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Jeff on Call: Recruiting and Non-Competes

Oct 8, 2009

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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.

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