WHAT TO DO WHEN YOU DISCOVER A CONCEALED PLACEMENT

WHAT TO DO WHEN YOU DISCOVER A CONCEALED PLACEMENT

At some point you may discover you have been wrongfully deprived of the benefit of one of your hard earned placements by the client hiring one of your candidates without telling you. Feelings of shock, surprise and anger often arise. The knowledge that one of your candidates was hired without your knowledge can come from the candidate after resignation from the undisclosed placement seeking your help to find a new job; from another recruiter, or by calling the candidate to ask if they are interested in a new job opening. Finding out about the concealed placement is actually a good thing because it gives you a chance to recover your fee or possibly even three times the amount of your fee.
What should you do when you discover a concealed placement? First, you must fight the temptation to immediately contact your employer client to confront them. Instead, you should first obtain an Affidavit or at least a letter or email from the informing source and/or the candidate to confirm the information before confronting the employer. Your goal is to get a factual Affidavit signed by the candidate and notarized if possible. The Affidavit must be strictly factual and not based on opinions. Obtaining your own Affidavit will not be considered practicing law if done for your own use. It will not be usable at trial as direct evidence but it can be used for impeachment if your candidate later changes their story. It can also be used to support pleadings and for review by experts. Feel free to consult with your own counsel with any questions or to prepare the Affidavit for you. It is also critical to thoroughly investigate all facts and obtain all confirming documents to complete your investigation.
After you are ready you should make a phone call to confront the hiring authority with all of the facts. You should also make a memo to your file in summary of exactly what was said in the conversation. You should then prepare an invoice for presentation of the placement fee and a notice letter to the employer sending the Affidavit or letter, all confirming documents and the invoice.
You should also examine Section 2501.101 of the Texas Occupations Code to determine whether there has been a statutory violation. You are looking to determine whether the employer client made a false statement or concealed any material fact to obtain an employee by or through you. If they did so knowingly, you should consider whether you have the right to recover three times the amount of the placement fee.
As a recommended best practice, if you want to try to reduce the chances for a concealed placement in the future you may want to obtain an acknowledgement from each candidate before you refer them for a new job opening as follows:

“The Candidate acknowledges that, although not obligated to pay any placement fee to the Recruiting Firm, the Candidate shall notify the Recruiting Firm of the receipt of any job offer or the making of any employment agreement with any employer to whom the candidate was referred by the Recruiting Firm”.

This acknowledgment can be in a stand-alone document or inserted into one of your standard documents that you ask the candidate to sign.
You may also wish to insert a clause into your fee agreement as follows:
“The Texas Occupations Code provides that the employer may not make any false statement or conceal any material fact for the purpose of obtaining employees by or through a personnel service. Employer covenants and agrees to disclose to the recruiting firm each and every job offer or employment agreement made at any time with a candidate referred by the recruiting firm. The failure of the employer to make such disclosure may result in the employer’s liability to the recruiting firm for three times the amount of the placement fee as provided under Texas law. In addition, any guarantee offered by this firm will be automatically voided.”

Hopefully this situation will not happen to you often or at all, but if it does, your systematic approach to the problem will put you in the best position to recover your concealed placement fee.

Best regards,

Brian D. Melton
Shackelford, Melton & McKinley, LLP
3333 Lee Parkway, Tenth Floor
Dallas, Texas 75219
(214) 780-1450
(214) 780-1401 (fax)
bmelton@shacklaw.net
“The opinions stated in the foregoing article shall not be considered specific legal advice and are merely intended for discussion purposes. You should consult your own counsel for specific legal advice.”