For hiring managers looking for temp labor, the cost effectiveness of temp agencies is important but often confusing. So we collected the need-to-know information on typical fees that temp agencies charge employers.
How Temp Agencies Charge Employers
The most common way temp agencies charge employers for temp workers is by adding a markup fee to the workers wages. These fees typically range from 25% to 100%. For example if a worker's wage was $15 an hour, and the agency markup fee was 50%, the business using the temp would pay $22. With $15 going to the worker and $7.5 going to the temp agency.
Another common temp agency fee is the conversion fee, also known as temp to hire or contract buyout fee. A company pays this fee when they find a temp worker they want to hire on full time. These fees are usually large, because the staffing agency wants to keep their temps.
The average conversion fee is between 15% to 25% of that employee's first year salary. For example, if the workers yearly salary is $15,000 the conversion fee of 25% would result in a fee of $3,750.
More fees temp agencies charge include administrative fees, minimum hours requirement fees, and overtime fees. Temp agencies will often charge an administrative fee that covers onboarding, paperwork, background checks, and other management tasks.
The minimum hours requirement is outlined in the contract a business signs with the temp agency. So if a business’s needs change and they no longer need the temp worker, they can pay a fee, usually close to the price they would’ve paid the temp worker anyway, to not use the temp worker for the length of the contracted time.
Overtime rates are paid when a temp worker works over the amount of hours outlined in the contract. These fees are usually paid at premium rates for the extra hours the worker worked.
Types of Temp Agency Fees
- Hourly Markup Fees
- Temp to Hire/Conversion Fees
- Administrative Fees
- Minimum Hour Requirements Fee
- Overtime Rates Fee
Tip: Ask about these fees upfront to avoid unexpected costs. You deserve complete transparency when working with temporary labor.
Alternative Staffing Solutions
Though temp agencies have been around for a long time, and have been the go to option for businesses looking for temp labor, they are not the only staffing solution. On-demand staffing apps are a flexible and cost-effective solution to temp labor. On-demand staffing apps, like BACON, build on the benefits of temp agencies and fix the challenges of temp agencies.
BACON has a transparent pricing model, businesses are charged a set 40% hourly markup fee that is added to the workers wage. There are no hidden fees, administrative fees, minimum requirements fees or conversion fees.
Types of BACON Fees
- Hourly Markup Fees
This means that on-demand staffing is significantly more cost-effective than traditional temp agencies. Businesses that use BACON can create a flexible, personalized staffing model to meet their staffing needs while saving more than $120,000 in fees.
What is On-Demand Staffing
On-demand staffing are platforms that allow businesses to post the shifts they need filled onto the app. Workers then receive notifications on the posted shifts and apply for the shifts they are interested in working. With on-demand staffing app BACON, businesses only pay for the shifts that are worked, avoiding minimum hour requirements and other fees, creating a more cost-effective model.
BACON is cost effective because it also allows managers to have complete control over their shifts. If a business needs workers the first two weeks of the month but not the last two, the manager can simply post shifts for the first two weeks and not post shifts for the last two.
Hiring managers who use BACON gain more control over labor needs, with the option to scale staffing up or down based on demand without incurring extra fees. BACON is a seamless fit for a range of industries including, warehouse temp staffing, events temp staffing, catering temp staffing, cleaning temp staffing, and general labor temp staffing.
Temp agencies charge businesses a list of fees for temp labor. These fees include markup fees, conversion fees, overtime fees, minimum requirement fees, administrative fees, and more. On-demand staffing apps, like BACON, only charge markup fees. Creating a more cost-effective staffing solution. With the added benefit of having more control and flexibility with their temp staffing.
