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.”

When I hear that, I always wish I could say (scream);  “Did you not just hear what I said?  I don’t care if you are looking for a job right now or not.  Eventually, you’ll need a recruiter with a recruiting specialty in your profession who places at your level, and I AM THE ONE YOU NEED TO KNOW.  So let’s start getting to know one another now so I can help you then, when you need my skill set to advance your career.”

And the truth is, the higher up the food chain these candidates are, the more important it is for them to begin that relationship with a recruiter who has a proven track record in their profession, and at their level, ahead of time.

But they don’t hear what we say, though most of us say things similar to what this article says with every recruit call we make to candidates we are looking to make contact with or put in play.

That’s why, this article, sent as an email or Twitter follow up, might get them to listen, because it comes from another source, a trusted and respected source, one that says what we have been saying for years:

Don’t try to find your recruiter when you urgently need one, take the time to develop a relationship with one BEFORE you need them so they know who you are when you do need them to conduct a confidential career search for you.

I have already sent this article to about two dozen candidates, and not just as a link, which you could do, but in that form it doesn’t extend your brand as much as it could.

We have reformatted it and created a PDF (http://skrentnyspeaks.com/wp-content/uploads/2010/07/Recruiting-Your-Recruiter-WashPost-2010Q3.pdf) to share this article via email that is very similar to this one for our search peers, but it is for candidates with my Jefferson Group Search branding instead.  I do this so my name and my brand remain attached to this good advice, AND so if they share it with anyone else, it is clear who shared the advice originally, and thus increase the likelihood that I get called after it has been shared.  This is especially useful if it was shared with a similarly skilled peer in my niche.

It also helps when they forget who you are, but saved the article.  All your contact information remains right there with the saved article.

I hope you find this new article as helpful as I think it is going to become for my search practice, and my thanks to Vickie Elmer as well as the search professionals who contributed to the article, for creating this great new tool for my search toolbox.

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.

A dependent intervening act is one caused by you. Pulling the plunger or working the flippers. Everything between that and the jackpot is a causation question. Was hitting the big bumper (an interview) caused by you? If it was caused by a ricochet (let’s say an employee referral), the client’s argument is that it was an independent intervening act; it had nothing to do with you. The turncoat candidate and client agree. There may even be a document trail that “substantiates” this.

No sale. So someone tells you about the “but for rule.” Yeah, that’s it!

You say, “But for me pulling the plunger, the ball would have never been on the playing field.”

It’s an open invitation for a fee-avoiding client to set up a variety of factual defenses. “But for” the candidate meeting someone from the client at a trade show, “but for” the resume already in the client’s data base, “but for” your failure to obtain the candidate’s consent to the referral, “but for” the employee referrer convincing the candidate to interview, and an infinite number of other ” but-for bumpers” that will have you flipping your five-figure fee into the forest.

If you haven’t already blown this fee, you absolutely must not use the linear “but for rule!” Placements in the real world (unlike bowling) don’t occur in a straight line. Just think of all the intervening acts that occurred after your sendout that an employer lawyer will say were independent of that referral!

I cover this in detail in Chapter 23 of The National Placement Law Center Fee Collection Guide, entitled “But For, But If, What Then?” It is followed by Chapter 24, entitled “The ‘Substantial Cause’ Test.

Even though you’ve been giving away your fee, try using my fee-getting, legal-sounding, poly-syllabic phrase: substantial cause.

Just say, “My referral was a substantial cause of the hire!”

It gets recruiters paid like crazy, because it’s impossible to argue that you didn’t plunge and flip.

Pinball, not bowling.

Best of luck to you!

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.

The UTSA expands the definition of “trade secrets” far beyond merely contact information on clients and candidates. Today, it can include such items as:

• Prospective clients and candidates.
• Contacts (decision-makers) at prospective and present clients.
• Hiring preferences at prospective and present clients.
• Temp bid rates and markups.
• Background and contact information on past, present, and future temps.
• Unique compensation plane.
• Unique recruiting techniques.

Now let’s look at how the court system works to protect your rights. The legal remedies available are the only two you could want: stopping the conduct and awarding money for the wrongdoing.

Temporary Restraining Order (“TRO”)

TRO’s are granted ex parte (“one party” – usually on 24 hours telephonic notice). They are psychological warfare.

You can’t afford to lose this hearing. That person who said “‘Tis better to have tried and failed than not to have tried at all.” Never tried a trade secrets case.

The decision is usually made by the judge in chambers. The burden of proof is irreparable injury. It is considered extraordinary relief, since someone is being deprived of his livelihood without having his day in court.

A judicial bond must be posted in case the judge made a mistake. The underlying complaint must be filed concurrently. That starts the lawsuit.

The TRO remains in force only 30 days. So the clerk of the court must set the hearing for an Order to Show Cause Re Preliminary Injunction within that time.

Preliminary Injunction

This is essentially a noticed TRO, whereby the other party has the opportunity to file opposing pleadings (court papers) including affidavits (statements under oath) and points and authorities (analysis and citations of cases, statutes, etc.).

Here too, the decision is almost always made by the judge in chambers. But oral argument in open court is usually permitted.

