Last updated: October 29, 2026
By Tom Kenaley, Senior Partner and President, KORE1
Before signing a staffing agreement, read five clauses first: conversion and buyout terms, non-solicitation, notice to end an assignment, insurance and liability, and timesheet approval and payment. Everything else in the document is boilerplate.
Fair warning. That’s not a dig at the rest of the contract. Most of it really is standard language that any competent agency’s counsel would write the same way, boilerplate venue clauses and governing-law paragraphs that look nearly identical from one staffing firm’s template to the next no matter which coast they’re headquartered on. The five clauses above are where agencies actually differ. That’s where a hiring manager who skims the document finds out the hard way six months in. Not fun.
Every one of these terms shows up differently depending on which contract staffing engagement you’re signing into. A six-week project assignment and an open-ended contract-to-hire search read like different documents, even under the same master agreement, because the clauses that matter shift with the engagement type.
What Does the Conversion or Buyout Clause Actually Cost You?
A conversion or buyout clause sets the price you pay to hire a contractor directly onto your own payroll before the agency’s fee schedule says you’re free to. Agencies price this one of two ways. Some charge a flat buyout regardless of how long the person has been on assignment. Others run a declining scale, where the fee drops the longer the contractor has worked, until it hits zero.
KORE1 runs the second model. Declining to zero. A contractor converts to the client’s payroll at no additional charge once they’ve completed 1,040 hours on assignment, which works out to roughly six months of full-time work. Devin Hornick, a partner at KORE1, put it directly on a call about how this gets explained to clients. “If this person completes 1,040 hours, then they are eligible to convert over to full time with that particular company at no additional charge from KORE1,” he said.
Read the hours threshold carefully. Some agreements measure elapsed calendar time instead of actual hours worked, which sounds like a minor distinction until a contractor takes extended leave, drops to part-time for a few months to handle something personal, or the assignment pauses over a slow quarter and restarts three months later with nobody updating the paperwork. Ask which one your agreement uses. Don’t assume the clock is running the way you think it is.
This is also where contract-to-hire outcomes get decided, and the numbers are worth knowing going in. Across KORE1’s own placement history, 37.5% of contract placements eventually convert to a permanent hire, based on 552 tracked engagements. That’s not a universal industry figure, and you shouldn’t treat it as one. Our book. Not the industry’s. If your recruiter quotes you a conversion rate, ask whether it’s theirs or an industry average pulled from somewhere else. The two numbers are rarely close, and we’ve broken down what good actually looks like on our contract-to-hire conversion rates page.
Worth knowing going in: the median KORE1 contract assignment runs 116 days, based on 1,887 assignments tracked between 2019 and 2026. That’s under four months. Most contract placements never reach the 1,040-hour mark at all, which means the conversion clause, as generous as it is, only ends up mattering for the engagements that run long. Short assignments live or die on a different set of terms entirely, which is exactly why the next few clauses matter just as much.
What Does Non-Solicitation Actually Prohibit, and for How Long?
Non-solicitation clauses in staffing agreements typically restrict two things: you hiring the agency’s other contractors or employees outside the formal conversion process, and you poaching the agency’s recruiting staff. Not a non-compete. They shouldn’t read like one.
Scope is where these clauses go wrong. A reasonable clause covers the specific contractor placed with you, or staff you had direct contact with during the engagement, nothing broader than that. An overreaching one tries to cover the agency’s entire workforce, everywhere, for years, which is a very different promise than the one you probably think you’re making when you sign. Too broad. If you see “any employee or contractor of the agency” with no limiting language tied to your actual engagement, push back on it before signing.
Duration matters just as much. Twelve to eighteen months after the assignment ends is typical, long enough to protect the agency’s placement relationships without tying your hands on every hire for the next several years over one contractor who worked with you for a single quarter. Anything past two years needs a real answer, not just a signature.
Enforceability varies by state, and this is genuinely outside what a staffing agreement can promise you. Some states enforce non-solicitation terms close to as written. Others narrow them sharply or won’t enforce them at all against certain workers. This isn’t legal advice, and it shouldn’t be treated as a substitute for it. Have your own counsel confirm what a given clause actually does in the state where your business operates, especially if you operate in more than one.
