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Straight Talk for the Recruiting Profession


Articles tagged 'askjeff'

The Business of Recruiting

Jeff’s On Call!: Business Forms



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This week’s inquiry comes from Sean Kirk:

Jeff, thank you for your column and for your time! I appreciate the motivation you give to recruiters like me with all your advice. I have a few simple questions regarding business forms for new contingent-based permanent placement firms starting up. What standard business forms do you recommend recruiters can’t run their business without? How has the job order form evolved over the years and exactly what information do recruiters need to capture within a one page form? Regarding fee agreements, how has this form evolved over the years and what language must be included to ensure a successful business relationship and collection of service charges?

Any advice or specific examples of business forms would be greatly appreciated and warmly received.  Thanks Jeff!

Sean Kirk

Editor's Corner, Jeff's On Call!

An Interview with Jeff Allen, Placement Law Attorney



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The following interview is an in-depth introduction to an individual who has been writing for The Fordyce Letter for nearly 30 years. A respected contributor to TFL, he has been providing our print subscribers with invaluable information on legal issues within the business of recruiting. He has recently generously offered to bring a piece of these offerings to our website readers as well. You will notice in the menu bar to the right a section titled “Jeff’s On Call” – this new feature is your opportunity to ask questions about collecting fees, discrimination issues, PSAs, and any other situations for which you may be seeking legal advice. Please take advantage of this generous offer by clicking on “Jeff’s On Call”!


An unbelievable 28 years ago, Jeff Allen wrote his first “Placements and The Law” article for a fledgling little monograph for contingency-fee recruiters called The Fordyce Letter.

It was introduced in the March 1982 TFL like this:

NEW FEATURE STARTING

Much of our mail confirms the fact that the field of battle upon which we toil is fraught with legal landmines. And who of us hasn’t experienced the frustrations of having to teach our attorneys the basics of our business before they take up the sword in our behalf? Unfortunately, bad advice is the rule rather than the exception when dealing with attorneys who are unfamiliar with the unique character of our business.

With the April issue, we will begin a regular feature entitled “Placements and The Law” authored by Jeffrey G. Allen, B.A., J.D., C.P.C. Jeff, a nationally renowned attorney specializing in placement law, is the senior associate of the offices that bear his name in Beverly Hills and Newport Beach, California. Jeff brings a unique combination of experience to our business, having established, operated, and been a consultant with a number of executive search organizations and general employment agencies. In addition, he has held progressively responsible positions in the personnel and industrial relations field with many major employers.

His columns will bring us a practical and useful approach rather than simply reciting abstract principles of law. As the author of “Placements and The Law Reference Guide,” as a regularly sought-after speaker for all types of groups within our industry, and as one of the recognized authorities in his field, his columns will be as interesting as they are educational.

The body of work that has evolved month after month since then is truly staggering. Through over 300 PTL’s, Jeff’s legal news updates, and his special legal supplements to TFL, our subscribers have learned everything there is to know about placement law.

Today, Jeff is the preeminent attorney in our industry. He has also written more best-selling career books than anyone else in the history of publishing. From Oprah to CNBC, Jeff has appeared in every major media at one time or another.

His credentials, experience and track record transcend his winning legal representation.

Yet he remains our very own accessible, approachable Jeff Allen. A good friend, a trusted advisor, always there, and the ultimate authority on “placements and the law.”

In order to introduce those of you who don’t know Jeff to his work, I decided to do an interview with him and have him share a little about himself.

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Recruiting Your Recruiter Washington Post Article



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It doesn’t happen often, but every now and then you are made aware of an article that you just know will become a new and critical tool in your search best practices toolbox (thank you, now forgotten LinkedIn contact who first made me aware of this gem).

That is exactly what I thought when I read The Washington Post article by freelance writer Vickie Elmer titled Do Your Own Recruiter Searching Long Before You’ll Be Job Searching.

In my mind it is an instant classic.  One you can use with every single candidate you recruit, or try to recruit, who says, “I’m not looking right now.”

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Ask Jeff: The ‘But For’ Placement Rule



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Q: I’m trying to collect a placement fee using the “but for rule”, and the client is just coming up with more excuses to avoid payment. Would you please explain what the rule is, and how it works?

A: So sorry you’re getting ensnared in this “but for rule” business. It’s really the “but for EXCEPTION,” and just educates fee-avoiding clients so they get better at their game. This polarizes the dispute and translates into “No Sale.”

So I’m going to take longer than usual with the answer. Hopefully, for once and for all, we’ll lay this “rule” to rest.

The “rule” itself is easy to state: “But for your referral, would the candidate have been hired?”

If you’ve never made a placement, this sounds reasonable enough. You think making placements is like bowling. You pick up the ball (candidate), roll it down the alley, and make a strike (a hire). Nobody argues with that.

But if you’ve ever worked a desk, you know that making placements is far more like pinball. You pull the plunger, shoot the ball, work the flippers, watch as it rolls around and hits the big bumper (and lights up – an interview!), rolls, spins, ricochets, delays, slides, and takes twists and turns like no other play you’ve ever made.

