Bill rate increase letter for staffing clients: statutory pass-through and negotiated increase templates (2027)

A bill rate increase letter tells a staffing client which rates change, by how much, from what date, under which clause of your agreement, and why. Send one of two kinds: a statutory cost pass-through, when a law raises what you must pay (minimum wage, payroll taxes, leave premiums, workers' comp), and a negotiated increase, when market wages or the scope of the work have moved. As of October 2026, several January 1, 2027 changes are confirmed, including California's minimum wage of $17.40, New Jersey's $16.48 for most employees and Washington's $17.73, so pass-through letters for those states can go out now. The templates below include a per-role rate table and a worked example.

Rate arithmetic comes first: how to calculate staffing markup shows how to build the burden the examples below use. These are business templates, not legal advice; your agreement's wording decides what you can change and when.

Which 2027 cost changes justify a pass-through?

Local minimum wages, state unemployment tax rates and your own workers' comp renewal also move on January 1. Use the notices you actually receive, and attach them; a client's procurement team will ask for the source. Workers' comp is worked through in workers' comp for staffing agencies.

What should you check in the contract before sending?

In a VMS program, a rate agreed by email but not entered in the system is the classic cause of short-paid invoices; see VMS fees for staffing agencies for how programs cap rates.

How do you calculate a pass-through?

There are two honest methods. Say which one you are using.

• Keep the markup percentage. New bill rate = new pay rate x (1 + markup). Simple, and the usual result when the contract fixes the markup, but your gross profit per hour rises with the wage.
• Pass through cost only. Increase = pay increase x (1 + the burden that rises with wages, such as employer Social Security and Medicare at 6.2% and 1.45% (IRS Topic 751), unemployment tax, workers' comp and wage-based leave premiums). Your gross profit per hour stays the same.

Workers already paid a little above the old minimum raise a harder question: if the new minimum reaches them, you may need to raise their pay to keep the differential the client expects. That is a negotiated change, not a statutory one; put it in a separate line of the table.

Template 1: statutory cost pass-through letter

[Agency letterhead]

[Date]

[Client contact name], [Title]
[Client legal name]
[Address or email given for notices in the Agreement]

Re: Bill rate adjustment for [state] statutory changes effective
    [January 1, 2027], under clause [x] of our [Agreement] dated [date]

Dear [Name],

[State] has set new [minimum wage / payroll tax / leave premium]
rates that take effect on [January 1, 2027]:

- [Minimum wage: $(old) to $(new) an hour (source attached)]
- [Paid leave premium: (old)% to (new)% of wages (source attached)]

As the employer of the workers assigned to you, we are required to
pay these amounts from that date. Under clause [x], we will adjust
the bill rates for the affected positions, effective [date], as shown
in the attached table. The adjustment passes through [the added wage
and the employer costs that rise with it / the new pay rate at our
contracted markup of (x)%].

Positions not listed are unchanged. Overtime and holiday rates move
in line under clause [y].

[If the client uses a VMS:] We will submit the rate changes in [VMS
name] by [date] for approval so that invoices from [date] process
without delay.

We value working with you and are glad to walk through the figures.
Please confirm receipt by [date].

Sincerely,
[Name]
[Title], [Agency legal name]

Attachments: Rate table; [state notice(s)]

The per-role rate table

Position          Site     Current   New pay  Current   New bill  OT bill   Effective
                           pay                bill                (new)
[General laborer] [Site]   $17.13    $17.73   $24.84    $25.56    $38.34    [Jan 1, 2027]
[Forklift op.]    [Site]   $[ ]      $[ ]     $[ ]      $[ ]      $[ ]      [date]
[Packer]          [Site]   $[ ]      $[ ]     $[ ]      $[ ]      $[ ]      [date]

Basis: [cost pass-through of wage increase plus (x)% statutory burden /
contracted markup of (x)%]. Figures in the first row are the example
from this page; replace with your own.

The overtime figure assumes the agreement bills overtime at 1.5 times the regular bill rate; use your contract's rule.

Template 2: negotiated bill rate increase letter

[Agency letterhead]

[Date]

Re: Proposed bill rate review for [positions], effective [date]

Dear [Name],

Thank you for a strong year at [site]: [one or two facts, e.g. "a 96%
fill rate and 140 workers placed since March"].

Over the same period, the wages needed to attract and keep workers for
[positions] have risen. [Evidence, e.g. "our last 40 offers for
pickers in (area) were accepted only at $(x) or more, and we lost
(n) candidates to offers at $(y)"]. At the current rates we can no
longer [fill at the level you expect / keep turnover where it has
been].

We propose:
- [Positions]: pay rate from $[ ] to $[ ]; bill rate from $[ ] to $[ ]
  ([x]%), effective [date], subject to [clause x] of our Agreement.
- [Optional: phase it: half on (date), half on (date).]
- [Optional: apply new rates to new starts first, existing workers
  from (date).]

The full table is attached. Could we discuss it at [our QBR on (date)
/ a 20-minute call this week]? If we do not hear concerns by [date],
we will [submit the change in (VMS) / send the amendment for
signature].

Sincerely,
[Name], [Title]

A negotiated increase lands better at a quarterly review, with the fill and turnover data in front of the client; the staffing client QBR template shows how to present it. If you post pay ranges for these jobs, keep them consistent with the new rates; see pay transparency for staffing agencies.

The reply when the client pushes back

Hi [Name],

Understood. For the statutory part, we have no choice on the wage:
from [date] we must pay [$x]. The options we can offer are:

1. [Phase the non-statutory part over (n) months.]
2. [Hold rates for existing workers until (date) and apply the new
   rates to new starts.]
3. [Narrow the scope: (e.g. fewer weekend shifts at premium rates).]

If none of these works, the current rates would mean [our fill rate
falling / our being unable to staff (positions)], and I'd rather
agree a plan now than miss orders in January.

Thanks,
[Name]

Common mistakes

• Sending it late. A January 1 change announced in September and raised in January leaves the client no time to budget.
• Mixing statutory and negotiated changes in one number. Show them separately; the first is not up for debate, the second is.
• No source. Attach the state's notice for every statutory figure.
• Forgetting the VMS. Update the rate in the client's system before the effective date.
• Missing overtime and holiday rates, which change too wherever the agreement calculates them from the regular bill rate.