How Much Notice Do You Owe to End an Assignment?
Most staffing agreements let either side end an assignment with short notice, often as little as 24 to 48 hours, because the underlying relationship is at-will on both sides and nobody’s locking anyone into a multi-year commitment over a single contract seat. Standard stuff. Usually in your favor as the client. What catches people off guard is what happens to billing in the gap.
Some agreements bill through the full notice period regardless of whether the contractor is still working. Others stop billing the moment you communicate the end date. Read which one applies. Don’t assume ending an assignment early saves you money starting that afternoon, because sometimes it doesn’t kick in until the notice window closes.
There’s a separate question buried in here, too: who decides when “notice” actually started. A phone call to your recruiter and a written notice sent to the agency’s main contract address can start the clock on different days under some agreements. Get the notice mechanism in writing and use it, even when the relationship is friendly.
Is There a Replacement Guarantee on Contract Staff?
Not on contract placements. None. KORE1 doesn’t offer one, and most agencies that are honest about their model don’t either. “The only SLAs that we have is that our people are going to show up on time, that we’re going to pay them on Fridays,” Hornick said. “As far as guarantees, there aren’t any. Not on contract.”
A trade-off. Not a gap. A guaranteed replacement on a contract role would mean the agency pricing in the cost of that promise across every single assignment it runs, whether the guarantee ever actually gets used on a given contract or not, and that cost would land somewhere in your bill rate whether you ever needed the protection. Contract staffing is priced as time and materials for a reason. SLAs on attendance and payment timing are the commitment that actually matches that model.
Direct hire placements work differently, and the contract runs a different clause entirely. KORE1’s direct hire fee is 20% of the placed employee’s base salary, and it carries a 60-day replacement guarantee. “There’s a guarantee of 60 days in which we will replace them at no additional cost,” Hornick said, describing that specific arrangement. If a direct hire doesn’t work out inside that window, for most cause-related reasons, the agency owes you a replacement search at no extra fee.
Confirm which model you’re actually signing. The two guarantee structures get conflated more often than they should, and a hiring manager who assumes contract staffing carries the same protection as direct hire finds out otherwise at exactly the wrong moment. Usually mid-project.
Which Insurance and Liability Terms Belong in the Agreement?
Simple question. Easy to miss. The core thing insurance and liability terms answer is who’s actually the employer of record, and what do they carry because of it. A properly structured W2 staffing arrangement means the agency, not your company, pays workers’ compensation, carries general liability coverage, and handles unemployment insurance for the contractor.
Ask for a certificate of insurance before the contractor starts, not after something goes wrong. A real COI names your company as an additional insured and shows current coverage dates, not an expired policy year nobody bothered updating since the last renewal cycle came and went without anyone noticing. If the agency can’t produce one on request, that tells you something about how seriously they treat the rest of the agreement. Worth noticing early.
Liability language should also spell out indemnification in both directions, not just protect the agency. A one-sided clause that shields the agency from everything while leaving you exposed is a red flag. Raise it before signature, not after.
How Are Timesheets Approved and Invoices Paid?
Small-sounding clause. Outsized friction. Timesheet approval causes more of it than it should. The agreement should spell out who approves hours, on what cadence, and what happens if approval is late. Vague language here turns into a Friday-afternoon scramble more often than it should.
At KORE1, contractors are paid weekly on Fridays regardless of whether the client has approved or paid the invoice yet. That’s a deliberate structural choice, not a courtesy. The agency fronts the payroll risk so the contractor’s paycheck never depends on your internal AP timeline, your month-end close, or whoever happens to be out sick the week an invoice needs sign-off. Not the contractor’s problem. Employers that run recordkeeping on their own payroll should know this isn’t optional under federal law either. The Department of Labor’s Fair Labor Standards Act recordkeeping rules require employers to track hours worked and wages paid, which is exactly the discipline a weekly timesheet-approval cadence is built to support.
Payment terms on the invoice itself are where the real negotiation usually happens: net 15, net 30, sometimes longer for larger accounts. Longer terms from you don’t change what the contractor gets paid. They change how long the agency is carrying that payroll cost before it’s reimbursed, which is worth understanding if you’re negotiating terms down just to shave a line item without realizing what you’re actually asking the agency to absorb on your behalf. The agency carries that float either way. It’s priced into the relationship somewhere.
