LEGAL UPDATE

I thought I would take the time to try and list those legal questions which I am most frequently asked by recruiting and staffing professionals. The answers are by necessity brief and simplified, and should by no means be taken as a substitute for thorough legal advice. Maybe, however, they will give you an idea as to when you need to go further in consulting an attorney.

• Can you email me a copy of that “but for” law?

No.

• I conveyed an offer to my candidate and she replied “oh what a wonderful day this is; I get a new job and find out I’m pregnant on the same day.” My client will be furious if it hires someone who has to go on leave a few months later. Can I tell my client? Must I?

No and no again. The Pregnancy Discrimination Act makes it unlawful to hire a pregnant woman who is able to work. Therefore, there is no reason to disclose this to your client and if you do so and the client takes some adverse employment action regarding the woman, you are making it easier for a pregnant woman to prove the client knew of the pregnancy. You may want to advise the candidate that she might want to discuss this with the client. First, she may be interested in knowing what the client’s leave of absence policies are, since, with less than a year’s seniority, she will not be entitled to maternity leave under federal law. Second, she may want to make sure that medical benefits will be provided throughout the pregnancy. This may also serve to take you off the hook with your client.

• I’m in temporary staffing and my client wants me to sign an indemnification agreement which basically states that if my temp screws up, I’m responsible. Since the temps are my employees, I guess that’s OK. Is it?

No (wow, I never say yes, do I?). In most cases the temp is an employee of both you and the client. Since the client is normally providing the direction and supervision to the temp, most states would hold it, not you, liable for any damages caused by the temp, unless you were negligent in referring or screening the temp. To make matters worse, many insurance policies will not protect you if you assume liabilities by contract which you would not normally have. I am not one to advise businesspersons to consult an attorney every time they feel a sneeze coming on, but if you feel an indemnification clause coming on, consult both your attorney and your insurance broker. You may be able to get a client-specific endorsement covering the indemnification clause.

• Clear this up for me – unsolicited telephone calls, emails and faxes – OK?

Unsolicited telephone calls are not restricted by the “do not call list.” Client calls are not covered, because business to business calls are exempt, candidate calls are not covered, because you are not trying to sell anything to the candidate. Unsolicited emails may be sent, as long as they contain a physical address and  an “opt-out” mechanism which you honor. Unsolicited faxes, however, may only be sent to persons or firms with whom you have a prior business relationship.

• My client has to hire a woman or minority, and has asked me to only refer them? Is that kind of discrimination lawful

No. First, the client never has to hire a woman or minority for a specific position. Often, the client can attract plenty of white males for a position, so it only wants to pay a fee for women or minorities. However, the EEOC has taken the position that you may not discriminate in referrals on the basis of gender or race, and this includes “affirmative action” job orders. You may explain to your client methods you use - such as recruiting at African-American colleges, or advertising in publications geared to women or minorities – to develop a diverse candidate pool, but you can only refer based on qualifications.

• I signed my client’s contract, which states that, after six months following the referral, I am no longer entitled to my fee if the client hires my candidate. Now, my candidate is being hired seven months after my referral, and the client won’t pay me. That’s not fair and can’t possibly be enforceable, can it?

Sure it’s enforceable. It is very rare that a provision in an agreement between a recruiter and its client is unenforceable, as long as it can be proven that the parties agreed to it. Pay close attention to all of the provisions in your client’s contract before you agree to them. There’s a reason that some attorney inserted them.

• C’mon, I want a copy of that “but for” law. Everyone knows that’s the rule.

It is? The but for rule works like this – if but for your actions, the client would not have hired the candidate, then you’re entitled to a fee. Suppose you recruit, screen and refer a candidate, and set up an interview, which the client tells you went perfectly. While you’re working out some details of the relocation package and how much notice the candidate should give his employer, another recruiter forwards the candidate’s resume. Better yet (from the client’s point of view), the candidate is referred internally or found on a job board. The company can argue that “but for” your actions the candidate still would have been hired. Sure, you’re entitled to a fee, but despite, not because of, any “but for” rule.

• How long must my temp work for a client before the temp is entitled to be     covered by the client’s fringe benefit plans?

There is no time limit. The language of the client’s plans will determine who is covered and when. In most cases, these plans can be drafted to exclude employees on the payroll of third parties, even if there is “co-employment.”

• My clients are asking me to sign an agreement that says I will ask my candidates to state their race or ethnicity. That’s not legal, is it?

Your client is probably a government contractor covered by some relatively recent rules issued by the Office of Federal Contract Compliance Programs, which require government contractors to ask their candidates this information. According the the OFCCP, your clients have a duty to require you to do this.. If you sign such an agreement, it is legal for you to survey your candidates in this way, subject to some procedural caveats. If you’re interested, take a look at the article entitle “What Is the OFCCP and Why Should I Care?” on the NAPS web site at www.recruitinglife.com.

