Virtually all recruiters are paid by the hiring company, not the candidate. There may be a few “job placement services” that offer services directly to candidates for a price, but these are relatively rare and tend to focus more on improving your resume and developing your interviewing skills. The vast majority of recruiters will never charge you, and if you find one that does, make sure you understand what you’re paying for.
For direct hire opportunities, the recruiter will usually be paid a fee based on your first year’s pay. The company hiring for the role already knows what salary range they want to pay for the position and what they will pay the recruiter before you are even contacted. Remember also that the hiring company is working with a recruiter because they are struggling to find the candidates they need for the positions they have open. If you are recruited for a position, know that the hiring company wants the process to be a good one so that you arrive happy to be there.
For staffing or “temp” positions, the recruiter’s fee is most likely based on the hourly rate you are paid. The exact percentage varies widely depending on the client company, the staffing agency, the type and duration of the position, and a variety of other factors. So, why do recruiters get paid for this?
There are many costs covered by the recruiter’s fee. First, the staffing agency needs to pay the recruiter (including a desk, a computer, a phone, etc.). Second, provided you are a W2 employee, they pay for taxes, health insurance costs, paid time off, and any other benefits that come with the position (don’t forget to ask about these!) Then, there are the other expenses like office space, professional insurance, and additional support resources (like HR, Finance, IT) – these costs add up. Staffing companies cover all of these costs through the recruiting fees they charge their clients. Most client companies negotiate the fees they are charged, but not the base rate for your pay as the employee. As a candidate for a job placed through a recruiter, you shouldn’t expect to negotiate that fee; each staffing company likely has built their infrastructure, support team, benefits, etc. based on what they expect to charge per employee. You should not expect to be told the details of this fee.
There are a lot of industry terms in the recruiting and staffing world. If you want to learn more, refer to this glossary of recruiting terms that we’ve been building.
*This content was originally written as a guest post on Mac’s list, available here: https://www.macslist.org/for-employers/hiring-decisions-should-you-use-a-recruiter-or-staffing-agency-to-hire-new-employees