‘We Hired the Candidate Through a Temporary Service’

Welcome to our ongoing series of blog posts in the Top Echelon Recruiter Training Blog:“Jeff Allen’s Collection Tip of the Week.” Each week, we’ll highlight one collection tip from Allen, JD/CPC, the world’s leading placement lawyer.

Since 1975, Allen has collected more placement fees, litigated more trade secret cases, and assisted more placement practitioners than anyone else.  He’s also the author of 24 books and a regular columnist for The Fordyce Letter, one of the leading publications for the recruiting industry.

Below is this week’s collection tip for recruiters, courtesy of Jeff Allen.

What the Client Says:

“We hired the candidate through a temporary service.”

How the Client Pays:

Look at your fee schedule.  See how it says (or conveys) employment will be “permanent” or “regular.” Can a temporary contract staffing assignment avoid its terms?

One trap you’ll probably miss is the annualized compensation.  Somewhere clearly in your schedule, you must state something (consistent with the rest of the terms) like the following:

“While projected annual compensation is used to determine the fee, anticipated or actual duration of the candidate’s tenure is not a factor in computing the amount due.”

Then again, you might just have a rubber stamp made that reads: “Life is a temporary assignment.”

Fee schedules, employer-generated PSA’s (placement service agreements), e-mail boilerplate, invoices, and all other communication to clients should contain consistent language that decouples the fee from the tenure of the candidate.

That will eliminate the “temp defense.”

This “temp defense” has several variations, but the usual ways it’s done is:

1. Recruiter refers candidate.
2. Client interviews candidate.
3. Client likes candidate.
4. Client gets “fee allergy.”
5. Client calls friendly temp service for cure.
6. Temp service is friendly.
7. Candidate is hired by temp service.
8. Candidate is dispatched to client on temp assignment.
9. Client pays temp service for an agreed time (usually 30 days).
10. Client exercises “conversion option” to hire temp (candidate) direct at a low (or no) fee.

The fee key is proving you were the source of the hire.  That means proving:

• The candidate was hired by the temp service at the request of the client.  (If the documents show the candidate was already registered with the service, be very suspicious.)
• The temp service knew about the scam.
• The temp service didn’t previously dispatch temps for similar jobs with the client.
• The temp service acted pursuant to a consistent conversion policy.

Proving these things can be done.  Filing a lawsuit helps.  Particularly when it includes:

• Breach of contract (against the client)
• Inducing breach of contract (against the temp service)
• Interference with contractual relations (against the temp service)
• Conversion (theft—against both)
• Fraud (against both)
• Conspiracy (against both)

As to conversion, fraud, and conspiracy, the candidate can also be named.  They will get very nervous, then ve-r-r-ry angry at the prospect of unlimited punitive (to punish) and exemplary (to set an example) damages (money to be paid).

Your basic employer lawyer usually reacts by preparing a mutual release of all claims, selling you on signing it in exchange for paying your full fee.

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Know how to collect your well-earned fees?  Test yourself!  Visit Jeff Allen’s Placement Law website and click the “Placement Fee Collection Quiz” button.  Allen can be reached via telephone at 310.559.6000 or via email at Jeff@PlacementLaw.com.