Q&A: How Do Temp Agencies Work?

Updated February 16, 2023

In the last few decades, short-term job positions have developed significantly. The “gig” economy makes it easy for people to set their own hours and pursue multiple interests, while internships give college students and entry-level candidates the necessary experience to find a full-time job.

Another type of flexible employment is temporary work, which is a time-limited position, usually lasting 6 months or less. In this article, we will discuss temp agencies, how they work and why working for a temp agency may be a good option for certain employment needs.

What is a temp agency?

Temporary agencies or "temping" agencies specialize in finding short-term labor opportunities and sending qualified candidates to these propositions. Companies often need extra sets of hands but only for a short time. Instead of hiring and firing people, or going through a lengthy hiring process themselves, these companies turn to temp agencies for their staffing needs. Some needs temp agencies may fill include:

Seasonal hiring

Retail and food services companies might request a few employees from a temp agency during the busiest weeks of the holiday season. If the employee’s work is satisfactory, the temp agency will likely place them somewhere else within a few weeks.

Hiring by experience or skill set

While many temp agencies work with entry-level job candidates, some companies specialize in candidates with specific skill sets. For example, a large Fortune 500 company might want to bring on a project manager for a six-month project. These types of short-term, high-commitment positions can be hard to fill.

Providing opportunities for all schedules

Temp agencies can also be ideal for people who need specific work hours and may require a flexible schedule, night or weekend work or seasonal work. For example, a teacher might contact a temp agency for a summer job to help them earn some extra money when school’s not in session.

How do temp agencies work?

Every temp agency has its own methods and protocols; however, if you are thinking about working for one, there are a few common elements you should keep in mind.

Temp agencies charge employers, not employees

The first thing you should know about working for a temp agency is that you should not be charged to be part of their talent pool. This is because you are not the customer, you are the product, offering your services to organizations looking for talent like you. Temp agencies simply exist to connect you to the right clients.

Companies turn to staffing agencies when they do not want to dedicate resources to the hiring process. They may not have time to post on job boards, sort through dozens of resumes and interview potential people. This is especially true if the company is looking for part-time or temporary work. Hiring through an agency also saves time when people are needed for a short-term project, like when an employee is on maternity leave or during peak seasonality.

To save time, the company pays a fee to the temp agency to supply a pre-approved employee to fill their talent needs. Then, they pay the agent, rather than the employee, for the work. If your agency offers any benefits along with your payment, it will come from them and not your employer. For the most part, this means that most temp workers have similar pay rates and benefits.

You are employed by the temp agency

Even though you may be placed within a company and show up to their workplace every day, you are still employed by the temp agency. The company that contracts with the agency might have paperwork recording your time there, but they are not responsible for your pay, benefits and other issues.

The temp agency has an established system to make sure their workers get paid at a set time. This is good news for employees who take multiple jobs from the temp agency. If your information is already set up, then you can keep getting paid with relative ease, no matter where you work.

While you may be able to bring certain HR issues to the company that you work for, you can also bring your problems to the agency. They will address the issue with the company and take the necessary steps to solve any complaints.

More good news is that you can still put the contracting company on your resume. You can talk about the skills you developed there and use the company’s brand and employer recommendations to help you secure a full-time job in the future.

Temp agencies do not offer guaranteed employment

Most people think that if they sign up for a temp agency, they will be called and placed immediately. This is not always true. You will likely go through an interview and vetting process to determine your skills and then meet with a recruiter to discuss your goals. The recruiter will work to place you in a suitable position.

It is in the temp agency’s best interest to send top candidates to their clients. If a company is not happy with the candidates that an agency sends, they might stop hiring temps through them. The agency’s professional reputation depends on the success of its employees.

You will work with professional hiring managers

Professionals who work for temp agencies as recruiters specialize in hiring people. They spend their days evaluating candidates and learning to recognize potential matches and red flags. These people also track the success of their placements and learn how to identify good hires over time. This means that you need to be prepared for every interview.

Make sure you arrive at your interview with a resume on-hand or send a resume ahead if you have a call or video interview planned. Even if they already have your resume, this shows that you are invested and prepared to provide whatever they may need.

During the interview process, make sure you highlight your skills and strengths. Your recruiter might want to place you in a specific role because of this skill set or have more roles open to you because of what you can do. Be open and honest about what you can do and the contributions you can offer.

You need to put your best foot forward

Not only do you want to put your best foot forward to impress the recruiter and stand out so you get placed, but you also want to do your best for the company you work for. Your assigned employer will likely submit employee reviews of your performance and the performance of other temps. They will compare your work to other hires. By doing your best, you can earn a positive review and a potential recommendation in the future.

A good work ethic can help you grow your relationship with the temp agency. For example, if you do an outstanding job with a six-week seasonal position, your name will move to the top of the list the next time that the agency has space to fill. Some people work closely with their recruiters for years because the recruiter knows that they can trust the worker and the worker knows there will always be work for them.

Some companies specialize in “temp to hire”

While some people enjoy the flexibility and dynamic nature of temp work, other people want something more stable, and only work with the temp agency to cover their immediate expenses. If this is the case, talk to your agency about any potential “temp-to-hire” positions. These are positions where the company wants to test out a potential employee and see if they are a good fit before taking them on full-time.

“Temp-to-hire” positions are ideal for companies that are considering expanding their workforce but are not sure if they can afford it or if the extra work will benefit the company. As a temp in this situation, it is your job to prove your value to the company. Show them that you are an essential staff member who they cannot afford to lose.

If a company decides to hire you, then your contract with the temp agency will end. You will start to get paid by your new employer and receive benefits through them.

How do staffing agencies work?

Staffing agencies are different than temp agencies. While many staffing agencies work to fill temporary positions, not all temp agencies can handle staffing. In a staffing agency, a company pays the agency to review, interview, and submit a handful of candidates for a particular job.

The main company then interviews these candidates and decides which one(s) to hire. The hired candidate works for the company that hired them, not the staffing agency. The employer is the main difference between a staffing agency and a temp agency, other than the fact that work at a temp agency is not permanent.

Staffing agencies might fill several open positions or just one or two. In staffing agencies, it is in the agencies’ best interest to send candidates that the employer will hire and will stay at the company. If the staffing agency sends employees who are not qualified, then the company will stop using them. In some cases, it is harder to get selected as a potential candidate by a staffing agency, as they are extremely careful about who they take on and recommend to their clients.

Related: What Is Direct Hiring?

Whether you are trying to find full-time work through a “temp-to-hire” position or just want to make extra money by working on a few set projects, temp and staffing agencies can help you meet employers who want to work with you. As long as you work hard and do your best, they will be willing to recommend you as an employee. If you are hoping to find temporary work or to find an entry-level position in a new industry, temp work could be an excellent choice for you.