How do Temp Agencies Work? 9 Tips You Can’t Afford to Miss
As you respond to job postings, job ads, and check out job boards, you may have thought about applying for a job with a temp agency, but not knowing how they work has stopped you from following through. Well fear no more! This article is a comprehensive guide to temp and staffing agencies so you can go into it with confidence.
1. What is the benefit of a temp agency?
Temp agencies (also called temporary agencies or staffing agencies) provide a service that is beneficial for both employers and employees.
Employees can go to a temp agency and generally find a job within a short period of time. It is also a possible way of getting a foot in the door for a full-time position.
Employers can get a position filled temporarily so the work is getting done while they search for a permanent employee.
Woohooo! Everyone benefits. But there is much more to it, and we have to go into more detail to answer the question, “How do temp agencies work?”
2. What should I expect when applying to a temp agency?
A temporary agency screens and interviews so many people so they can match them with jobs. The agency can place you in jobs with many different companies that the temp agency has contracts with. The contract describes what type of work they need done, what the prospective employee’s duties will be, and how much they will be paid.
Each temp agency has their own guidelines and different contracts with companies; therefore, the following information could vary from one to another.
3. What should I expect in my interview or visit?
When you walk into a temp agency, a staffing specialist will greet you and have you fill out an application/information sheet that helps to highlight your strengths. You should bring your resume if you have one. If you do not, some agencies will help you to create one. References for the type of work you are seeking and a background check are also generally required by the agency.Other than that, your interview at the temp agency is similar to an interview you would have when you apply directly to a company looking for a new employee. The staff member will ask you questions about your employment history, strengths and about circumstances under which you left previous jobs. Just be honest and have answers prepared for the potential questions.
Don’t stress over the interviews here. It is much easier to do well in these than regular interviews because most staffing companies always want to increase their pool of employees to choose from and want to help you improve your chances of getting a job through them. Plus, it is less commitment and is less expensive for them to hire and let go of you than it is for a regular company.
Additionally, you may be asked to take tests to assess your skill level for the type of work you perform. For example, if one of your skills is typing, you will be given an exam to see how many words per minute you type as well as the accuracy. Another example that is very common is a Microsoft Office skills test, such as Word or Excel. Other tests may be required based on your specialty or industry. The temp agency uses the results of your tests to match you with jobs they have from different companies.
4. What will my schedule be like?
When you work for a temporary agency, they will usually call you when something in your area of expertise is needed. Alternatively, some temp agencies advise you to call them on a regular basis to check for available jobs.
Be prepared to answer these common questions about what kind of schedule you would like:
- Are you available on weekends?
- Do you want to work strictly days, nights or are you available anytime?
- Is there a particular geographical area where you would prefer to work?
5. Do I have to sign a contract?
When you decide to work or a temp agency, you will almost always be asked to sign a contract. This contract basically states that you are affiliated with the temp agency and have certain restrictions with the companies that they introduce you to.
When they send you on a job, you cannot accept any other temporary or permanent position with the company without going through the temp agency. Should the company want to hire you permanently, they will pay the temp agency a certain amount to release you from your contract. This amount depends on the temporary agency and I will explain it later. (Disclaimer: This article is not legal advice)
Once you have finished this process and signed the contract, crossed your t’s and dotted your i’s, you now are able to be called for to work for a client of the temp agency.
6. How does the pay work?
The temp agency is responsible for paying the workers they send to a company. They charge the company a set amount per hour from which they take a percentage. The temp agency is also responsible for collecting taxes from the temporary worker’s pay. All of this is specified in the contract that the company has with the temp agency.
For example, if a temp worker is paid $15 per hour, the company for which they are working may actually be paying $25 per hour for their services. The temp agency keeps the extra $10 per hour of the pay. The markup is typically 50% to 100%, and is 66% in this example.
7. Is it better for the company to hire workers from a temp agency or independent contractors?
Companies get certain advantages from using temp employees through agencies, the burden of figuring and withholding employment taxes is taken away from them. In addition, they don’t have to worry about paying benefits, such as health insurance, unemployment, or vacation.
If a company hires an independent contractor, they pay them a certain amount for their services. An independent contractor typically works their own hours and days, does not use the employer’s equipment and is not trained nor told how to work by the person hiring them.
The company does not have to pay any payroll taxes for temporary workers. They enter into a contract with the temp agency. This contract states that the agency pays the employee. It also states that the temporary agency is responsible for payroll taxes for the temp.
In effect, the temp agency is the employer of the temporary worker and as such, this releases the company that hires temps from paying any benefits, and places this burden on the temp agency. This is a huge benefit for employers and makes up for the higher cost of staff brought on from employment agencies.
In addition to the payroll taxes they collect from their pay, they may also offer health insurance. If so, this would be deducted as well. This will vary from one temp agency to another. Employees who work on ‘long term temporary positions’ may even be offered 401Ks and be provided with paid vacation time and holidays.
8. What if the company I temp with wants to hire me full-time?
If your skills are matched well enough to the company where you are working as a temporary employee, you may be fortunate enough to be offered permanent employment with that company. The company’s human resources officer will contact the temp agency where you’re employed and inform it that they want to hire you.
Should this happen, if you want to know how temp agencies work in the background; the company will typically pay a fee to hire you, typically 25% of your yearly salary. This can be a substantial sum, so even if you become crucial to the organization, don’t feel bad if they do not hire you full time.
Some temp agency clients may actually use the agency to test a worker before deciding whether to hire them or not. When they decide they want to do so, the temp agency releases you from its employment, freeing you to work for your new employer.
9. Use all temporary jobs to expand your network
Now that you know how a temp agency works, you should feel more confident about updating your resume, putting on a professional outfit and visiting several temp agencies in your community. Don’t forget, while working jobs through a temp agency, expand your network and meet as many people as you can in your industry.
– By Jeremy Coleman
If you are starting a staffing agency or work for one and are looking for a place to post your available job openings, we recommend posting on Indeed.com.