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Sep 19, 2011

This week’s inquiry comes from Mary Anderson:

Jeff, I have been an avid reader of The Fordyce Letter and your “Jeff’s On Call!” column for over 10 years. Reading your column has helped me to avoid a number of pitfalls that you never think will happen to you. Your insight and legal knowledge has been very helpful in running my business. I’ve run into a situation that I don’t recall having been addressed in your column before, but I know you’ll have the answer.

I’ve had a signed contract and have made placements with a firm since 2006. I have not made any placements with them for the last few years due to the economy, ever-changing HR personnel and hiring managers, etc.  However, I have always stayed in touch with them throughout these years and sent them candidates for positions that never went anywhere.

A couple years ago, this firm was bought by another firm, but remains a separate entity in name.

About six months ago, I started working very closely with two new HR people and several hiring managers in different locations. I sent them resumes, they interviewed my candidates, etc. etc. During this process, I was informed by one of the HR contacts that the new company had implemented a new HR system that requires all recruiting vendors to use this system for applicant tracking and client management. I was emailed an RFI to complete and return. The RFI was made up of questions only related to my company’s ethics program. Did I have a formal ethics program? Did we do an ethics audit once a year? Did we regularly train our employees on ethics issues. etc. I am a sole proprietor and do not have a formal ethics program, so I had to answer each of these questions “no.” However I added an addendum stating how long I had worked with the company, the names of the employees I placed with them, the hiring managers I worked with closely, and offered additional references.

I received a call from my HR contact and was told that they could no longer work with me because I was determined to be “adverse.” I asked what that meant and the HR person told me she was only the messenger and did not have any further information. I asked for the name of the person in compliance that made this decision and she wouldn’t give it to me. I told her I had an existing contract and reminded her that the firm has continued to accept and interview candidates from me. I told her my reputation was on the line and that it was very important to me to be able to discuss this further. She said she’d do what she could and call me back. She did call me back and said she was told by compliance that even if I talked to them directly, I would get the same answer. This time the HR person used the words “background check.” Well at that point I could hardly talk because I know for a fact that I have a completely clean background whether it be credit, criminal, or otherwise. She also said that the contract I had with them originally was no longer valid because the new firm was using this new system. I proceeded to tell her that the very last statement on the original contract is in regards to Termination Notice, and it states that either party can cancel the contract with prior written notice. I informed HR that I never received written notice.

At that point the HR person asked me to fax her a copy of the original contract and she would send it over to the compliance department. I did that, but have not heard anything back.

Jeff, can a company do this without informing me as to the reason WHY I have been found to be adverse? Although I don’t want to lose this company as a client, I am more concerned about my reputation. I have strong relationships with hiring managers in this company and I don’t know what I’ll have to tell them when they are ready to hire again. This could really damage my reputation. Also, if I knew for a fact that this was based on the RFI responses, I would research to see if there was some kind of ethics program for a sole proprietor, just so I could fulfill their requirements.

Please Help!


Hi Mary,

Thanks for your most gracious comments. I’m so pleased that you’ve been listening and learning. Your success is our goal!

You shouldn’t have to go through all this turmoil with an obviously misguided client. However, it sounds like it can legally stop working with you for any reason — or no reason at all. That “Termination Notice” requirement just sounds like a formality. Even if you had completed the RFI (request for information) process and the bid was accepted, most of those open bid deals are terminable at will by either party anyway.

I’ve written many ethics codes, rules, and enforcement procedures for our industry trade associations, networks, and franchises. Typically a draft goes to the volunteer “ethics committee” for deep-tissue massaging. So the result is an abstract marketing piece that ensures no member will get nailed, but (they think) sells well to prospective clients and candidates.

The dirty little secret is that prospective clients and candidates don’t want “ethical recruiters.” They want effective ones. (Another is that clients don’t care how much they pay – for results. Junkyard dogs are high billers. They charge and get paid full fees.)  Recruiting reality doesn’t yield to recruiting rhetoric.

Do you want the most ethical lawyer? It’s not that a professional shouldn’t be “ethical.”  It’s that “ethics” is the subjective, daily way that a professional conducts himself.

That’s why my take on this whole “ethics” business is that “professionalism” is synonymous with “personal preference.”

There are four things that might help if you want to continue the relationship (then a fifth if they don’t work):

1. Ask the human resources manager for a copy of some ethics policies they’ve accepted.

State that they can just redact (“excise” or remove) identification of other vendors or any items that don’t apply to you.

That way, you’ll find out immediately whether the background check (if any) really persuaded them, and whether you’re really considered “adverse.”

If you receive samples, just rework them with the same words and phrases. Then submit the policy.

2. Google trade associations, networks, or business groups for codes of ethics (rules of professional conduct, business practice standards, etc.).

All business and professional trade associations have these masterpieces. They’re almost identical.

Just play their silly game. Again, no real-world business obsesses over this stuff.. If they’re in business for a profit, they want the most effective recruiter. Period. They just don’t want to get caught recruiting from a competitor or misrepresenting to a candidate.

They also don’t want to get caught doing what they’re trying to do with you. Because the more they try to monitor the process, the more liable they become for conspiracy. That’s two or more persons doing what neither of them should be doing separately. (Perhaps you can place an employer lawyer over there in the “compliance department!”)

Does that client want to get nailed for participating in a violation of the code of ethics?

3. Ask the human resources manager what he means by “adverse.”

Adverse is a very specific legal word. It’s the first half of the legal phrases adverse impact and adverse party.

In the 1971 landmark case of Griggs v. Duke Power Co. (401 US 424) the United States Supreme Court found that a “facially neutral” (otherwise acceptable) employment practice could be implemented in a way that had an adverse impact (discriminatory effect) on a protected class (racial minority, etc.).

Perhaps the HR or “compliance” folks are just using the word because it sounds like they know more than they do. But it’s worth asking for an explanation of why that five-dollar word is being used to describe you.

Lawyers use the phrase adverse party to refer to the other side in litigation too. Again, why the use of a five-dollar word to describe you?

4. Demand a copy of the “background check.”

Since your business is not a consumer or candidate, there’s no way to compel the documentation without filing a lawsuit.

But it might shake these folks up enough to reconsider their arbitrary decision.

Then, if all else fails,

5. Tell the human resources manager that you’re changing your company policy from “compliance” to “compensation.”

Do this by a “courtesy” phone call. It’s over, and the “ethical” thing to do is tell him why.

When clients start dictating how you are to run your business, you quickly reach a point of diminishing returns. It starts because you identify with a “client” to make placements. You must. How else can you sell well?

But when you’re abused like this, it’s time to go from “professional detachment” to “professional attachment.” To yourself – who you are, what you do, how well you do it, and how little you’re appreciated. That deal is terminable at will for you too. Unfortunately, for them.

That’s about all there is to know here. It sounds like that “client” could really use someone like you.

Hopefully you’ll straighten them out now!

Best always,


If you have a legal question you’d like to have Jeff answer here on The Fordyce Letter, check out Jeff’s On Call! and submit your question.

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