Staffing Agency vs Recruitment Agency: Which Do You Need?

Who employs the worker

With a staffing agency, the worker is on the agency's payroll. The agency pays wages, withholds taxes, carries workers' compensation and issues the W-2, while the worker takes direction from your supervisors at your site. The Bureau of Labor Statistics counted 945,000 temporary help agency workers in July 2023, 0.6 percent of total employment.

That arrangement does not move every obligation to the agency. OSHA says staffing agencies and host employers are jointly responsible for a safe workplace for temp workers, including training, hazard communication and recordkeeping. The EEOC's guidance on workers placed by staffing firms says they typically count as employees of the staffing firm, the client or both, and that neither may discriminate against them.

With a recruitment agency, the person you hire is your employee from day one. They are on your payroll, your benefits plan and your handbook. The agency's work ends once the placement is made, apart from any guarantee in the agreement.

Temporary vs permanent roles

The simplest test is how long you need the person.

• A few days to a few months, or an unknown length: a staffing agency. Peak season, covering leave, a project with an end date and a new contract whose volume you cannot predict all fit here.
• A permanent role you want to keep filled: a recruitment agency, or your own hiring. Team leads, office staff, sales reps and experienced hourly workers who are employed today usually want a permanent offer.
• A permanent role where you want to watch the person work first: temp-to-hire through a staffing agency. Our comparison of temp-to-hire vs direct hire covers when the trial period is worth its cost.

How each gets paid

A staffing agency bills a rate per hour worked, made up of the worker's pay plus a markup. The markup covers payroll taxes, unemployment insurance and workers' compensation, then recruiting, overhead and profit. You pay it for every hour the person works. Our guide to staffing agency markup rates explains how to read the numbers.

A recruitment agency is usually paid once per hire. With contingency recruitment, you pay only if you hire a candidate the agency introduced. With a retained search, part of the fee is paid up front. Fees are often a percentage of first-year pay or a flat amount per hire, and how much recruiters charge employers covers the published ranges and what to check.

Over a short assignment, the hourly markup usually costs less. Over a long one, the markup keeps adding up while a placement fee is paid once.

Speed and candidate pools

Staffing agencies are built for speed in hourly work. They keep a pool of people who have already been screened and want shifts now, so they can often fill entry-level roles at short notice. The pool is mostly people available right now, which suits temporary needs.

A recruitment agency usually takes longer because it runs a search, screens for the specific role and coordinates interviews and an offer. Its reach is wider for permanent roles, since a recruiter can approach people who are employed and would only move for a better permanent job. If the role needs experience, a license or a track record, that wider reach matters more than speed.

Check how the agency is set up

Licensing rules differ by state and city, and they can tell you which model an agency runs. In New York City, for example, the Department of Consumer and Worker Protection requires an employment agency license for businesses that help people find jobs for a fee. Staffing agencies that employ and hire out their own workers do not need that license, and neither do employer-paid agencies that place commercial, clerical, executive, administrative or professional workers and never charge the worker a fee, though those must follow New York State employment agency law.

Wherever you hire, ask the agency who will employ the worker, who pays them, and whether candidates are ever charged anything.

Using both at once

Many employers use a staffing agency and a recruitment agency side by side. A contact center might staff a seasonal surge with temps while a recruiter fills team lead and permanent agent roles. A distribution center might cover peak with temp pickers while hiring its leads and forklift operators directly.

1. List each role and how long you need it filled.
2. Send short, seasonal and uncertain roles to a staffing agency.
3. Send permanent, skilled and lead roles to a recruitment agency or your own hiring.
4. Agree conversion terms with the staffing agency in case a temp turns out to be someone you want to keep.
5. Review the split each quarter. A role that has been staffed with temps all year is a candidate for a direct hire.

If you are also deciding whether to hire some roles yourself, our guide to recruitment agency vs in-house hiring covers that choice.

How Optihire Staffing works

Optihire Staffing is a recruitment agency for permanent non-IT roles across the United States, including customer service, administration, sales and frontline teams. The people we place join your payroll. We work on contingency, so you pay a recruitment fee only when a successful candidate is hired, under terms agreed in writing before any work starts. Candidates never pay us.

Read how we work with employers, or submit your hiring requirements for the permanent roles you need filled.