Are electronic signatures legally binding?

Yes. Electronic signatures are generally valid under the ESIGN Act (15 U.S.C. §7001) and UETA in most states if intent, consent, attribution, and retention requirements are met.

When are e-signatures not permitted?

Certain instruments — wills, some court orders, and specified notices — are exempt from e-signature under ESIGN and state law; check local statutes and exceptions.

Do sourcing agreements need notarization?

Ordinary placement agreements typically do not require notarization; notarization is only necessary where a specific statutory or evidentiary purpose exists.

How do I correct a signed agreement?

Use an amendment signed by all parties referencing the original agreement; avoid unilateral edits to executed documents to prevent enforceability issues.

Who is authorized to sign?

An authorized officer or agent of an entity should sign; include printed name and title. Confirm signature authority to avoid challenges to validity.

How long should records be kept?

Retain agreements through the active term plus at least three years; follow industry-specific retention rules such as 6 years for HIPAA-related records.

Electronic Signature
Templates
HR
Employee Sourcing Agreement

Employee Sourcing Agreement

This template is fully customizable. Edit the text, fill out the fields, and send it for signature. Give it a try!

EMPLOYEE SOURCING AGREEMENT

Parties and Contact Information

Company Name: Company Address:

Company Contact Name:

Phone:

Email:

Sourcing Provider (Agency) Name: Provider Address:

Provider Contact Name:

Phone:

Email:

Recitals and Effective Date

This Employee Sourcing Agreement (the "Agreement") is entered into between Company Name: and Provider Name: .

Effective Date: . The parties agree that Provider will identify, refer and introduce candidates for employment by Company in accordance with the terms below.

Definitions

"Candidate" means an individual introduced by Provider to Company for potential employment. "Placement" means the commencement of employment or engagement of a Candidate by Company or any affiliate thereof. "Fee" means the placement fee payable to Provider as set forth in this Agreement.

Scope of Services

Description of Sourcing Services:

Positions and Fee Schedule

The following initial positions and fees are agreed. For each Placement, Fee is calculated as the percentage of the Candidate's first-year gross annual compensation unless otherwise stated.

Position 1 - Job Title:

Position 2 - Job Title:

Position 3 - Job Title (optional):

Fees, Invoicing and Payment

Fee for each Placement shall be: of the Candidate's first-year gross annual compensation unless otherwise agreed in writing.

Payment due within days of Candidate's start date. Provider shall submit an invoice upon Candidate's commencement. Late payments incur interest at .

Remit To (payment details):

Candidate Ownership and Exclusivity

A Candidate introduced by Provider shall be deemed a Candidate of Provider for the duration of this Agreement and for a period of days following the introduction. If Company engages a Candidate during that period, Company shall be obligated to pay the Fee.

Exclusivity: Exclusive engagement for specified positions Non-exclusive engagement

Replacement Guarantee and Refunds

Provider warrants that if a Candidate placed by Provider ceases employment for any reason other than a documented reduction-in-force or similar organizational decision within days of start date, Provider will use commercially reasonable efforts to present a suitable replacement at no additional Fee or will refund a pro rata portion of the Fee as follows:

Replacement/Refund Terms:

Compliance; Background and Right to Work

Provider represents that it will obtain Candidate consents necessary for background checks and authorization to disclose Candidate information to Company. Company is responsible for verifying eligibility to work and for all employment decisions. Provider will comply with applicable employment and anti-discrimination laws in sourcing and presenting Candidates.

Confidentiality and Data Protection

Each party shall keep confidential all non-public information disclosed by the other party, including Candidate resumes and evaluation materials, and shall only use such information to perform its obligations under this Agreement. Provider will process personal data in accordance with applicable data protection laws and will only transfer Candidate data to Company for recruitment purposes.

Non-Solicitation

During the term of this Agreement and for a period of months thereafter, neither party will directly solicit for employment the other party's employees assigned to or substantially involved in the performance of this Agreement without prior written consent.

Term, Termination and Survival

This Agreement commences on the Effective Date and continues until terminated by either party upon days' prior written notice. Termination shall not affect obligations with respect to Candidates introduced prior to termination, and provisions that by their nature survive termination shall remain in effect.

Representations, Indemnity and Limitation of Liability

Each party represents that it has authority to enter into this Agreement. Provider will indemnify Company for claims arising from Provider's negligent misrepresentation of Candidate qualifications. Company will indemnify Provider for claims arising from Company's employment decisions. Except for willful misconduct or gross negligence, neither party's liability shall exceed the aggregate Fees paid to Provider in the prior 12 months.

Governing Law and Dispute Resolution

This Agreement shall be governed by the laws of the state of , without regard to conflict of law principles. Parties shall attempt to resolve disputes in good faith prior to initiating litigation.

Notices

All notices under this Agreement shall be in writing and delivered to the addresses listed above or such other address as either party designates by written notice.

