unexpected call-offs or spikes in demand.

Doing Well By Doing the Right Thing

In the end, good business practices often improve business results.  Having a safe, a hotel staffing compliant workplace with low turnover is a pathway to higher quality, better ratings and a greater competitive edge.  It also protects against some very serious branding and safety pitfalls that could affect a property on a local and national branding level.

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