Template · Staffing agency documents
Staffing agreement template
In short
A staffing agreement template is the master contract between a staffing agency and a client business that sets the terms for supplying temporary workers: who employs them, bill rates and overtime, timesheets and invoicing, conversion fees, insurance, safety duties, indemnities and termination. This version is written for US temporary and temp-to-hire staffing and flags the clauses that cause most disputes.
Staffing Services Agreement template
Staffing Services Agreement
Template for a master agreement between a staffing agency ("Agency") and a client ("Client"). Individual assignments are confirmed in a separate assignment order or rate schedule. Replace every [Placeholder]. This template is a starting point; have counsel review it for the states where workers will be placed.
1. Parties and term
This Staffing Services Agreement ("Agreement") is made on [Effective Date] between [Agency Legal Name], a [State] [corporation / LLC] with offices at [Agency Address] ("Agency"), and [Client Legal Name], a [State] [corporation / LLC] with offices at [Client Address] ("Client").
This Agreement begins on the Effective Date and continues for [one year], renewing automatically for successive [one-year] terms unless either party gives [30] days' written notice of non-renewal.
2. Services and assignment orders
Agency will supply temporary workers ("Assigned Employees") to perform work for Client as described in written or electronic assignment orders ("Orders"). Each Order will state the job title, duties, work location, shift, start date, expected duration, pay rate, bill rate, any required qualifications or screening, and the Client supervisor. If an Order conflicts with this Agreement, this Agreement controls unless the Order expressly states otherwise and is signed by both parties.
3. Employment relationship
Agency is the employer of record of Assigned Employees. Agency will recruit, screen, hire, assign, pay wages, withhold and remit payroll taxes, provide workers' compensation coverage, maintain unemployment insurance, and provide any benefits required by law, including those under the Affordable Care Act where applicable. Agency will complete Form I-9 employment eligibility verification for each Assigned Employee.
Client will supervise and direct the day-to-day work of Assigned Employees at Client's worksite. Client will not change the duties, location or pay of an Assigned Employee without Agency's written agreement. Client will not ask Assigned Employees to [operate motor vehicles / handle cash or negotiable instruments / operate [equipment]] unless the Order specifically permits it.
4. Screening
Agency will perform the following screening for each Assigned Employee before assignment, as specified in the Order: [identity and work authorization / background check / drug screen / skills assessment / reference check / license verification]. Agency will conduct background checks in compliance with the Fair Credit Reporting Act and applicable state and local law. Client will not request screening that is not job-related and consistent with business necessity.
5. Rates, overtime and invoicing
Client will pay Agency the bill rates set out in each Order or the attached Rate Schedule (Exhibit A). Bill rates include Assigned Employee wages, employer payroll taxes, workers' compensation, Agency overhead and margin.
Overtime hours, as required by the Fair Labor Standards Act and applicable state law, will be billed at [1.5] times the regular bill rate. [Double-time hours, where required by state law, will be billed at [2.0] times the regular bill rate.] Holiday hours will be billed at [rate]. If a statutory minimum wage, required benefit or mandatory payroll tax increases during the term, Agency may adjust affected bill rates by the amount of the increase plus applicable markup, with [15] days' written notice.
Agency will invoice Client [weekly] based on approved time records. Payment is due within [30] days of the invoice date. Late balances accrue interest at [1.5]% per month or the maximum allowed by law, whichever is lower.
6. Timekeeping
Client will verify and approve the hours worked by each Assigned Employee each week by [day and time], through [Agency timekeeping system / signed timesheet]. Client's approval confirms the hours were worked. If Client does not approve or dispute time records by the deadline, the records submitted by Assigned Employees will be treated as approved for billing purposes. Agency will pay Assigned Employees for all hours worked, as required by law, whether or not Client has approved them.
7. Worksite safety
Client will provide a safe workplace and comply with the Occupational Safety and Health Act and state safety laws. Client will provide site-specific safety training, hazard communication and personal protective equipment for the work performed, unless the Order states that Agency will provide [general safety orientation / specified PPE]. Client will notify Agency of any workplace injury or illness involving an Assigned Employee within [24] hours and cooperate with Agency's workers' compensation claim process. Client will not place Assigned Employees in work that is materially different from the Order without Agency's prior written approval.
8. Removal and replacement
Client may ask Agency to remove an Assigned Employee from an assignment for any lawful reason by notifying Agency. Client will not be charged for the first [4 / 8] hours worked by an Assigned Employee whom Client removes for unsatisfactory performance within that period and reports to Agency the same day. Agency will make reasonable efforts to provide a replacement within [one business day]. Client will not remove or request an Assigned Employee for any reason prohibited by federal, state or local anti-discrimination law.