• Do I need a candidate’s permission to check references?

Yes. If you are going to do the check yourself, you can get oral permission and confirm it in writing (or by email). If a third party is doing the check, as is usual with credit checks and criminal record checks, then you need to get written permission in advance. You must also advise the candidate if the check of records results in some adverse employment action, such as a decision not to refer or hire him. For more details, including suggested disclosure language for reference checking, see the “Certified Personnel Consultant’s Legal Manual,” available from NAPS.

• Am I entitled to my fee if the candidate is already in the client’s files at the time of my referral?

Again, you can clear this up by properly drafting your contract. At www.recruitinglife.com, you can find a model agreement drafted by NAPS and the American Staffing Association. This agreement contains various optional clauses, including one that provides that you get your fee unless the candidate has been interviewed, or an interview has been scheduled.

• My client is frightened that my temps will also be the client’s employees under “co-employment.” How can we avoid this?

Unless you are providing all the on site supervision and direction of the temp, you probably can’t. Since typically each of you and your client perform certain activities normally performed by employers, various laws will allocate your legal responsibilities accordingly. This is often a good thing for your client and/or you, particularly when a temp tries to sue the client for an on-the-job injury. For more on this subject, see “Temporary Help Service Operations: A Legal Manual,” available from NAPS.

• I pay my recruiters a 60 per cent commission, so I can pay on a straight commission basis, right?

Wrong. Recruiters are entitled to receive a minimum wage like everyone else, so if they didn’t make any placements this pay period they must receive the higher of the minimum wages provided for under federal or your state’s law (many. In addition, while there may be an argument that your recruiters are exempt from the requirement that they be paid time and one-half for hours worked over 40 in one week, that argument simply doesn’t exist if the recruiters are not guaranteed at least $455 a week.

• My client won’t let me refer anyone with a temporary visa. Is that lawful?

Not according to the Justice Department. While you may require candidates to have the current ability to work in the United States, you may not require them to have the permanent authority to do so. That is because, according to the Justice Department, most temporary visas are routinely renewed. You do not, however, have to refer someone who needs sponsorship.

• Why are you being so nasty about this “but for” rule?

Sorry, I guest it’s just my natural personality showing through. Look, it’s true that the but for rule will give you the correct answer more often that not, there is just no law to that effect. A more accurate description of how a court will often rule is that you are entitled to a fee if your actions are the proximate cause of the employment of your candidate by your client. However, you really should be exercising your right to write the “law” yourself, by drafting your contract accordingly. If you want a “but for” rule, put it there. If you want a “proximate cause” rule, write it that way. If you want to get paid if your candidate is hired within X months following your referral, even if your referral didn’t cause the placement, you can put it in the contract. Don’t wait for a court to interpret your contract when you can write it clearly yourself. As you know, more and more clients are drafting contracts as they rush to fill the vacuum left by recruiters who fail to state what they have to do to be paid. Again, you may find helpful model agreement clauses at www.recruitinglife.com.

As I stated at the beginning of this article, the above is more of a starting point for thinking about the questions than a complete answer. 

See also 

Recruiters - FREQUENTLY ASKED QUESTIONS PART II –one lawyer's effort to summarize additional issues that may trouble you

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Biography

Robert Style is special counsel to the firm Astor Weiss Kaplan & Mandel, LLP; with his practice focused on the area of Employment law. Since 1976, has maintained a private practice in Philadelphia, Pennsylvania  focusing on employment and corporate law, with an emphasis on the representation of clients engaged in various aspects of the staffing industry. Prior to that, from 1969 to 1976, he served as Vice President and General Counsel of Snelling and Snelling, Inc.

He has served as general counsel to various staffing industry trade associations, including the National Association of Personnel Services (since 1977), the Pennsylvania Association of Personnel Services and the Mid-Atlantic Association of Personnel Consultants. His representation of staffing industry clients has included counseling, contract preparation, litigation relating to employment discrimination issues, fee collections, enforcement of employment agreements, as well as issues arising out of the Fair Labor Standards Act, Family and Medical Leave Act and the Employee Polygraph Protection Act, mergers and acquisitions, workforce transition issues and co-employment issues. He has spoken on staffing industry issues to associations, networks and employees of staffing firms, and has addressed clients of staffing companies on labor and employment law issues.

Bob has written frequently on issues affecting the staffing industry and is the author of the Certified Personnel Consultant's Legal Manual, the manual used by the National Association of Personnel Services in connection with its CPC program.

His presentation will include an overview of what you must know to prepare for the certification exam, and he will answer any questions attendees may have about the study material or the laws affecting various aspects of the staffing industry.

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