You watch from the outside-in as these events take place, and eventually the ball reaches the jackpot (a hire).

Legally, each one of those bumps, rolls, spins, ricochets, delays, slides, twists, and turns is called an intervening act. Simple enough. Something that happens after you shoot the ball.

Not so fast. There are two types of intervening acts.

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Jeff on Call: File Trade Secrets



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Q: How does the court system protect my client and candidate files as trade secrets?

If you have a valid employment agreement (only a 20% chance), there are two sure ways:

Injunctive relief to stop unauthorized use. The federal and state courts use procedures known as a temporary restraining order (TRO) and preliminary injunction to immediately stop and freeze any use of your client and candidate information.

This is followed by the award of money in the form of compensatory, punitive, and exemplary damages. These awards regularly extend into millions of dollars, and often include attorney’s fees.

In 1973 when I wrote the only trade secrets act for our industry (California Business and Professions Code, Section 16607). Since that time, there have been many general trade secrets laws enacted by state legislatures.

The most significant is the Uniform Trade Secrets Act. Since the UTSA is essentially the same in the dozens of states that have adopted it, there are many published decisions at the federal and state levels interpreting it.

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Jeff on Call: Employment Practices Liability Insurance



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Q: Do I need EPL (Employment Practices Liability) insurance?

A: EPL is very expensive coverage, but it is essential if you employ recruiters, have more than one office, place temps or contractors, or are an absentee owner. It covers costs of defense (the “duty to defend”), has the indemnity (claim coverage) provision, and a deductible.

It covers everything from discrimination to wrongful termination claims. There are usually many witnesses, the cases can be complicated, and government agencies are often involved. So the costs of defense can be high.

In employee lawsuits, owners and managers are typically named as defendants. Having this insurance may either give you protection or motivate plaintiffs to focus on corporate responsibility — because they know the “deep pockets” of insurance will be involved.

Not only are the costs of defense high, but the claims can be astronomical. Back pay is much less than front pay which is theoretically unlimited. The case law usually limits it to three years, but decisions vary widely. Fines, penalties, and taxes are often added.

If you risk this, check with your broker. Review the costs and coverage, carefully read the policies yourself, and select the highest deductible you can withstand. (Don’t worry about which carrier you use, but make sure it’s one with sufficient reserves.)

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Jeff On Call: More on Cold Calls, Harassment



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Q: This question relates to your October 26 post on Cold Calls & Defining Harassment. Are the rights of companies the same as the individual candidate you mention in this post? I ask in the context of an outside search firm marketing into, or attempting to recruit from, a corporation. Can the company claim they are damaged by receiving a recruiter’s phone calls (i.e., disruption/interference of normal business suffered as a result of calls into the company)?

A: Yes, the rights are basically the same. However, the intensity and the danger is much higher.

These days, it’s tempting for failing businesses to blame anyone they can. Regardless of the real reason (mismanagement, the economy, competition, etc.), losing key employees tends to trip lawsuits against those involved.

Moreover, the massive damages alleged by an employer can be expected to include reduced market share, loss of investor confidence, inability to attract talent, loss of present and future profits, etc. There’s virtually no limit on the amount of a judgment (judge-decided) or verdict (jury-decided) award, since we’re talking about compensatory (to compensate), punitive (to punish), and exemplary (to set an example) damages.

Aside from the invasion of privacy issues (which are personal to a candidate), the inducing breach of contract, interference with contractual relations, and interference with prospective economic advantage intentional tort theories are the same.

This is because the third-party (recruiter) interference allegedly disrupted the bilateral contract between the employer (source) and the employee (candidate). So each party has rights against the interference.

Of course, employers usually have more money, more lawyers, and more politics. So the likelihood of major litigation is higher and so are the stakes.

Many of these lawsuits are filed to simply give nervous management types job security. With litigation pending, they have “cover,” since their claims have credibility. And who’d terminate a key witness? I was fascinated by this move when I was in HR, since we’d have totally useless, highly paid employees doing absolutely nothing for years. They just kept the discovery pot boiling in protracted lawsuits against totally innocent recruiters and competitors. Always talking about terrible misdeeds and huge awards that they never could prove. The lawsuits took on a life of their own and reached old age.

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To participate in future Q&As, email jeff@placementlaw.com. Keep in mind you should always consult with your own attorney. Nothing
contained herein should be construed as legal advice. It is for your information only.

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Jeff On Call: Cold Calls and Defining Harassment



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Q: Given the ease at which recruiters can now find passive candidate information online, when does a cold-call to a candidate at their place of work constitute either harassment or an invasion of privacy (or something else)? Must the candidate declare the solicitation unwanted (as in sexual harassment) for the recruiter to become liable for something? What if the candidate has posted their employment details in the public domain as in Linkedin or Facebook, for example? Do they somehow legally waive the right to be contacted at their place of employment if they upload this information themselves (without a phone number)?