9. Conversion to Client employment
If Client, or any affiliate, hires an Assigned Employee directly, or engages them through another agency, during the assignment or within [6] months after it ends, Client will pay Agency a conversion fee, unless the Assigned Employee has worked [520] hours on assignment for Client, in which case no fee applies. The conversion fee is [percentage]% of the employee's first-year base pay, reduced by [percentage]% for every [40] hours worked on assignment, as set out in Exhibit A. Client will notify Agency in writing before making a direct offer.
10. Insurance
Agency will maintain, during the term: (a) workers' compensation insurance as required by law and employer's liability insurance of at least $[1,000,000] per accident; (b) commercial general liability insurance of at least $[1,000,000] per occurrence; (c) employment practices liability insurance of at least $[1,000,000]; and (d) [employee dishonesty / third-party crime coverage of at least $[amount], if Assigned Employees will handle property or cash]. Client will maintain commercial general liability insurance of at least $[1,000,000] per occurrence and [auto liability insurance, if Assigned Employees will drive Client vehicles]. Each party will provide certificates of insurance on request.
11. Indemnification and limitation of liability
Agency will indemnify and defend Client against third-party claims arising from (a) Agency's failure to pay wages, payroll taxes or benefits it owes as employer of record, (b) Agency's breach of this Agreement, or (c) the negligent or wrongful acts of Agency's own staff.
Client will indemnify and defend Agency against third-party claims arising from (a) Client's supervision and direction of Assigned Employees, (b) unsafe conditions at Client's worksite, (c) Client's breach of this Agreement, or (d) Client's violation of law, including anti-discrimination and wage-and-hour laws relating to time worked that Client failed to report.
Neither party is liable for indirect, consequential or punitive damages. Agency is not liable for damage to or loss of Client property, data or funds entrusted to Assigned Employees unless the Order specifies coverage and the loss results from the Assigned Employee's proven dishonesty.
12. Confidentiality and non-solicitation
Each party will keep the other's confidential information, including rates, candidate information and business data, confidential and use it only for this Agreement. Client may require Assigned Employees to sign Client's confidentiality agreement, with Agency's approval of its form. During the term and for [12] months after, Client will not solicit Agency's internal staff for employment.
13. Compliance and equal opportunity
Each party will comply with all laws that apply to its obligations, including anti-discrimination, wage-and-hour, immigration, safety, data privacy and leave laws. Neither party will request, refer or accept workers on the basis of any characteristic protected by law.
14. Termination
Either party may terminate this Agreement for convenience with [30] days' written notice, or immediately if the other party materially breaches it and does not cure the breach within [10] days of written notice. Client may end any individual Order with [one shift / [number] days] notice. Client will pay for all services provided through the termination date, and Sections 9, 11 and 12 survive termination.
15. General
This Agreement, its Exhibits and the Orders are the entire agreement between the parties on this subject. Amendments must be in writing and signed by both parties. This Agreement is governed by the laws of [State]. Neither party may assign it without the other's written consent, except to a successor of its business. Notices must be in writing to the addresses above.
AGENCY: [Agency Legal Name] By: ____________________ Name: [Name] Title: [Title] Date: [Date]
CLIENT: [Client Legal Name] By: ____________________ Name: [Name] Title: [Title] Date: [Date]
Exhibit A: Rate Schedule and Conversion Fee Table Exhibit B: Assignment Order Form
How to use this template
- Agree the commercial terms first: markup or bill rates by job, overtime multiplier, payment terms and conversion fee scale, and put them in Exhibit A.
- Fill in each party's legal name and entity type exactly as registered.
- Set insurance limits to match what the client's procurement team requires and what your carrier actually covers.
- Decide who provides safety training and PPE for each type of assignment and record it in the Order form.
- Choose the governing law and have counsel review the indemnity, conversion and limitation clauses for the states you place in.
- Sign the master agreement once, then issue a short Order for every new assignment or rate change.
- Store the signed agreement, Orders, insurance certificates and approved timesheets together for each client.
What a staffing agency contract covers
A staffing services agreement sets the rules for every placement the agency makes with that client. It is a master agreement: signed once, then used with a short assignment order for each job. The order carries the details that change (role, rate, shift, start date). The agreement carries the things that do not: who is the employer, how billing works, who is liable for what, and what happens if the client hires a temp directly.
This template is for temporary and temp-to-hire staffing, where the agency employs the worker and the client directs the work. For permanent placement, where the agency introduces a candidate and the client hires them from day one, use recruitment agency terms of business instead. When a client wants a defined trial period that converts to a permanent hire, pair this agreement with a contract-to-hire agreement. For background on how agencies work, see our glossary entry on the staffing agency.
