By Gordon Kramer, COO · Last updated: August 2026
Most staffing agencies charge the employer a fee calculated as a percentage of the new hire's first-year salary. The candidate never pays anything. Fee levels vary by agency, role, and search type, and are quoted per engagement. What we can promise: you'll get our number in writing in the first conversation, with nothing hidden in the fine print. Below is exactly how each fee type works, so you can walk into any staffing conversation knowing what you're looking at.
A direct-hire fee is a one-time charge for a permanent placement, invoiced when your new hire starts. The fee is a percentage of first-year base salary, and that single number covers the full search: role scoping with you, sourcing from a network we've built since 1979, interviews, reference checks, shortlist presentation, offer support, and a replacement guarantee if the placement doesn't work out. ◆ [Guarantee terms.]
Two things the fee is not: it is not deducted from the candidate's salary (their offer is their offer), and it is not an ongoing charge. Direct-hire fees are one-time.
Temporary staffing is billed hourly. You agree to a single bill rate per hour; the temp professional is a W-2 employee of Palo Alto Staffing, and we pay their wages, employer payroll taxes, workers' compensation, and benefits out of that rate. The difference between the bill rate and the candidate's pay rate covers those employer costs plus our service: vetting, payroll, replacement if someone isn't the right fit.
Temp-to-hire lets you work with someone before committing. If you convert a temporary employee to your permanent staff, a conversion fee applies. Ours decreases the longer the person has been on assignment with you, stepping down with hours billed until it reaches a modest flat fee, because you've already been paying for the placement through the hourly bill rate. We put the full schedule in writing before your first assignment starts, so you can plan the math from day one.
Whether you sign with us or anyone else, check these seven things before you sign:
1. The fee, stated as a number in writing, early. If an agency won't commit to a number before you've invested weeks, ask why.
2. Guarantee terms: what happens if the hire leaves or underperforms in the first 90 days?
3. Conversion terms: what does it cost to hire a temp permanently, and how does it decrease?
4. Who counts as "introduced": how long after an introduction does a fee still apply (typically 6 to 12 months)?
5. Payment timing: on start date is standard; be wary of fees due before a candidate starts.
6. Exclusivity: understand exactly what you're granting and for how long before agreeing to it.
7. Replacement vs. refund: know which one the guarantee actually promises.
Staffing fees are treated like a secret in this industry, which mostly benefits agencies. We handle it differently: ask, and you get our number in writing in the first conversation, along with the guarantee and conversion terms. No discovery calls to discover the price. Since 1979, that has been the faster route to a good placement for everyone involved.
Who pays the staffing agency fee?
The employer, always. Candidates never pay a fee to be placed by Palo Alto Staffing. That's true of every legitimate staffing agency in the United States.
What does it cost?
A percentage of first-year base salary for direct hire, paid by the employer, quoted per engagement. You'll have our number in writing after the first conversation.
What does the guarantee cover?
◆ [Exact guarantee terms.]
How fast can you place someone?
Temporary placements can often start within days. Direct-hire timelines depend on the role and market; we'll give you a realistic timeline in the first conversation.
Can I hire my temp permanently?
Yes. A conversion fee applies and decreases the longer they've been on assignment; you'll have the schedule in writing before the assignment starts.