What to Look for in a St. Louis Staffing Agency Contract

Hiring through a staffing agency can simplify recruitment, but only if the contract is clear, fair, and tailored to your business needs. Not all staffing agreements are created equal. Misunderstanding the fine print can lead to unexpected costs, compliance issues, or hiring headaches.

Reviewing your staffing contract carefully helps protect your budget, your team, and your hiring outcomes. Understanding the terms before you sign is essential, whether you are onboarding one temporary worker or building an entire team.

Learn how to choose the right agency in our guide to [How to Choose the Best Staffing Agency in St. Louis for Your Hiring Needs].

Key Clauses to Review in a Staffing Agency Agreement

Fee Structure and Markups

Staffing agencies in St. Louis typically charges a markup on hourly wages (for contract placements) or a percentage of annual salary (for direct hires). Some contracts also include additional costs for overtime hours, early termination of placements, or converting contracts to full-time hires.

Make sure your contract clearly outlines:

• Base pay vs. markup
• Fees for converting a contract to a permanent hire
• Billing cycles and payment terms

Guarantee and Replacement Policies

What if a placement doesn’t work out? Many staffing agencies offer a guarantee period for permanent hires of 30 days.

Ensure your contract includes:

• The length of the guarantee window
• Conditions under which replacements apply
• The process for requesting a replacement

Scope of Services and Responsibilities

Clarify exactly what the agency is responsible for. Are they only sourcing candidates, or are they also handling payroll, benefits, onboarding, and background checks?

Key questions to ask:

• Who is the official employer of record?
• Who handles tax withholdings, workers’ comp, and compliance?
• Does the agency offer support with onboarding?

Termination and Exit Clauses

Every contract should include language around how and when the agreement can end, including any early termination fees.

Watch for:

• Required notice periods (e.g., 14 or 30 days)
• Charges for ending contracts early
• Conditions that trigger immediate termination

Red Flags to Watch Out For

• Vague language around pricing, services, or responsibilities
• No mention of a candidate replacement guarantee
• Excessively complex or one-sided terms

Tip:
If a contract is overly complex or hard to interpret, it’s a sign to ask more questions, or walk away.

Negotiating a Fair Staffing Contract

Many terms, such as markup rates, guarantee lengths, and notice periods, are negotiable, especially if you’re hiring multiple roles or considering a long-term partnership. Don’t be afraid to ask for clarification or request adjustments.

When in doubt, involve legal counsel, especially for larger agreements.

FAQ

Q: Are staffing agency contracts negotiable?
A: Yes, especially for long-term or high-volume clients.

Q: What’s a typical guarantee for a staffing placement?
A: Most agencies offer a guarantee period for permanent hire of 30 days.

Q: Can a staffing agency charge me if I want to convert my contract employee to a permanent employee earlier than the negotiated conversion date? 

A: Yes, that would result in a “conversion fee” which would be outlined on your contract according to how early you decide to make your contract employee a permanent part of your organization. If you want to wait until the 90 day conversion date, there will typically still be a fee, but it will be far lower and based on however much is left of that individual’s salary. The fee is based on a formula: The annualized salary – however much you have paid weekly in contract fees = the conversion fee. Essentially, a contract to hire fee is a way to pay for a perm fee while you are “ trying them”. 

Conclusion

Your staffing contract is more than a formality, it’s the foundation of a successful hiring partnership. Understanding the terms helps you manage risk, control costs, and ensure accountability. Never sign without reading, and never hesitate to ask questions.

Need help navigating staffing agreements? PEG Staffing & Recruiting for a personalized consultation.