There’s a good chance you’ve run into staffing agencies at some point. You may have gotten a random message through Linkedin, your email, or seen a posting on job boards.



Some of the most common names in staffing are Aquent, Creative Circle and 24 Seven. Staffing agencies offer some alluring promises: consistent work, top-tier projects, exciting opportunities, and even health insurance. But let’s get real: if it sounds too good to be true, it probably is.



The presence of staffing agencies has grown a lot in the past few years, and I think they’re trying going to try even harder to have a hold in the motion design market. I’ll walk you through how these agencies operate, what pros and cons they offer, and some inside practices you should be aware of.



I’ll go into as much detail as I can without getting sued :)



Why Do Companies Use Staffing Agencies?

There are two main reasons for a company to use a staffing agency instead of hiring a freelancer directly.

1. Using staffing agencies simplifies the legal and financial process. If a large company wants to hire a freelancer, there’s a large amount of documentation, paperwork, and billing processes that have to get approved. A staffing agency reduces a lot of that friction for companies. Once they set up a system with a staffing agency, it’s much easier for them to manage legal work, payroll, taxes. Staffing firms smooth out those processes.



2. Staffing agencies offer talent on demand, and can work quickly to find creatives. If a company needs a motion designer ASAP, a staffing agency can move quickly to fill that role. The staffing agency has a rolodex of names to pull from at a moment’s notice. Companies rely on a staffing firms to be their personal headhunters.



Let’s run through a hypothetical scenario.



When you sign up to work with a staffing agency, the first thing they do is a portfolio review. They want to know what skill sets you have that align with their client base. Are you a print designer, editor, or motion designer? They’ll usually provide some paperwork with info on all of the benefits they offer, such as health insurance and retirement accounts. Sounds great! After an extensive background check, they’ll put you on their rolodex of talent.



Now, let's say Company X realizes they need a motion designer by next week. They'll call up the staffing agency to see if anyone’s available. If the staffing agency thinks you're a good fit, they'll put you on the project. Here’s where things get tricky.



The Markup

If you agree to take on the project, the staffing agency will take your rates and mark them up by about 50% to Company X, and pocket the difference. Here's one review from Glassdoor:



Unfortunately, it’s in their best interest to hike up the charges to the client, and cap your rate by setting limits. By relying on a staffing agency to find you work, you’re leaving money on the table that the client was willing to spend. Furthermore, whatever rate you give the agency is the rate you’ll be locked into. If you’re a freelancer, you can raise your rates as high and as often as the market will accept. But if you’re under a staffing agency, they'll want you to keep or sometimes even lower your rate.



From one freelancer:

“I have had a few good projects come from them but recently it seems like they undercut every job until they are paying a little as possible to whomever ends up getting the job rather that paying the right person at the right hourly rate. They'll ask you to take less on one particular job and then every job after that will be at that low rate. Then they'll undercut again a month later...I finally told them I would not continue to cut my rates. It just isn't worth it. I'd rather spend my time looking for direct client work.”

While these companies are lowballing creatives, they’re also raking in money hand over fist.

If you do decide to move ahead and work onsite at company X, the staffing agency will make you fill out extensive paperwork, and put you through a“employee training”. Remember, you’re technically an employee of the staffing agency. They make it very clear that you work for THEM, and have to behave as such. Sometimes this even includes taking a drug test.



Going Full-time

When it comes time for payment, the staffing agency is going to categorize you as a “full-time” W4 employee. The one perk here is that you can get weekly direct deposit payments. If you’re used to chasing down accounting departments, then this will be a welcome change. The downside is that you don’t get the same tax write-offs for business expenses, and it may be very different than how you’re used to paying taxes as a freelancer.



What About Benefits?

Let’s say you end up working with company X for longer than a month, and end up staying there for a while. This is what they would call a “long term commitment”, which is usually more than 2-3 months. At this point, you qualify for health insurance, a retirement account, and some other benefits. Sounds great on paper, but again - there is a catch.



The health insurance plan isn’t what you’d get from a normal full time gig. Here’s how they set it up: for every hour you clock in at work, the staffing agency will put about $3 towards your weekly health insurance cost. This means that if you work a full 40 hour week, the majority of your health insurance is covered. But, if you work less than 40 hours, or take a couple of weeks off, all of that cost gets taken out of your next pay check, effectively slashing your take home pay. A standard health plan for a spouse and dependent can cost up to $1,200 a month, even AFTER the agency pays for their portion. At that point, you may as well freelance and buy your own plan. When these agencies say they offer “health insurance” you shouldn’t be expecting the same thing you’d get as an actual full time employee.



Retirement Accounts

Many agencies will tout a 401k as part of their "benefits" package. What they won’t tell you is that there’s no company match. Obviously, it's a good idea to invest money into a 401K, but by not getting the match, you’re not really getting any huge benefit from the staffing agency. The whole point of getting a 401K with an employer is to get the match.



Other Benefits

You’ll also foot the majority of the bill for things like dental, vision, and disability insurance. The larger issue with benefits under a temp agency is that they’re not designed to be permanent. You only keep them if you work a certain number of hours under the agency. And if you have a slow period between projects, you could lose them altogether. Is it really worth having benefits if they’re tied to project that could drop at any second?

Getting Hired