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Jeff on Call: Enforcing Candidate Acceptance Agreements

Feb 19, 2009

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Welcome to Jeff on Call…your opportunity to “Ask Jeff” a placement-related legal question. This article is the first in a long-term series of Q&As, and I invite you to participate — email me directly at jeff@placementlaw.com with your question. (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 enforce a CAA (Candidate Acceptance Agreement) requiring candidates to accept good offers?

A. Theoretically, yes.

There is no specific law at the federal or state level prohibiting an individual from entering into a personal service contract.

So we could construct a CAA that would be definite and certain enough to meet legal specificity requirements for offer and acceptance—and we could even pay consideration to complete the contract formation.

Whenever we’re dealing with requiring someone to perform an act without being paid, the major defense is the 13th Amendment to the U.S. Constitution. The Emancipation Proclamation of 1864.

It states simply:

Neither slavery nor involuntary servitude except as punishment for a crime, . . . shall exist within the United States. . .

If it is a business-to-business arrangement (as where an independent contractor uses a privately held corporation), there is no problem at all.

Next, employment agreements generally are considered disfavored contracts by the courts. This means that courts are strict in reviewing them because there is a high likelihood that the employer will take advantage of the employee’s need to work. This is why we are so careful in our drafting and updating of our agreements. Over 80% of the employment agreements we see are unenforceable—or even worse–illegal!

Courts look to the extrinsic circumstances surrounding the execution of the contract. If they find any evidence of fraud, undue influence, duress, mistake of fact or mistake of law (even if oral), whether by the employer or not, the agreement will not be enforced.

The courts are starting to punish employers for overreaching. An example is the U.S. District Court case in California, Latona v. Aetna U.S. Healthcare, Inc., 82 F Supp2d 1089.

The court stated:

It is not asking too much for Aetna to refrain from requiring its employees to sign presumptively illegal provisions and the fire them when they refuse to do so. (82 F Supp2d 1095)

Finally, unless there is a specific term in a written employment agreement, the contract is terminable at will. So technically, the employer could avoid liability by accepting, working a short time, then resigning. Binding the employee to stay on the job would be unenforceable, since the client is not a contracting party.

If you use a CAA, make the offer terms as clear as possible, include compensation, benefits, relocation and other requirements in detail, and include a hire-on bonus upon acceptance (the amount doesn’t really matter – legal sufficiency not adequacy counts). Then use it to make more placements knowing that a court will not order specific performance (requiring the candidate to accept) or damages (money to compensate you, punish the candidate, or make an example out of her).

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