Staffing MSA — analyzed
This is a real-feel example of what LexGuard returns on a client master service agreement. Your own analyses are private and never shared.
Three high-severity clauses shift nearly all placement risk onto the agency: a short backdoor-hire window, an unconditional 90-day full-refund guarantee, and one-sided indemnity for contractor reclassification. Combined estimated exposure on a typical $92k placement: $18,400+.
Plain-English summary
Acme engages your agency on a non-exclusive, contingency basis for direct-hire and contract staffing. Your fee (22% of first-year salary) is earned only when a candidate completes 90 days of employment. Fee protection for introduced candidates lasts 6 months and does not extend to Acme's affiliates. You bear full responsibility for contractor classification, and payment is due Net-60 with no late-payment remedy.
Key points before signing
- 1.Your fee isn't earned at start date — it's earned after the candidate survives the 90-day guarantee period.
- 2.The backdoor window is 6 months and excludes affiliates — Acme's sister company can hire your candidate fee-free on day one.
- 3.The refund guarantee has no carve-out for layoffs: if Acme cuts the role in week 12, you refund 100%.
- 4.You indemnify Acme for 1099 misclassification even though Acme directs the contractor's day-to-day work.
- 5.Net-60 payment with immediate refund obligations creates a one-way cash-flow squeeze.
Red flags
Fee protection expires 6 months after introduction. Industry standard for perm placements is 12 months — if the client hires your candidate in month 7, no fee is owed. Redline: extend to 12 months and cover affiliates and subsidiaries.
If the candidate leaves for any reason within 90 days — including layoff or termination without cause — the full fee is refunded in cash. Redline: sliding scale (100/66/33 by month) and carve-outs for layoffs, restructuring, and termination without cause.
You indemnify the client for any IRS or state reclassification of 1099 contractors (including California AB5 / ABC-test findings) — back taxes, penalties, and defense costs — even where the client controls the work. Redline: mutual indemnity tied to each party's own conduct.
You're paid 60 days after invoice with no interest or collection-cost recovery, while your refund obligations are immediate. Redline: Net-30, late interest at 1.5%/month, and recovery of collection and attorney fees.