US · Starting
What should staffing agency terms of business include?
The clauses a staffing agency needs in client terms: payment, timesheets, conversion, rebates, liability, data and suspension of supply.
The short answer
Staffing terms of business should define the worker model, bill and pay rates, overtime, timesheet approval, invoice timing, payment terms, conversion fees, rebates, replacement obligations, confidentiality, data protection, liability, insurance and the right to suspend supply for non-payment. Agree them before the first introduction or assignment, not after a dispute.
Key facts
- Agree before
- The first candidate introduction or assignment
- Cash clauses
- Timesheet approval, invoice date, payment terms and late interest
- Protection clauses
- Conversion, rebate, liability, insurance and suspension
Client terms are the operating constitution of a staffing relationship. If the document only says what percentage you charge, it has not dealt with the moments that create the loss: an unapproved timesheet, a worker converted without notice, a client paying late or a role changing after the start date.
Put the cash cycle in plain language. State when the client must approve time, when you invoice, whether disputes must be raised within a short window and when payment is due. A client should not be able to hold an entire weekly invoice because one line is disputed.
The conversion and introduction clause protects perm economics and temp-to-perm economics separately. Cover the client group, the protection period and introductions passed to a third party, and state how the fee is calculated on salary and guaranteed compensation.
Guarantees need equal precision. Define the start date, rebate taper, exclusions for redundancy or material role change, and whether you can replace rather than refund. A generous guarantee is manageable; an ambiguous one is not.
Have counsel adapt the template to the states, sectors and worker model you serve. Templates are a starting point, not permission to ignore consumer reporting, wage, data or employment law.
Step by step
01
Define the service
State whether the agency is making permanent introductions, employing temporary workers, or providing both services.
02
Set the commercial terms
Specify pay, bill, overtime, expenses, minimum hours, invoice timing, payment terms and the tax treatment of charges.
03
Protect the introduction
Include a conversion fee, affiliate coverage and a defined protection period for candidates introduced by the agency.
04
Set replacement and rebate rules
Make guarantee periods, tapered rebates, replacement obligations and exclusions clear before a perm candidate starts.
05
Allocate risk
Cover worker safety, data protection, confidentiality, insurance limits, indemnities and the process for incidents.
06
Agree the stop point
Give the agency a clear right to suspend supply for overdue invoices, unsafe conditions or missing approvals.
United States
How this differs by US state and metro
The answer above holds nationally. What changes locally is registration, insurance, wage rules and how much cash each contractor consumes — these are the states and metros founders ask us about most.
Pennsylvania
Philadelphia · Pittsburgh · Allentown
Register with the Department of Revenue for employer withholding, and for local earned income tax where workers live and work
Pennsylvania guideNorth Carolina
Charlotte · Raleigh–Durham · Greensboro
Register with the North Carolina Department of Revenue for withholding
North Carolina guideSouth Carolina
Charleston · Greenville · Columbia
Register with the South Carolina Department of Revenue for withholding
South Carolina guideNew York
New York City · Brooklyn · Long Island
New York City licenses employment agencies through the Department of Consumer and Worker Protection — confirm whether your model falls inside that definition before you place
New York guideMetro-level wage, bill rate and startup cost detail:
Local questions
Does this change if I start in Pennsylvania?
The national answer holds. What changes in Pennsylvania is local: Register with the Department of Revenue for employer withholding, and for local earned income tax where workers live and work Check the Pennsylvania page before you register anything, and model the cash gap on Pennsylvania pay rates rather than national averages.
Is the answer different in North Carolina than in Pennsylvania?
The economics are the same shape; the local detail is not. In North Carolina: Register with the North Carolina Department of Revenue for withholding That affects your registration checklist and your working capital number, not the underlying principle.
Which US cities does this apply to?
All of them — but we publish metro-level bill rate, wage and startup cost detail for Pittsburgh, Charlotte, Raleigh–Durham, Charleston and more, because pay rates and buyer mix vary far more between metros than between states.
Do I need a separate licence in every state I place in?
You register where you have employees and where you do business, not once nationally. Most states require unemployment insurance and withholding registration plus workers' compensation cover; a minority licence employment agencies, and some cities — New York City among them — licence separately from the state. Confirm each state and city before your first placement there.
Sources
General information for recruitment and staffing founders, not legal, tax or accounting advice.
Go deeper
How to start a staffing agency in the US
A step-by-step guide to starting a US staffing agency: entity and insurance, working capital for payroll, first niche, margin maths and the funding route that fits.
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