The triangular relationship between outsourced workers, intermediary employers, and user firms is theoretically underexplored. We address this gap with a two-period model of temporary agency employment in which the temp agency screens workers and rents them out to user firms, balancing current revenue maximization against the risk of future poaching. Although screening gives the agency an informational advantage that could improve assignment quality, the threat of poaching creates incentives for strategic misallocation. In particular, the agency may conceal some productive workers in low-quality assignments to preserve future rents. This distortion results in prolonged temporary spells, fewer permanent transitions, lower aggregate productivity, and inefficiently low employment due to a poaching-induced holdup problem. The interaction with the direct-hire market can also amplify the inefficiencies, particularly when search externalities are not internalized. Although in theory poaching fees can mitigate these distortions, they are typically restricted by labor laws. The model predicts that agency employment is more prevalent and misallocation more severe in lower-productivity segments. In our framework, strategic misallocation is necessary to rationalize salient patterns of employment flows and wage differentials across skill categories.