A temp-to-hire conversion fee is what a staffing agency charges when you hire one of its temporary workers directly onto your payroll. It exists because the agency invested in recruiting and screening that worker, but the terms vary widely, so it pays to understand them before you sign.
How Conversion Fees Usually Work
- Flat fee: a set dollar amount at conversion.
- Percentage of salary: a share of the worker’s first-year pay.
- Sliding scale: the fee drops the longer the worker has been placed, often reaching zero after a set number of hours or weeks.
Terms Worth Negotiating
- Waiver period: ask when the fee disappears, such as after 520 hours or 90 days.
- Buyout clarity: know the exact cost if you want to convert early.
- Guarantee: a replacement or partial refund if a converted hire leaves quickly.
- No-penalty evaluation: confirm you can end the assignment without a fee if the worker is not a fit.
Why Temp-to-Hire Is Worth It
Seeing a worker’s attendance, skill, and attitude in real conditions lowers the risk of a bad hire. A fair conversion structure lets you hire proven people at a predictable cost.
Red Flags
- Fees that never expire
- Penalties for hiring a worker after the assignment ends
- Vague language about what counts as a direct hire
See how we handle temp-to-hire on our corporate staffing solutions page.
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