Company Notice Address (if different): Provider Notice Address (if different):

Miscellaneous

This Agreement constitutes the entire agreement between the parties relating to its subject matter and supersedes all prior agreements. Any amendment must be in writing and signed by authorized representatives of both parties.

Additional Terms or Special Instructions:

Certifications and Authorizations

The undersigned certify that they are authorized representatives of their respective parties, that the information provided in this Agreement is true and accurate, and that each party authorizes the other to contact references and perform background checks as necessary to effect placements.

Company:

By:

Date:

Provider:

By:

Date:

What an Employee Sourcing Agreement Covers

An Employee Sourcing Agreement documents the terms under which one party (a sourcing firm, recruiter, or referrer) introduces or places candidates with a client employer. It defines scope of services, candidate ownership, placement and replacement obligations, fee structure and payment timing, confidentiality and IP treatment, and the effective period of exclusivity or notice. The agreement clarifies which introductions trigger fees, conditions for fee refunds or replacements, and responsibilities for background checks and compliance. Well-drafted sourcing agreements reduce disputes about who generated a candidate and when fees are payable.

Why a Clear Sourcing Agreement Matters

A precise Employee Sourcing Agreement reduces ambiguity about candidate ownership, fee triggers, and timelines, lowering litigation risk and improving hiring predictability. It protects the client’s and recruiter’s expectations while allocating responsibilities for references, background checks, and any required regulatory compliance.

Who Typically Uses an Employee Sourcing Agreement

Common users include staffing agencies, corporate talent acquisition teams, independent recruiters, and in-house legal or HR who manage third-party sourcing relationships.

Staffing agencies placing multiple candidates for ongoing engagements across departments, needing clear fee and replacement terms.
Corporate HR or talent acquisition teams contracting one-off or retained recruiters and documenting ownership and onboarding responsibilities.
Independent or freelance recruiters offering candidate introductions that require payment terms, non-solicit, and confidentiality protections.

The agreement suits both single-placement introductions and ongoing sourcing arrangements; parties should select clauses that match the relationship type and volume of hires.

Step-by-step: How to complete the Employee Sourcing Agreement

Follow these ordered steps to prepare, review, and finalize the agreement with minimal errors and clear obligations for all parties.

01

Prepare details: Gather candidate criteria, recruiter details, and fee schedule before drafting.
02

Draft clauses: Confirm scope, exclusivity, and replacement language.
03

Legal review: Have counsel review for compliance and enforceability.
04

Sign and retain: Execute by authorized signers and store records securely.

Six essential clauses to include

A robust Employee Sourcing Agreement includes specific, enforceable language addressing the most common disputes: fee triggers, candidate ownership, and post-placement obligations.

Scope and Definitions

Define terms such as 'Candidate', 'Introduction', and 'Placement' to remove ambiguity about when a fee is earned and which introductions are covered by the agreement.

Fee Calculation

Detail the fee formula (percentage of base salary or flat fee), what components of compensation are included, invoicing schedule, due dates, and late payment interest or collection costs.

Candidate Ownership Period

Set clear ownership windows (e.g., 6–12 months from introduction) and rules for previously known candidates to avoid double-fee claims.

Replacement and Warranty

Specify replacement terms if a hire separates within a defined period, including notice requirements and options for refund or replacement search.

Confidentiality and Data Handling

Address candidate data security and compliance with applicable privacy laws; for healthcare or sensitive roles include HIPAA considerations where applicable.

Termination and Governing Law

State termination rights, survival of fee and confidentiality provisions, and the governing state law that will interpret the agreement.

Key information to collect and verify

Full Name: Legal entity name

Contact Details: Address and email

Tax ID: TIN or EIN

Fee Terms: Rate and basis

Effective Dates: Start and end

Authorized Signer: Name and title

Risks of an incorrect or missing agreement

Fee Disputes: Lost fees

Double Billing: Competing claims

Tax Exposure: Incorrect reporting

Regulatory Noncompliance: Fines or sanctions

Confidentiality Breach: Data exposure

Enforceability Issues: Invalid clauses

Common preparation mistakes to avoid

Failing to define 'introduction' precisely, which creates disagreements over when a fee is earned and may lead to costly arbitration.
Using vague fee language such as 'reasonable commission' instead of a defined percentage or flat amount, making enforcement and invoicing ambiguous.
Not specifying which compensation components count toward the fee base (bonus, equity), causing disputes over calculation of the recruiter’s fee.
Omitting signature authority and dates, which can render the agreement unenforceable or delay fee collection and onboarding.

Typical workflow from introduction to payment

This sequence outlines the common operational steps once a sourcing agreement is in place, including approvals and invoicing.

Introduce Candidate: Recruiter submits candidate details to client.
Client Interview: Client evaluates and interviews candidate.
Placement Notice: Client notifies recruiter of hire and start date.
Invoice and Payment: Recruiter invoices; client pays per agreed terms.

How to set up an online signing workflow

Configure the digital workflow to collect signatures, capture timestamps, and route documents to stakeholders automatically.