Rates, markups and the clauses that move margin
The rate schedule decides whether the account makes money. A common structure is a markup on pay rate. For example, a picker paid $18.00 per hour at a 45% markup bills at $26.10. The markup has to cover employer FICA (7.65%), federal and state unemployment taxes, workers' compensation premiums, which vary a lot by job class and state, plus recruiting costs, overhead and profit. Light industrial and clerical markups typically sit in the 30% to 60% range, with skilled and technical roles often higher. See our glossary entries on markup and bill rate for the full calculation.
Three clauses protect that margin. The statutory increase clause (Section 5) lets you pass through minimum wage and mandatory tax increases without renegotiating. The overtime clause bills overtime at a multiple, not at the straight rate. And the timesheet clause (Section 6) sets a deadline for approval, because unapproved hours you have already paid the worker for are the most common source of unpaid invoices.
Co-employment and joint employer risk
In US staffing, the agency is the employer of record, but the client directs the work. Agencies and clients can both be treated as employers of temporary workers for some purposes. Under the FLSA, a client can be a joint employer responsible for unpaid wages. Under OSHA's guidance on temporary workers, the host employer and the staffing agency are jointly responsible for worker safety, and the host is usually best placed to provide site-specific training. Anti-discrimination laws can also apply to both.
The agreement cannot remove that exposure, but it can allocate it. Sections 3, 7 and 11 do that: the agency handles pay, taxes, I-9s and workers' compensation; the client handles supervision, site safety and accurate time reporting; each indemnifies the other for its own failures. Clients should also avoid treating temps like their own staff in ways that blur the line, such as putting them in the employee handbook's discipline process or setting their pay directly.
Conversion fees that hold up
Conversion fees cause more arguments than any other clause. Clients feel they already paid markup for months; agencies feel they found and carried the worker. A sliding scale settles most of it: a fee that drops for every week worked and reaches zero after a set number of hours, often 520 hours (13 full-time weeks) for light industrial roles. That gives the client a clear free-conversion point and protects the agency against a client poaching someone in week two.
Cover indirect hires too. Section 9 includes hires through an affiliate or another agency within six months, which is the usual workaround. And require written notice before a direct offer, so conversions are visible rather than discovered on an invoice dispute.
Common mistakes in temporary staffing agreements
- No assignment orders. A master agreement with no written orders leaves pay rates, duties and screening requirements to email. Use a one-page order for every assignment.
- Uncapped or one-sided indemnities. Large clients often send their own paper with broad indemnities running only to them. Push for mutual indemnities tied to each party's own conduct.
- Insurance you do not have. Promising crime coverage or a $5 million umbrella you never bought is a breach waiting to be found.
- Silent on duties. If the agreement does not limit driving, cash handling or equipment operation, a temp may end up doing all three. Your workers' compensation class and liability exposure follow the actual work, not the job title.
- Ignoring state rules. Some states regulate temporary labor more closely. Illinois's Day and Temporary Labor Services Act, for example, sets notice and equal-pay requirements for certain temporary workers. Check the rules where you place people.
Managing agreements across many clients or vendors
An agency with 80 active clients can end up with 80 slightly different contracts, each with its own payment terms, conversion scale and insurance limits. Keep a clause register: one row per client with the key terms, renewal date, and certificate of insurance expiry. Review it monthly.
On the client side, large employers often run a dozen agencies across sites. A standard agreement for all of them, with the same rates by job family and the same timesheet rules, makes performance comparable. Tracking fill rate, time to fill and conversion per supplier in one place, for example in a vendor management tool, shows which agencies earn their markup. Larger programs often formalize this through an MSP and a VMS.
Frequently asked questions
What should a staffing agency contract include?
Parties and term, how assignments are ordered, who is the employer of record, screening, bill rates and overtime, timekeeping and invoicing, worksite safety duties, removal and replacement, conversion fees, insurance, indemnification, confidentiality, termination and governing law.
What is the difference between a staffing services agreement and recruitment terms of business?
A staffing services agreement covers temporary workers employed by the agency and billed by the hour. Recruitment terms of business cover permanent placement, where the client hires the candidate directly and pays a one-time placement fee.
What is a typical conversion fee in a temporary staffing agreement?
It varies by role and market. A common approach is a percentage of first-year salary that reduces with hours worked and reaches zero after a set threshold, often around 520 hours for light industrial and clerical roles.
Who is responsible for safety training for temporary workers?
Both parties. OSHA treats the staffing agency and the host employer as jointly responsible. The agency usually provides general safety training, and the host provides site-specific training, hazard communication and equipment.
Who pays workers' compensation for temp workers?
The staffing agency, as employer of record, normally carries workers' compensation for its assigned employees, and the cost is built into the bill rate. The client should still report injuries promptly and keep the site safe.
Can a client hire a temp directly without paying a fee?
Only if the agreement allows it, usually after the worker has completed a set number of hours on assignment. Before that point, most staffing agreements require a conversion fee, including for hires through another agency or affiliate.