An employment agency is an agency or a person engaged in the business of procuring employment for others and employees for employers for a fee. Whether the employer or the employee pays the fee depends on the terms of the agreement. 29 USCS § 49 provides that for promoting and maintaining a national system of public employment offices, the United States Employment Service shall be established and maintained within the Department of Labor.
The public employment agencies provide a wide range of services, mostly supported by employer contributions to state unemployment funds. Private employment agencies also play a major role in recruiting professional and managerial candidates for various companies.
State statutes regulate the operation of private employment agencies and control the relations between an employment agency and its clients. If an out-of-state agency’s business within a state does not constitute operating an employment agency, the agency is not required to be licensed within that state.
An employment agency includes an executive search firm which specializes in recruiting executive personnel for companies in various industries. Employment agencies also include state agencies which provide free employment services. The service of an employment agency shall come to an end where the two principals or the employer and employee become aware of each other and when they start negotiations.