Staffing agencies in Phoenix: Census counts, Arizona's day labor rules and how to vet one

This report is for Phoenix-area employers choosing an agency, people looking for work through one, and B2B sellers whose customers are staffing firms. It covers the whole metro, Maricopa and Pinal counties.

Phoenix staffing agencies in Census data

The figures are the US Census Bureau's County Business Patterns for 2023, for the Phoenix-Mesa-Chandler, AZ Metro Area (CBSA 38060) and two industry codes: NAICS 56131 (Employment Placement Agencies and Executive Search Services) and NAICS 56132 (Temporary Help Services).

The same release splits the total into three industries:

Why 863 agencies employ 33,224 people

The Census Bureau's definition of temporary help services says the people supplied to clients "are employees of the temporary help services establishment." So a forklift driver working a three-month assignment at a Tolleson warehouse is counted at the agency's branch, not at the warehouse. That's why temp branches here average about 49 employees while the recruiters who staff them are a small share of the total. Placement agencies and search firms work the other way: the people they place join the client's payroll, so their counts are mostly recruiters and support staff.

Two limits apply. Employment is a snapshot of the week of March 12, before summer and holiday peaks. And professional employer organizations (NAICS 561330), which co-employ a client's existing staff, are a separate industry: the metro has 82 PEO locations with 6,361 employees on top of the totals above.

Size and location

In broader bands, 576 establishments have 1 to 19 employees, 193 have 20 to 99 and 94 have 100 or more. The Census Bureau doesn't publish the top three classes for the two codes combined, so the 94 is the total less the smaller bands. The industry rows fill in most of the gap: 22 temp help branches have 250 to 499 employees and 3 have 500 to 999, and the temp help classes account for all 608 branches, so none reached 1,000. Two placement agency locations sit in the unpublished classes above 249.

The Census Bureau published Pinal County's employee figure but flagged it as high-noise: the noise it adds to protect confidentiality moved the value by 5% or more. The county rows come from the county file and add to 861, two fewer than the metro file's 863. County Business Patterns counts establishments with paid employees, not companies, so a national brand with eight Valley branches counts eight times, and a one-person recruiter with no payroll isn't counted at all. No SEC-registered listed staffing company (SIC 7361 to 7363) has its business address in the metro, so the big names you'll meet here are branches of firms headquartered elsewhere, or private.

Which agency for which job

Arizona rules that apply

Day labor. A.R.S. 23-551 to 23-553 cover "day labor service agencies," which supply day laborers to client businesses and charge them for it. The law requires the agency to:

• pay day laborers in cash or in negotiable instruments "payable in cash, on demand, at a financial institution";
• give an itemized statement of every deduction each time it pays;
• keep deductions, other than those required by law, from taking pay below the federal minimum wage for the hours worked;
• not restrict a day laborer from accepting a permanent job with the client, or restrict the client from offering one.

The article doesn't apply to farm labor contractors, union hiring halls, in-house hiring offices, or temp services that supply "white-collar employees, secretarial employees, clerical employees or skilled laborers." An office staffing firm is outside it; a general labor branch dispatching crews by the day is inside it.

Who the employer is. For unemployment insurance, a temporary services employer that contracts to supply a worker to a client "is the employer of the worker" (A.R.S. 23-614). The agency, not you, pays state unemployment contributions on its temps.

PEOs. Arizona's PEO law sets a financial floor: a PEO located in the state must keep a net worth of at least $100,000 or hold a $100,000 bond, letter of credit or securities (A.R.S. 23-569). Under the workers' compensation chapter, a PEO must tell each client in writing that the client still has to insure any employees the PEO agreement doesn't cover (A.R.S. 23-901.08).

How to vet a Phoenix agency

1. Name the type first. Day labor, temp, temp-to-hire, direct hire or search: the contract, the price and the rules differ.
2. Get the certificates. Ask for the agency's workers' compensation and general liability certificates naming your company, and confirm them with the insurer.
3. Ask how temps are paid. For a day labor branch, the answer should match A.R.S. 23-553: cash or a check cashable on demand, with an itemized deduction statement.
4. Split the price. Get the pay rate, the markup, the overtime bill rate and any conversion fee in writing. Ask whether the bill rate moves when the pay rate does.
5. Read the hiring clause. For day labor, Arizona voids restrictions on taking a permanent job. For other temps, conversion terms are a matter of contract, so negotiate them before the first shift.
6. Check references. Read ratings on ClearlyRated, then call two clients with sites like yours.

If you're looking for work through an agency

Read the job type before you sign up. On a day labor ticket you're entitled to an itemized statement of deductions every time you're paid, and the agency can't stop you from accepting a permanent job the client offers you. On any assignment, the agency is your employer: it pays you, withholds taxes and carries the workers' compensation that covers you on the client's site.

Worked example: payrolling workers you recruited yourself

Illustrative example. The company, rates and markups are invented to show the arithmetic.

Saguaro Cold Storage (saguarocold.example) in Goodyear has already found six seasonal pickers through referrals. It wants an agency to employ them for 12 weeks at 40 hours a week, 480 hours each, at a $19.00 pay rate. One agency quotes its standard 45% markup; another offers "payrolling," where it only employs and pays workers the client recruited, at 22%.

The lower markup still has to cover payroll taxes, workers' compensation and the agency's margin, so ask what happens to the rate if a worker files a claim, and get a zero conversion fee in writing: Saguaro found these workers, so the agency shouldn't charge to release them.

Selling to Phoenix staffing agencies

The 608 temp help branches buy for volume: timekeeping and payroll, background and drug screening, workers' compensation, safety training and job advertising. Day labor branches add a pay-window compliance load. Placement and search offices, mostly small, buy recruiting tools and candidate data.

Start from the branch, not the brand: one company may run a day labor hall and an IT contracting office with different buyers. Sort branches by their job postings, then work the 193 mid-sized ones first, where a manager can say yes. At volume the research is the slow part; Bebop finds agencies that match a description and explains why each fits. For list method, see how to build a prospect list, and for the right person at a national brand, how to find decision makers.

Subject: Deduction statements at the pay window

Hi [first name],

I saw [agency] is dispatching [role, e.g. general laborers] to sites in [city] this week.

Arizona's day labor law asks for an itemized deduction statement every time a worker is paid, and on a busy morning that paperwork lands on branch staff. Our [product] prints the statement with each payout and keeps a copy for your records.

Would a 15-minute look on [day] be useful?

[Your name]

Local sources

Next step: see how Arizona's capital compares with the state as a whole in the report on staffing agencies in Arizona.