Review guide · Staffing and recruiting agreements
How to review a staffing or recruiting agreement before you sign
What to check in a staffing, temp-to-hire or recruiting agreement before you sign: conversion and placement fees, bill-rate markups, guarantee periods, co-employment liability, non-solicitation, and termination.
A staffing agreement sets the price of every hour and every hire that comes through the agency, and the expensive terms are the ones that trigger later: the conversion fee when you hire the temp you like, the placement fee that is due even if the candidate leaves in week three, and the non-solicit that follows a worker you met through them for a year.
For a warehouse, a clinic, an agency or a seasonal retailer, this is often the second-largest vendor relationship after rent. Read these clauses first.
Who usually signs it: The owner, an operations lead or an HR manager, usually on the agency's standard terms.
The clauses to check, in order
- 01
Conversion and placement fees
Why it matters: Hiring a temp permanently triggers a fee, often a percentage of first-year salary, that may not step down with hours worked. Direct placements charge the same percentage up front.
What to ask for: A conversion fee that declines to zero over a defined number of hours worked, and placement fees stated as a fixed percentage with the salary base defined.
- 02
Guarantee period
Why it matters: If a placed candidate leaves in the first weeks, a short or conditional guarantee means you pay again for the replacement.
What to ask for: A 90-day replacement guarantee at no additional fee, not conditional on paying the first invoice early.
- 03
Bill-rate markup and pass-through costs
Why it matters: The markup over the worker's pay rate is where the margin lives; overtime multipliers, holiday pay and "statutory increases" can be passed through on top.
What to ask for: The markup stated as a number, overtime at a defined multiplier on the pay rate (not the bill rate), and notice before any pass-through increase.
- 04
Co-employment and indemnity
Why it matters: The agreement decides who is liable for wage claims, injuries and misclassification. A one-way indemnity puts the agency's compliance risk on you.
What to ask for: The agency as employer of record with a mutual indemnity: they cover payroll, taxes, workers' compensation and their compliance; you cover your workplace.
- 05
Non-solicitation of workers
Why it matters: A broad non-solicit stops you hiring anyone the agency ever introduced, including people who apply to you directly later.
What to ask for: A non-solicit limited to workers actually placed with you, for the assignment plus a short tail, with the conversion fee as the remedy.
- 06
Term, exclusivity and termination
Why it matters: Some agreements make the agency your exclusive source, or require long notice to end the relationship while assignments continue.
What to ask for: No exclusivity, termination on 30 days' notice, and assignments ending on their own terms.
Before you sign: the checklist
- Find the conversion fee schedule and compare it to the hours a typical temp works before you would hire them.
- Read the guarantee period and its conditions.
- Confirm the markup, overtime and pass-through rules.
- Read the indemnity in both directions and who is employer of record.
- Check the non-solicit scope and length.
- Confirm termination notice and that no exclusivity applies.
Run the interactive 12-point red-flag checklist → · Find the last day to give notice →
Have one of these on your desk?
Upload it and Sidecar returns a verdict, a 0–100 risk score, every clause above flagged with the text quoted, every date that can cost you, and the negotiation points with suggested wording. A Sidecar reviewer looks it over on request. The first review is free.
Questions
What is a typical conversion fee?
There is no fixed market number and this page does not invent one. What matters is the structure: whether the fee steps down with hours worked, what salary base it uses, and whether it is due on a hire that happens months after the assignment ended.
Who is liable if a temp worker is injured?
Usually the staffing agency carries workers' compensation as employer of record, but the agreement can shift workplace-safety liability to you. Read the indemnity and insurance clauses, and ask for certificates of insurance.
Does Sidecar review staffing agreements?
Yes. Staffing agreements are one of the agreement types the review classifies. Upload the agreement and the rate schedule, and the review returns the verdict, the risk score, the clauses flagged and quoted, and what to ask for.
Clauses explained
Other agreement types
Definitions and negotiation guidance here are educational business decision support, not legal advice. Consult an attorney about how any clause applies to your own agreement.