CPC Contract Negotiation & Placement Agreements 2 — Questions and Answers
Question 1: In a temp-to-perm conversion, a client who directly hires a temporary worker typically owes the staffing agency:
- No fee, since the original temp assignment was already paid
- A conversion fee as specified in the original staffing agreement (Correct answer)
- Only the remaining weeks of the original assignment billing
- A fee equal to the worker's first month of permanent salary
Correct answer: A conversion fee as specified in the original staffing agreement
Most staffing agreements include a conversion fee clause that requires the client to pay a fee if they directly hire a temporary worker, compensating the agency for sourcing and placing the individual.
Question 2: Which of the following is the most important element to define in a placement agreement to prevent fee disputes?
- The number of candidates the recruiter will present
- The exact definition of what constitutes a successful placement (Correct answer)
- The recruiter's sourcing methodology
- The candidate's right to negotiate salary directly
Correct answer: The exact definition of what constitutes a successful placement
Precisely defining what triggers a fee obligation — such as the candidate's first day of work or signing an offer letter — prevents disputes over whether a placement was 'completed' when issues arise.
Question 3: A 'split-fee arrangement' in recruiting refers to:
- Dividing the fee between the recruiter and the client equally
- Two recruiting firms sharing a placement fee after one provides the job order and the other provides the candidate (Correct answer)
- Billing the client in installments rather than a lump sum
- Splitting the fee between direct placement and retained search components
Correct answer: Two recruiting firms sharing a placement fee after one provides the job order and the other provides the candidate
In split-fee recruiting, one firm holds the job order and another firm provides the candidate; they agree in advance to split the client fee (commonly 50/50) when placement is made.
Question 4: A counter-offer clause in a placement agreement is designed to protect the recruiter by:
- Requiring the candidate to reject any counter-offer from their current employer
- Entitling the recruiter to a full fee even if the placed candidate accepts a counter-offer and does not join the client (Correct answer)
- Allowing the recruiter to renegotiate the fee if the candidate receives a counter-offer
- Preventing the client from offering more than the agreed salary range
Correct answer: Entitling the recruiter to a full fee even if the placed candidate accepts a counter-offer and does not join the client
A counter-offer clause ensures the recruiter is paid for their work even if the candidate declines the client's offer because their current employer counter-offers, since the recruiter fulfilled their obligation by presenting a qualified, interested candidate.
Question 5: An indemnification clause in a staffing agreement protects the client by requiring the staffing agency to:
- Verify all candidate credentials before presenting them
- Hold the client harmless from claims arising from the agency's negligent actions or omissions (Correct answer)
- Maintain liability insurance equal to the client's total payroll
- Guarantee that no placed candidates will file workers' compensation claims
Correct answer: Hold the client harmless from claims arising from the agency's negligent actions or omissions
Indemnification clauses shift financial liability for certain claims — such as those arising from the agency's misrepresentation of a candidate's qualifications — from the client to the staffing firm.
Question 6: When negotiating payment terms in a placement agreement, 'net 30' means the client must pay:
- Within 30 business days of invoicing
- Within 30 calendar days of the invoice date (Correct answer)
- After a 30-day probationary period for the new hire
- 30 days before the candidate's start date
Correct answer: Within 30 calendar days of the invoice date
Net 30 is a standard payment term meaning the full invoice amount is due within 30 calendar days of the invoice date, which typically coincides with the candidate's first day of employment.
Question 7: A prorated fee refund schedule in a replacement guarantee clause typically means the refund amount:
- Stays the same regardless of when the candidate leaves
- Decreases as the candidate stays longer through the guarantee period (Correct answer)
- Increases if the candidate leaves for reasons related to job dissatisfaction
- Is determined solely at the client's discretion
Correct answer: Decreases as the candidate stays longer through the guarantee period
A prorated refund decreases over the guarantee period, reflecting that the recruiter's obligation diminishes as the candidate proves successful — for example, 100% in the first 30 days, 50% in days 31–60, and 25% thereafter.
CPC Contract Negotiation & Placement Agreements 2
In a temp-to-perm conversion, a client who directly hires a temporary worker typically owes the staffing agency: