My name is Jeff Weisberg from JW Resources, a contingency search firm. We are a small specialized boutique firm.
We go to your Jeff’s On Call! column and The Fordyce Letter as soon as we get into the office, and have been following your advice for years.
This morning I terminated my agreement with one of my clients. This was primarily due to a lack of assignments that I have been given over the past year. I placed one individual several months ago due to an old assignment, but hadn’t received any additional assignments during a one year period. I am fully aware that they have been using several other firms on a regular basis based on job postings and by talking with candidates in the industry.
My agreement states that it can be cancelled by either party at anytime and there is nothing stated about recruiting their employees. So I canceled the agreement and they responded, “What is your reason for canceling?” I told them that it has been an unproductive relationship for JW Resources and wished them well. He responded, “I wish you well; stay away from our people!”
My question is this: I’m thinking about recruiting some of their employees for other clients. What is your opinion and do they have a legal leg to stand on?
Thank you for your time and constantly keeping us sharp.
Jeff WeisbergJeffrey A. Weisberg JW Resources Executive & Technical Search Consultants
Jeff Allen Responds
Thanks for the compliment and asking about the raiding rules of the road. It’s a pleasure assisting you, and now assisting our readers.
Let’s all get a little driver’s training for our Legaland ride:
- Go to www.placementlaw.com.
- Click the Placement Manager’s Law Quiz button in the middle of the bottom row.
- Take the PMLQ.
- Click the Placement Law Language Quiz on the right side of the bottom row.
- Take the PLLQ.
- Click the Answers to Placement Law Quizzes button at the end of the bottom row.
- Grade yourself.
- Get back to this screen.
- Take the wheel and turn on the GPS.
- Fasten your seat belt and smile.
I just checked my wallet – now my State Bar card can be used for more than a discount at Hertz.
We’re off to Legaland!
Here’s how those raiding rules work for recruiters:
Okay, we’re cruisin’ down Search Street, justa smilin’ and dialin’ on our way to Placement Place.
Legaland has installed a bright red light at the Raid Road intersection that flashes “STOP”! It’s the warning that prevents you from crossing over. Raid Road is a rocky road, and is dark and dangerous.
Literally dozens of federal and state laws prohibit corporate raids. The initial problem is defining what they are.
Remember how cautious and tentative you were in your first direct recruiting call? Then as you drove that Search Street path toward Raid Road, you felt more and more comfortable in offering someone a better opportunity at Placement Place.
But did you then cold call someone during working hours? On the job? Did you send an email to the prospect’s work address? Did you get it surreptitiously by some misrepresentation? Did you persist after a recruit asked you to stop? After a supervisor asked? Did you ask for referrals? How? Did you use an email blast? Was it a direct solicitation to leave the source? Did it go to unintended recipients like source management? Did you jeopardize a critical project at the asylum by spooking the inmates?
Recruiting is all about the chase, so it’s easy to get lost in Legaland. Crossing over to Raid Road can happen instantly if you don’t watch where you’re going. And that assumes you can control all the variables.
I could teach an entire traffic school class on this subject, but here’s the (don’t) crash course:
The raid theories used by employer lawyers include interference with contractual relations, interference with prospective business advantage, misuse of trade secrets, unfair competition, invasion of privacy, conspiracy, and a web of federal and state unfair trade practice statutes.
However, the underlying law is an intentional tort (non-contractual civil wrong) theory called inducing breach of contract. Although it sounds like breach of contract, the similarity ends there.
Inducing breach of contract is the act of persuading the candidate to break his or her employment contract with the source employer. If the source proves this “maliciously” occurred, an injunction (an order that you cease and desist) can be immediately obtained. At the trial, punitive damages (to punish you) and exemplary damages (to discourage other recruiters by making an example of you) in an unlimited amount (in the discretion of the judge or jury) can be awarded.
For those readers we’ve represented or who’ve followed our writing, inducing breach of contract is familiar. That’s because it is one of the primary ways we nail runaway recruiters who take and misuse use the client and candidate database of their ex-employers.
The quick three-point analysis when you’re smilin’ and dialin’ while drivin’ is like this:
1. Was there a legally-enforceable contract?
Everyone you’re trying to recruit has a contract with his or her employer. Generally these are at-will contracts, meaning they are “terminable at will” by the employer or employee.
The usual analysis – too often even made by lawyers – is, “Since the employee can terminate the contract at any time, recruit away!” This is a serious oversimplification that has been consistently addressed by a century of federal and state appellate court rulings.
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My favorite is the U.S. Supreme Court decision rendered in 1915 (Truax v. Raich, 239 US 33, 60 L Ed 131, 36 S Ct 7) that stated:
The fact that employment is at the will of the parties respectively does not make it at the will of others . . . and by the weight of authority the unjustified interference . . . is actionable although the employment is at will.
So we’re dealing with a contract, and you can interfere with it.
2. Was the conduct “malicious”?
The courts aren’t quite sure what malice is. But you’re supposed to know.
American Law Reports, one of the most highly-respected legal encyclopedias, states:
Any further discussion of [malice] should, for purposes of clarity, here point out the lack of scientifically accurate terminology which has mitigated against clearness in decided cases, both in conception and discussion . . . The “malice” which will make one liable for procuring a breach of contract is malice in its legal sense, and does not consist of spite or ill will. (84 ALR 50)
Malice can be presumed by a raid and placement with a competitor. This shifts the burden of proof to you to show an absence of malice. If you can show something didn’t occur that isn’t defined, you may qualify for honorable mention in the next edition of ALR.
3. Are you doing the source a favor by removing its undesirables?
We call this the “outplacement fee defense.” Maybe the source should split the fee with your client! Believe it or not, this argument can be quite effective to stop the source employer from pursuing its inflated claim.
This is why it’s so important to find out what your candidate doesn’t like about his or her current position. It not only helps you recruit and helps you place, it helps you defend against the (usually grossly inflated) claims of how the candidate was solely responsible for the employer’s survival.
I originally started using the “outplacement fee defense” just to get a laugh from the judges. It did, so like any comedian I kept it in my repertoire.
Then one took it seriously and dismissed the case against my client. That was all I needed to use it seriously too. Tell your lawyer. If he or she laughs, get another one.
The amount of injury to the source employer doesn’t necessarily affect your liability. It is the wrongful interference itself that is being enjoined (stopped) and then punished once the trial is held.
A Harvard Law Review comment states how expansive liability can be:
[Inducing breach of contract] includes not merely the procurement of a breach of contract, but all invasion of contract relations . . . Any act . . . which retards, makes more difficult, or prevents performance. (4 Harv L Rev 728)
We’re seeing an increasing number of contractual interference cases these days. Since you’re a paid member of the raiding (not “racing”) team, and since your client has the money, it’s inevitable that conspiracy will also be alleged. This leads to you and your client wrestling at the wheel, and a wild ride to the courthouse.
This should help many drive safely – to VIP parking on Raider Row.
Now that we’re done with the law, let’s have some laffs.
Irate employers have been trying to stop recruiters from sourcing ever since the first recruiter sourced. Fear and anger are counterproductive responses.
So we’ll script a reply. (No, it’s not “You’re either a client or a source!”):
Our business provides a valuable service to our clients, as you undoubtedly know. We don’t get paid to search for those who are unemployed. So let’s get real:
Your premise that we’re stealing your people is based on two fallacies. First, no recruiter can “steal” someone who doesn’t want to be “stolen.” Second, they’re not “your people.” They’re intelligent, career-minded, free agents who will make their minds up after careful reflection about their futures.
Perhaps you should be using your management time in positive ways to reduce employee turnover. This includes motivating and engendering loyalty in your employees. Erecting a very visible fence only makes the grass look greener on the other side.
The morale of employees suffers when they are shackled. That’s why the lowest amount of productivity exists in countries with the least personal freedom. In fact, the strictest employers make the best sources for us to recruit qualified candidates.
The U.S. Chamber of Commerce surveys consistently reveal that employees want the following things from their employer (in order of importance):
- Job security.
- Competitive pay and benefits.
- Inclusion in the decisions affecting their job.
- Interesting work.
- Pleasant office surroundings and coworkers.
- Promotion and development potential within the company.
- Sympathetic understanding.
- Fair performance evaluations.
We have an anonymous survey we can conduct for you at no charge, asking whether your employees think your supervisors:
- Ignore their achievements.
- Criticize them too often.
- Fail to do their share of the work.
- Review, give raises, and promote equally.
- Discipline firmly, fairly and consistently.
- Set a good example.
- Assign, delegate and monitor work realistically.
- Encourage them.
- Support them.
- Reward them.
Would you like us to administer the survey professionally for you? Again, at no charge. It would help you identify morale problems so you can address them. We’ll even suspend any recruiting for 90 days so you can work on correcting them.
What’s it worth to you for us to weed out your “deadwood”? Your malcontents?
We’re doing it at no charge, but we should be charging you a hefty outplacement fee!
Would you just prefer that we place a very specific internet job posting, classified ad, or how about if we rent a local billboard to recruit your people? These public ways of recruiting are perfectly legal and very effective. Or maybe we should just distribute flyers in local parking lots and restaurants.
So there you have it. Use all or whatever parts of this script you like, but use it well!
Thanks for asking, Jeff. You can don your Raiders t-shirt now.