What Is a Temp Agency and How Does It Work?

A temp agency (temporary staffing agency) is a company that hires workers and places them in short-term or temp-to-hire jobs at client businesses. The agency pays the worker and bills the business a higher hourly rate, keeping the difference to cover payroll costs and profit. Workers don't pay a legitimate temp agency.

How temp agencies work

1. A business sends a job order (role, hours, pay, start date)
2. The agency recruits, screens and sometimes tests candidates
3. The agency places a worker at the business
4. The worker is on the agency's payroll; the agency pays wages and taxes
5. The business pays the agency a bill rate per hour
6. Some placements become permanent (temp-to-hire)

Types of staffing agencies

How temp agencies make money

The agency's bill rate is usually the worker's pay plus a markup (often 25%–75%). The markup covers payroll taxes, workers' comp, benefits, recruiting and profit. For permanent placements, agencies charge a fee, often a percentage of first-year salary.

For workers

Temp agencies help you find work quickly, try different employers and sometimes get hired permanently. Learn more: How to get hired through a temp agency and Do temp agencies cost money?.

For businesses

Temps help cover busy seasons, absences and projects without long hiring processes, and let you try workers before hiring.

Frequently asked questions

What are temporary agencies?

Companies that employ workers and place them in temporary jobs at client businesses.

How does a temp agency work?

The business pays the agency, the agency pays the worker, and the agency handles recruiting and payroll.

Who pays you when you work through a temp agency?

The agency pays your wages.

What is temp-to-hire?

A temporary job that can become permanent if both sides are happy.

How do staffing agencies make money?

By billing businesses more per hour than they pay workers.