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Abby:
When a placement agency places a permanent person, the fee is paid
in a lump sum presumably from by the company that retained the
employee--but we all know that is taken right off the top of the
employee's annual salary.
In a contract situation, what you described is exactly what
happens. The agency is paid a percentage of the hourly wage. Yes, 25%
of your friend's pay went directy into the agency coffers. Your friend
has indeed been shafted (10% is more reasonable) but this is the way it
works. Some agencies take as much as 60%, so really, he shouldn't feel
that badly. The only way to get around this situation is to contract
directly with the companies (not using an agency to find the gig) but
this is extremely difficult to do. And most companies have legal
departments that insist that an agency be used. (If you want to hear a
big rant on why legal departments insist on this, we can take if
offline--I could go on for days about agencies lobbying congress and on
and on...)
