I was hired as an independent contractor (1099) with a recruiting firm. I am just getting started, so please help......I am paid on "commission only." I would like to know what is a "fair" commission structure for an independent contractor?

Here's my current structure:

The example: I place a $100,000/year candidate - the recruiting firm charges a 30% fee and gets $30,000.

Then here's my deal with the recruiting firm:

1. If I found either the candidate or the client I get 25% or $7,500.

2. If I find the client and the candidate, I get 50% or $15,000.

Is this a standard agreement? If not, can you please let me know what a standard commission agreement is for an independent (1099) recruiter?

Thanks so much!!

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Yes, that is fairly standard. You're getting 50% of what you bill.

But, do you go into their office every day? Or do you work from home 100%? If you are going into their office, then you should at least receive a draw against commission...basically an advance on commissions so you get a weekly pay check, that you reimburse when commissions come in.

Are you new to recruiting? If so, this is actually higher than most plans. Most agencies start new recruiters at 30-35% of what they bill, instead of the 50% that you are getting.

Now legally, I don't think they can consider you an independent contractor, if you are only allowed to work with them, you are an employee.

To truly be an independent contractor, you would work for yourself and act as a vendor to this agency as well as others, and in that scenario you'd be doing regular splits, where you'd get 100% of what you bill, so let's say in that situation you gave, if you had the candidate, you'd get half the fee, or $15,000.

But, if you have no experience, this wouldn't make sense.

Feel free to e-mail me directly if you have any questions. I worked on 100% commission for most of my 14+ years in recruiting, but when I worked at an agency, I had a draw against my commission.
Thanks Pam!!

I do not go into their office every day. I work from home exclusively. I am new to recruiting, but I am only getting 50% when I source both the client and the candidate - otherwise I am getting 25%.

Legally, you are right - I am in no way an employee based on my agreement with the recruiting firm, but they mention a "non-compete" clause that does not seem to allow me to compete with the recruiting firm - allowing me to source and find candidates on my own if I ever wanted to circumvent the recruiting firm.

Pam - can I send you a copy of the agreement to take a look at (of course the names will be changed to protect the innocent) - but you will get the idea.

So it seems like you think "half of everything" with the recruiting firm is equitable - a 50/50 split with them all the way around. Seems like the recruiting company really makes out when I source both candidate and client. And it also seems like they make a killing when they get 75% of what they bill when I source the candidate.

But I'm still learning though.........I just want to make sure this is fair for me because I do not know this business yet...

Thanks again so much for your help!!!!
I agree with Pam, based on your experience level the structure seems fair. The area I question, if you find the client and the candidate, have no draw, then it appears you are giving them 50% of your fee?

Scenario 1 seems good, if they fill your job or you fill their job, you get 25% (although 50/50 seems better).

There are a lot of factors in play here;

1. If you are new to the business, this is a great starting point.
2. If your end goal it to get your own business off the ground, then this is a good way to supplement your income.
3. Do you have current clients you are working with?

Best of luck, I may have went a tad off subject, but hopefully this was helpful.
Thanks Alex!

Yes. If I source client and candidate , I get 50%. I thought that was low too, but when I asked about it, they told me that "the house" takes 50% because they have the corporate structure, website, expenses, liability if the candidate renegs shortly after taking the job, etc. etc.

The factors you mentioned

1. I am new to the business.
2. Not sure I want to start "my own" business. The recruiting firm I am working with told me that I could "partner" with them down the road if things are successful. Or of course I could start my own business too.
3. I currently have a few clients that I sourced myself.

I just want to make sure I am not being taken advantage of because I am so new to this business. It seems like everything is relatively fair, given my lack of experience.

Thanks again Alex for your input.....

Alex Putman said:
I agree with Pam, based on your experience level the structure seems fair. The area I question, if you find the client and the candidate, have no draw, then it appears you are giving them 50% of your fee?

Scenario 1 seems good, if they fill your job or you fill their job, you get 25% (although 50/50 seems better).

There are a lot of factors in play here;

1. If you are new to the business, this is a great starting point.
2. If your end goal it to get your own business off the ground, then this is a good way to supplement your income.
3. Do you have current clients you are working with?

Best of luck, I may have went a tad off subject, but hopefully this was helpful.

Kaira,

Are you working their job orders, or yours? Do they also let you have access to their database of candidates - do they have one? If the resources and job orders are theirs, then 35% seems like it would be o.k.

If you bring in the job order and fill it, then I would try for a higher percentage.

Fair is like market value.  What a willing seller and a willing buyer will agree to.  Make some placements and bring in some job orders then you can make it as fair as you want it to be.  :)

Does anyone know what market value is in the NYC market for commission on temporary billing for a 1099 recruiter working both client and candidate?

 

If I may throw in my 2cents; if you're currently working from home 100 percent, why don't you just branch out entirely on your own, forget getting clients just focus on sourcing candidates for direct vendors or other recruiters/firms who have the job order then you take fifty percent of the entire fee, one deal can easily yield anywhere from six to twenty thousand depending on the job order. lets say ten grand average, do one a month and you're already at hundred and twenty thousand take home-well after miscellaneous expenses.

Michael Madrid said:

Thanks Pam!!

I do not go into their office every day. I work from home exclusively. I am new to recruiting, but I am only getting 50% when I source both the client and the candidate - otherwise I am getting 25%.

Legally, you are right - I am in no way an employee based on my agreement with the recruiting firm, but they mention a "non-compete" clause that does not seem to allow me to compete with the recruiting firm - allowing me to source and find candidates on my own if I ever wanted to circumvent the recruiting firm.

Pam - can I send you a copy of the agreement to take a look at (of course the names will be changed to protect the innocent) - but you will get the idea.

So it seems like you think "half of everything" with the recruiting firm is equitable - a 50/50 split with them all the way around. Seems like the recruiting company really makes out when I source both candidate and client. And it also seems like they make a killing when they get 75% of what they bill when I source the candidate.

But I'm still learning though.........I just want to make sure this is fair for me because I do not know this business yet...

Thanks again so much for your help!!!!

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