Who Owns the Work Product?
Every staffing agreement should include an IP assignment clause stating that work product created by the contractor during the engagement belongs to the client, not the contractor and not the agency. This should be unambiguous. Don’t assume it by default if it isn’t explicitly stated.
The clause should cover code, documents, designs, and any other deliverable created specifically for your business during the assignment. It generally should not try to claim ownership of general skills, pre-existing tools, or open-source libraries the contractor brings to the work and uses elsewhere. We’ve gone deeper on how that distinction plays out in practice, and where it gets contested, in our breakdown of contractor IP ownership.
Clause Checklist
| Clause | What to Look For | KORE1 Position | Red Flag |
|---|---|---|---|
| Conversion / buyout | Hours-based or flat fee; measured in actual hours or elapsed time | No fee after 1,040 hours | Fee never reduces regardless of tenure |
| Non-solicitation | Scoped to your engagement; 12-18 month duration | Scoped per engagement | Covers the agency’s entire workforce indefinitely |
| Notice to end assignment | Notice period and whether billing continues through it | Short notice, billing stops at notice | Full billing continues after notice given |
| Replacement guarantee | Applies to direct hire only, not contract | 60-day guarantee on direct hire; none on contract | Vague language implying contract roles are guaranteed |
| Insurance / liability | Current COI naming you as additional insured; mutual indemnification | Agency carries workers’ comp, GL, unemployment | No COI available on request |
| Timesheet / payment | Approval cadence defined; contractor pay not tied to your AP cycle | Contractors paid weekly on Fridays | Contractor pay delayed until client pays invoice |
Legal review before signature is worth the time this list can’t replace. None of the above is legal advice. It’s a map of where the real differences between agencies live, so your counsel knows exactly where to spend their attention instead of reading all thirty pages cold.
What Hiring Managers Ask Before Signing
What should you actually check before signing a staffing agreement?
Five clauses carry almost all the risk: conversion and buyout terms, non-solicitation, notice to end an assignment, insurance and liability, and timesheet approval and payment. Everything else in a typical agency’s contract is close to standard.
Read those five first, even if you skim the rest. A hiring manager who focuses there catches the terms that actually differ between agencies, instead of re-reading boilerplate language that’s nearly identical across the industry.
How do conversion fees usually work?
Most agencies charge a declining fee that drops the longer the contractor has been on assignment, until it eventually hits zero. Flat buyout fees regardless of tenure still exist, but they’re less common than they used to be.
At KORE1, that threshold is 1,040 hours, roughly six months of full-time work, after which conversion carries no additional charge. Ask whether your agreement measures hours worked or elapsed calendar time. Not the same thing. The two aren’t interchangeable if the assignment has any gaps in it.
Is the non-solicitation clause even enforceable?
Depends on the state. Some states enforce these clauses close to as written, others narrow them sharply, and a few won’t enforce certain versions against certain workers at all.
That variance is exactly why this isn’t a question a blog post can answer for your business. Have counsel confirm it in whichever state your operations actually sit in, especially before assuming a clause written for one jurisdiction means the same thing in another, which it frequently does not even when the wording looks identical on the page.
What happens if you need to end the assignment early?
Most agreements allow either side to end an assignment on short notice, often 24 to 48 hours, because the relationship is at-will.
The part that trips people up is billing. Confirm whether charges stop the moment you give notice or continue through the full notice window regardless of whether the contractor keeps working. The agreement should also say who has to receive that notice, and how, for the clock to start.
Does the staffing firm carry its own insurance, or do you need separate coverage?
Usually not. A properly structured agency carries its own workers’ compensation, general liability, and unemployment insurance as the employer of record, so you shouldn’t need to add separate coverage for the contractor specifically.
Ask for a current certificate of insurance before the contractor’s first day, not after. If the agency can’t produce one, or hands you something expired, that’s worth treating as a signal about the rest of the document, not just the insurance section.
Signing a staffing agreement doesn’t have to mean reading all thirty pages with the same level of attention. Focus on the five clauses above, confirm the specifics match what you were told verbally, and reach out to our team if you want a second set of eyes on the terms before you sign.