Field	Configuration
Signature Order	Specify signer sequence or allow parallel signing
Authentication	Choose email, SMS code, or stronger verification
Notifications	Set reminders and overdue notices
Storage	Auto-save signed PDF and audit trail

Digital signing and technical considerations

Choose an eSignature platform that supports lawful electronic execution, audit trails, and secure storage consistent with your compliance needs.

Integrations: Salesforce, NetSuite, Microsoft 365 support
File formats: PDF, DOCX, HTML supported
Security: TLS and AES-256 encryption

Key timing and tax-related deadlines to keep in mind

Although the sourcing agreement itself has no IRS filing deadline, related tax reporting and document retention have statutory timelines that affect parties.

Provide W-9 on request:

No fixed filing deadline; supply taxpayer identification to payers when requested.

1099-NEC to recipient:

Due Jan 31 for nonemployee compensation reporting.

1099-MISC to IRS (paper):

Due Feb 28 if filed on paper; electronic deadlines differ.

1099-MISC to IRS (electronic):

Due Mar 31 when filing electronically.

Individual tax return:

April 15 is typical filing deadline for Form 1040.

Typical milestones after agreement execution

Track these sequential milestones to ensure candidate introductions, placement, and billing occur within agreed windows and replacement periods are enforceable.

01

Onboarding Window

Client completes interviews and hires within the agreed introduction period.

02

Start Date Confirmation

Recruiter receives written confirmation of candidate start date from client.

03

Invoice Submission

Recruiter issues invoice after hire per payment terms (e.g., 30 days).

04

Replacement Period

Replacement or refund claims must be made within the stated warranty period.

Realistic use cases for Employee Sourcing Agreements

These examples illustrate common scenarios and contract provisions that parties typically include to manage risk and payment expectations.

High-volume IT recruiting

A staffing firm delivers multiple developer candidates into a technology company over six months, each introduction tracked via CRM and email confirmation.

Fee is 20% of first-year base salary per hire, invoiced upon candidate start.
The agreement includes a 90-day replacement clause, exclusivity for defined roles, and a data processing addendum to protect candidate personal information.

Single-key executive placement

An executive search consultant presents a CEO candidate who is hired after a multi-stage process with background checks.

Fee is a flat placement amount payable within 30 days of start date.
The contract defines candidate ownership, success fee milestones, confidentiality obligations, and prorated refund conditions if termination occurs within the warranty period.

eSignature vendor comparison for signing and managing agreements

Compare basic pricing and key compliance features across platforms. signNow is listed first per comparison format; verify plan details with each vendor before purchasing.

	signNow	DocuSign	Adobe Sign	PandaDoc	HelloSign
Starting Price	$8/user/mo	$15/user/mo	$14/user/mo	$19/user/mo	$15/user/mo
Free Trial	7-day free trial	Varies by vendor	Varies by vendor	Varies by vendor	Varies by vendor
Audit Trail	Yes	Yes	Yes	Yes	Yes
HIPAA Compliant	Yes	Yes	Yes	No	No
Envelope Cap	No cap	100 envelopes/user/year	Varies	Varies	Varies

Practical tips for accurate and efficient completion

Apply these best practices to reduce disputes, improve compliance, and accelerate payment when using Employee Sourcing Agreements.

Use precise definitions

Define key terms like 'introduction' and 'placement' clearly. Precise definitions prevent later litigated disagreements and ensure consistent invoice triggers.

Document candidate history

Record emails and CRM notes evidencing the date of introduction; contemporaneous records strengthen fee claims in disputes.

Align tax documentation

Collect W-9s or relevant tax information timely to avoid backup withholding and to meet 1099 reporting obligations where applicable.

Preserve audit trails

Use electronic signing with an audit trail capturing timestamps, IP, and signer identity to support enforceability under ESIGN and UETA.

Frequently asked questions about Employee Sourcing Agreements

Answers to common legal, timing, and execution questions to help parties finalize agreements and avoid enforcement issues.

Need help? Contact support

Are electronic signatures legally binding?
Yes. Electronic signatures are generally valid under the ESIGN Act (15 U.S.C. §7001) and UETA in most states if intent, consent, attribution, and retention requirements are met.
When are e-signatures not permitted?
Certain instruments — wills, some court orders, and specified notices — are exempt from e-signature under ESIGN and state law; check local statutes and exceptions.
Do sourcing agreements need notarization?
Ordinary placement agreements typically do not require notarization; notarization is only necessary where a specific statutory or evidentiary purpose exists.
How do I correct a signed agreement?
Use an amendment signed by all parties referencing the original agreement; avoid unilateral edits to executed documents to prevent enforceability issues.
Who is authorized to sign?
An authorized officer or agent of an entity should sign; include printed name and title. Confirm signature authority to avoid challenges to validity.
How long should records be kept?
Retain agreements through the active term plus at least three years; follow industry-specific retention rules such as 6 years for HIPAA-related records.

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