Contingency Recruiting Agreement: Clauses to Check

The fee and when it is earned

Under a contingency agreement, the fee is owed only if you hire a candidate the agency introduced. The clause should say exactly how the fee is worked out and which event makes it payable.

• The amount. A percentage of pay or a flat fee per hire. For published ranges, see how much recruiters charge employers.
• The fee base. A 2025 article in Insurance Journal notes that some contracts calculate the fee on base salary and others on estimated total first-year compensation. A 2017 review of agency agreements by the law firm Gordon Feinblatt advised specifying that only base salary counts. For hourly roles, state the hours assumed and whether overtime is included.
• The trigger. The fee might be earned on the offer, the acceptance or the first day of work. Gordon Feinblatt said there are normally no circumstances where it would be appropriate to pay an agency before the employee begins work.
• Any other charges. A true contingency agreement has no upfront charge. Check for advertising, assessment or administration fees.

Gordon Feinblatt also suggested the agreement spell out what the agency has to do to earn the fee, and that the agency agree to comply with the laws that apply to its work.

Candidate ownership and the referral window

This clause decides whether you owe a fee when the same person reaches you more than one way. The agreement should define an introduction and how long it lasts.

• What counts as an introduction. A written submission naming the candidate for a specific role is clearer than a mention on a call.
• The window. This is how long after an introduction the agency can claim a fee if you hire that person. Gordon Feinblatt called a one-year window standard and said the obligation to pay should not be open-ended or unreasonably long.
• People you already know. The same review said the employer need not pay a fee for specific candidates it had prior contact with. Agree how you will show prior contact, such as an application date in your tracking system.
• Other roles. Check whether the fee applies if you hire the candidate for a different position than the one you briefed.
• Duplicate submissions. If you use more than one agency, agree that the first written introduction wins, and tell each agency when a name has already reached you.

Exclusivity

A non-exclusive search lets you use other agencies, job ads and referrals at the same time. An exclusive one gives a single agency the role for a set period, and some agencies ask for that in return for other terms. The Insurance Journal article opens with an example of an offer of no money up front but six months of exclusivity.

If you agree to exclusivity, pin down the details:

• Which roles it covers, and for how long.
• Whether you can still hire people who apply to you directly or come through employee referrals, and whether a fee is owed if you do.
• What the agency commits to in return, such as a shortlist by a date or regular progress updates.
• How either side can end it early.

The guarantee

The guarantee clause says what happens if the hire leaves or is let go soon after starting. Check the remedy (a replacement, a full or prorated refund, or a credit), the length, when the clock starts and what voids it. Insurance Journal describes guarantees that start on the first day of employment and run between 30 and 180 days, while Gordon Feinblatt recommended employers ask for six months to a year and seek a refund if the employee resigns or is terminated for reasons other than lack of work.

Our guide to recruiter guarantee periods covers the common exclusions and what to do if a placed hire leaves early.

Payment terms

• Due date. Insurance Journal calls a 15, 30 or 45 day payment window standard. Gordon Feinblatt suggested full payment within a set number of days after the employee begins work.
• Method. Insurance Journal says check and ACH are most common, and a service charge is likely if you pay by card.
• Late payment. Look for late fees, interest and collection charges, and above all for conditions that void the guarantee if you pay late.
• Installments. If the fee is split, Gordon Feinblatt suggested the first payment fall no earlier than 30 days after you receive the invoice.

Make sure the payment clause and the guarantee work together. If you must pay before the guarantee window closes, you are relying on the refund process if the hire leaves.

Other clauses to read

• Indemnification. Gordon Feinblatt suggested seeking indemnification from the agency, or making an existing indemnification clause mutual.
• Disputes. Agencies often require disputes to be heard in their home jurisdiction, and the same review said arbitration clauses should not be blindly accepted. Check the venue, the governing law and any attorney's fees clause.
• Term and termination. How the agreement ends, and whether the referral window survives after it does.
• Confidentiality. How the agency handles the information you share about your business, the role and candidates.
• Non-solicitation. Whether the agency agrees not to recruit the people it places with you, and for how long.

What to get legal review on

Recruiting agreements are contracts, and the terms vary between agencies and states. An employment attorney is worth involving when the agreement includes exclusivity, a long or open-ended referral window, a fee based on total compensation, payment due before the start date, automatic renewal, indemnification or a dispute clause that sends you to another state.

For how the search itself runs once the agreement is signed, read how contingency recruitment works. If you are still deciding between a recruiter and a temp firm, see staffing agency vs recruitment agency.

How Optihire Staffing handles terms

Optihire Staffing works on contingency for permanent non-IT roles across the United States, from sales representatives and account managers to office, customer service and frontline staff. There is no fee until you hire a candidate we introduced. We agree the fee, when it is due, how introductions are recorded and what happens if a placement does not work out with you in writing before any work starts.

Use the checklist above when you read our terms. Contact us to ask for them, or submit your hiring requirements and we will send them with our first reply.