Employment Agencies (New York State)

  
     

Kinds of Employment Covered by this Report

Several provisions in New York State law affect different types of employment. The laws described in this report apply only to what is known as "Class B" employment -- commercial, clerical, executive, administrative and professional employment, and all employment outside the continental United States.

This report does not cover domestic and household employees, unskilled and untrained manual workers, non-professional trained or skilled industrial workers and mechanics, and theatrical or nursing employment.

What is an Employment Agency?
The New York State law regulating employment agencies applies to any person who, for a fee, renders vocational guidance or counseling service and who, directly or indirectly:

1)   procures or attempts to procure employment;

2)   represents that he/she has access to, or the capacity to gain access to, jobs not otherwise available to job seekers not purchasing the service; or

3)   provides information of any kind purporting to result in employment for the applicant with any employer other than himself.

Different laws pertain to those agencies which charge a fee to the job applicant, and possibly also the employer, than to agencies which make only employer fee paid placements. These distinctions concern requirements for licensing, fees that may be charged and other provisions of the law as described in this report.

Licensing
Class B agencies which charge a fee to the applicant must be licensed by the NYS Department of Labor (in New York City, by the Commissioner of the NYC Department of Consumer Affairs). As a condition of obtaining a license to do business in New York, employment agencies must deposit a bond in the amount of $5,000 with two or more sureties or with a surety company approved by the Commissioner. Consumers who are damaged by practices of licensed employment agencies in violation of the law may bring action against this bond. The Commissioner also may institute a suit against the bond on behalf of the damaged consumer. An employment agency must post a copy of its license in a conspicuous place in the agency.

To check whether an employment agency in NYC is licensed, visit https://labor.ny.gov/workerprotection/laborstandards/PDFs/EmploymentAgenciesListing.pdf

Agencies which charge a fee only to the employer do not need to be licensed.

Contracts and Receipts
Licensed employment agencies must provide the applicant with:

  • A copy of the contract which includes statements of the law regarding conditions under which the employment agency is entitled to a fee, and the circumstances under which any fees collected must be rendered.
  • A receipt stating the amount and purpose of any fee, deposit or payment that the agency collects.
  • Information as to the name and address of the person to whom an applicant is to apply for employment, the anticipated rate of wages, the agency's fee, whether such employment is temporary or permanent, the name and address of the person authorizing the hiring of an applicant, and the cost of transportation if the services are required outside the city where the agency is located.

Fees
Licensed employment agencies cannot accept a fee in advance from an applicant and cannot charge or accept a fee for the registration of applicants for employment.

Generally, after an applicant has been placed in a position, the licensed employment agency is entitled to no more than the following percentages of the first full month's salary or wages:

First Month Salary

Percentage

$750 or less

25%

$750 - $949

35%

$950 - $1,149

40%

$1,150 - $1,349

45%

$1,350 - $1,499

50%

$1,500 - $1,649

55%

$1,650 or more

60%

 

A fee up to 1.5 times the fee charged to the job applicant may also be charged to the employer. By agreement with an employment agency, the employer may voluntarily assume payment of the applicant's fee.

If the employment states that the job is temporary (less than four months) the employment agency's fees cannot be more than 50% of that given above, or 10% of the total wages actually received, whichever is less.

The fee may be paid in installments, based on the employee’s pay schedule.

If the applicant is hired on a commission basis, the fee for the employment agency will be based on the percentages listed above and applied to an amount equivalent to one-twelfth (1/12) of the employer's estimate of first-yearly wages.

Return of Fees
Any licensed employment agency which has received payment contrary to or in excess of the above schedule must return it or the excess portion of it within seven days of a request for it.

If an applicant accepts employment, but fails to report for work, the agency is entitled to 25% of the fee permitted by the above schedule. If the applicant accepts employment, fails to report to work and remains with his/her former employer, the agency is entitled to 50% of the fee allowed by the schedule. In either case, no fee may be charged to the employer.

If an applicant accepts employment, reports to work, and the job is terminated through no fault of his/her own, the fee charged to the employee and the employer each shall not exceed 10% of the salary or wages received (and nothing in excess of the fee schedule).

Under any circumstances, if an applicant accepted a job, reported to work and the employment was terminated, the fee charged to the applicant and the employer must not exceed 50% of the salary or wages received (and nothing in excess of the fee schedule).

Additional Provisions of the Law
The law also prohibits both licensed employment agencies and unlicensed fee-paid agencies from:

  • Directing an applicant to an employer in order to obtain employment without first having obtained a bona fide order for the job. One exception to this is that an agency may direct an applicant to an employer who has previously requested that qualified applicants be sent. In the event that an applicant is referred to an employer who neither had a bona fide order for the job nor had requested that qualified applicants be sent, and the applicant does not obtain employment, the applicant is entitled to reimbursement for the travel expenses incurred within 24 hours of demanding it.
  • Sending an applicant to an employer where the agency knows or reasonably should have known that the employment is in violation of minimum wage or child labor laws, or that a labor dispute is in progress without having notified the applicant of the existence of the dispute.
  • Requiring an applicant to subscribe to any publication or incidental service or contribute to the cost of advertising.
  • Making or using any name, sign or advertising device which bears a name similar to or which could be confused with that of any government agency.

The law also prohibits any licensed agency from:

  • Inducing an applicant to terminate current employment in order to obtain other employment from the employment agency.
  • Publishing any false, fraudulent or misleading information, representation, promise, notice or advertisement.
  • Advertising in newspapers, or otherwise, or using letterheads or other written material, unless such advertising or other matter contains the name and address of the employment agency and the word "agency".
  • Charging an applicant a fee for a job placement which the agency advertised as fee-paid.

The law prohibits an employer from:

  • Requiring, requesting or permitting an employee to reimburse him for the cost of a fee paid by the employer to an employment agency or an employer fee-paid agency.

Complaints
Complaints against licensed employment agencies in New York City are also handled by the NYC Department of Consumer Affairs, 42 Broadway, New York, NY 10004, (212) 487-4104.

Complaints against licensed employment agencies in the rest of New Complaints against licensed employment agencies in the rest of New York State are handled by the New York State Department of Labor, 9 Bond Street, 4th Floor, Brooklyn, NY 11201, (718) 780-9499.

Consumers can contact BBB to obtain information about an employment agency before doing business with them, or to file a complaint against one, by visiting newyork.bbb.org.

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