The preliminary injunction remains in full force and effect during the pendency of the litigation (until settlement or trial).

Permanent Injunction

This is issued at the trial. (A preliminary injunction ripens into a permanent injunction if it is ordered.

The 12 causes of action (legal theories) we use make trade secrets litigation a very expensive, painful experience for recruiters who violate the law.

The most important thing you can do is have a properly-drafted employment agreement. Over 80% are not. They are also not updated as statutory and case law changes, or administrative rulings are issued.

Use a well-drafted agreement, plead the case properly, and the court system protects your trade secrets very well!

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.)

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.

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.

Liability has developed through case law (court decisions that set precedents) rather than statutory law (legislative enactments). Since each “fact pattern” in each case is different, it’s unclear as to what “invading” someone’s “privacy” really means. So one person’s “invasion” is another’s opportunity. Or both, depending on the whim of the victim.

In attempting to decide objectively whether someone’s privacy was invaded, there are three probes to use:

1. There must be an “unreasonable” interference with the “right to be left alone.”
2. Only an unreasonable interference is “actionable.”
3. What is “unreasonable” depends upon the circumstances (including the express or implied consent of the victim).

You’ve asked about the candidate declaring the solicitation unwanted. This has a tendency to happen only when the source employer finds out. So the appropriate legal defense is some poly-syllabic variation of “Gimme a break!”

The way to get around all of this nonsense is to simply make that cold call, and ask immediately for an after-hours phone number. Home, cell, parole officers’, whatever. If you get one (or even a personal email address), the candidate is estopped (stopped) from asserting that you violated her rights. She impliedly waived them. (A “waiver” is the voluntary relinquishment of a known right. Once waived, you’re estopped from asserting it. Pretty nifty, eh?)

While there are an endless number of ways candidates can impliedly consent to being contacted — from showing their bodies on billboards to stuffing photo-reduced resumes into fortune cookies — these things are not necessary to show consent. Of course, anyone on Linkedin or Facebook wants publicity. Gimme-a-break for sure.

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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.

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.

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.

Q: What do I need to know about E&O (Errors and Omissions) Insurance?

The most important thing to know is that it means what it says: if you erred or omitted something during a placement, there might be coverage. In other words, “ordinary, garden-variety, negligence.”

The problem is that you won’t be accused of negligence — at least not only that. You’ll absolutely be accused of breach of contract, or something intentional like gross negligence, breach of fiduciary duty, fraud, a variety of unfair business practices, and
probably conspiracy.

None of these are covered under standard E&O policies. In fact, the only one that might be covered under a CGL (Comprehensive General Liability) policy is the breach of contract claim.

So assuming you can convince your E&O carrier that you are really being accused of negligence, you might be able to get coverage. The policies initially include a duty to defend you, then indemnify you (pay a settlement or judgment).

So if the claim is accepted, you’ll be assigned to a lawyer and receive a reservation of rights letter from the carrier. It says that the carrier “reserves the right” to charge you back for its legal expenses if at any time it decides you are liable for breach of contract, any intentional wrongdoing, or any act not deemed an “error” or “omission.”

Should you get the coverage? I always say “Yes.”

But think about what you’re paying, that you’ll have a deductible to pay the carrier first, that you can’t choose your lawyer, that insurance defense lawyers don’t know our business, that there is great pressure on these lawyers to keep fees low, and that you’re on the hook for the consequences if things don’t go your way.

If you get even the hint of a claim, be ready to notify your carrier immediately. All of these policies have an awareness or notification clause, and if you don’t request coverage in writing within the time specified, you will not be covered.

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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.

Q: Can I re-recruit a placed candidate?

Yes. There is absolutely no statute or case anywhere prohibiting this.

However, there are three intentional torts lurking in the background:

An intentional tort is a non-contractual civil wrong. If you are found liable for committing it, the law allows unlimited punitive and exemplary damages to be awarded in the discretion of the judge or jury. That’s where the huge jury verdicts come from.

Hundreds of federal and state courts have written opinions on this issue. The foundation is a feisty U.S. Supreme Court decision rendered in 1915 (Truax v. Raich, 239 US 33, 60 L Ed 131) that stated:

The fact that employment is at the will of the parties respectively does not make it at the will of others . . . and by the weight of authority, the unjustified interference . . . is actionable, although the employment is at will.

Almost a century of court review, and the law is still the same.

The three intentional torts that expose recruiters are:

Inducing Breach of Contract:

This means causing someone (like an employee) to break his contract with another (like an employer). Of course, almost every business tries to get business from someone else, so the law only recognizes cases where there is some wrongful conduct (like using confidential information). That’s why recruiting a placed candidate could legally cross the line.

Even at-will employment is considered a contract that might not otherwise be breached.

Interference with Contractual Relations:

This relates to the disruption caused by calling into companies. It ranges from a passive annoyance to an active insurrection, depending on your aggressiveness and the loyalty of the employees.

Interference with Prospective Economic Advantage:

This is an actuarial projection. The loss of future services of the candidate, morale, and anticipated business can be massive.

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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.