A: “Harassment” is a word used frequently by people who are hassled about anything, at any place, and at any time. But it’s difficult to imagine how a professional contact — or even a series of them by phone, email, express mail, or regular mail — could be deemed so annoying as to rise to that level.

There are no reported cases in the history of American Jurisprudence where a recruiter was even accused of harassment. Who’d bother? If there’s anything a contingency-fee recruiter doesn’t do, it’s waste time with contrary candidates. So if someone stalks an LPC (least placeable candidate), he deserves what he gets.

Now, on to the tort (non-contractual civil wrong) of invasion of privacy.

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Jeff on Call: Soliciting Employees and the Law



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Q: Can you let me know what the legal ramifications are of a company’s request to stop soliciting their employees? Do they have legal recourse if I continue to solicit them? Does it matter if the solicitation is in the form of an email or phone call? And does it matter if an email solicitation is in the form of a request for referral versus asking them if they would be interested in the position?

A: Great questions that I’m asked dozens of times a month!

There are no ramifications with regard to the source employer’s request itself. However, you shouldn’t ignore it.

If the request is from some human resourcer or other non-lawyer, reply in the same manner as you were notified (mailed letter, faxed letter, email, or phone call). If there’s a letter from a lawyer, have your lawyer reply with a letter. Using the same mode of transmission is appropriate without appearing defensive or aggressive.

If the solicitation is in the form of an email or any other writing at a candidate’s workplace, you’re just providing evidence to a potential adversary. So phone solicitation is best. Immediately ask for an after-hours number, cell number, and personal email address.

Asking for referrals is better than a direct solicitation for obvious reasons.

Now on to the law:

The source must be able to prove you’re guilty of inducing breach of contract and interference with contractual relations. If you are found liable for one or both of these intentional torts (civil wrongs), punitive and exemplary damages (to punish and make an example of you) can be awarded in an unlimited amount.

There are only two issues:

1. Was there an enforceable contract with the candidate?

Always. Even an at-will employment of one day is a contract. The expectancy of continued employment by the parties is sufficient.

2. Was the conduct malicious?

If it helps, the courts have defined “malice” as “hatred” or “ill will.” Others call it “over the top.” What does that mean? It’s very subjective, but no reported case has ever defined it as “cold-calling to determine interest in a job change.”

Inducing breach of contract and interference with contractual relations claims are often coupled with allegations of unfair competition and conspiracy (with the client). These also invoke unlimited punitive and exemplary damages.

So that’s the story — recruit away. Then if you’re sued, we’ll counterclaim for an outplacement fee. Since you can’t “steal” someone who doesn’t want to be stolen, you’re helping the source remove its morale problems! Nothing like getting two fees for one placement.

Thanks for asking!

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To participate in future Q&As, email jeff@placementlaw.com. Keep in mind you should always consult with your own attorney. Nothing contained herein should be construed as legal advice. It is for your information only.

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Jeff on Call: Recruiting and Non-Competes



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Q: Can I be held liable for recruiting an individual out of a company where there is a non-compete and placing them with a competitor? I know that it is the candidate who signed the non-compete, but can I get in trouble for my role as a recruiter?

A: Thanks for this dynamite question! I get it constantly, so am delighted we can post the answer for all to read.

The big defense (“cover”) is traditionally that since a recruiter is an independent contractor, the client is not liable for its acts. This is unlike the vicarious liability of an employer for the acts of its employees done “in the course and scope of their employment.”

The independent contractor status has been a good marketing tool for aggressive outsourced recruiting, since in-house recruiters are typically employees. Even “contract recruiters” on site are under the thumb of the employer.

However, employer lawyers ensnare recruiters by alleging a civil form of conspiracy. My definition of conspiracy is “two or more people doing something neither of them should do alone.” Conspiracy (and related “complicity” theories) if proven invoke unlimited punitive (to punish) and exemplary (to set an example) damages.

The underlying wrongful conduct that also invokes unlimited punitive and exemplary damages includes such theories as inducing breach of contract (the employment relationship with the candidate), interference with contractual relations (the current benefit of the candidate’s slave labor), and interference with prospective economic advantage (the loss of the future value of the candidate’s services).

If you’re doing retained search, it’s easier to make the case that you’re de facto (“in fact”) your client when you recruit. But even when you’re doing contingency-fee search, you should not get involved.

Simply tell the candidate to contact an employment law specialist to analyze her rights and liabilities under the contract. Resist the temptation to give any advice whatsoever, and don’t even look at the contract. You’re asking for trouble if the source gets serious about enforcement.

We get involved in these situations a lot. But we don’t have recruiters in the consultation with the candidate, and we insulate them from liability in many ways.

Thanks again for asking. You helped a lot of people stay behind the line!

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To participate in future Q&As, email jeff@placementlaw.com. Keep in mind you should always consult with your own attorney. Nothing contained herein should be construed as legal advice. It is for your information only.