“We hired them for another position.”
The reason I am spending a whole chapter on this particular subject is we are seeing a trend, with larger companies specifically, where they are hiring our clients and having them sign a contract that is position specific. As you read this, you may feel that argument is very close to the last reason we discussed in the previous chapter. That argument was “We hired them as a consultant, not as an employee.” A lot of the time, it is going to depend on that same common theme we have talked about throughout the other chapters: how your agreement reads. I am also working off the assumption you have a signed agreement. It is so much easier for us to collect on something where the agreement is signed and has the magic wording: if they are hired in any capacity or in any position, a fee would be owed. From a collectability standpoint, getting the fee is going to depend on the size of the company. A large company would more than likely have you sign their agreement stating the fee collection is position specific. We are seeing more and more of these types of agreements with larger companies. I cannot stress to you enough how unfair they are to the recruiters, and you need to be very careful before you enter into any type of agreement. I cannot tell you how many times per month I talk to a recruiter, and they have this type of situation. The recruiter tells me, “I know that I signed the agreement, but they shouldn’t be allowed to hire my candidate if it’s for a different position.” It may be unjust from a moral standpoint, but if they signed an agreement that states it was a position only search then they are quite frankly out of luck. We also have success with the smaller Mom-and-Pop businesses because they typically do not argue the wording of the contract. I feel it is a character issue where they had no intention of paying you from the start, and now they are just trying to find a creative way to justify to themselves that they are not going to pay your fee.
On these types of excuses and arguments, the best defense is to make sure that you have all of your bases covered before you start to do business with a company. Make sure that if you sign their agreement, you or your attorney review it to make sure it does not have wording in there specifying it to be position only. If you do sign, I can tell you the second you turn it over to us and we reach out to the debtor they are going to have their attorney, whether he is in-house or contracted, point out that their client does not owe a recruitment fee because the contract clearly states that it was position related. If they make that argument and you used your contract, we are going to be in a stronger position, especially if that contract is signed and has the wording, “If the candidate is hired in any capacity or in any position.” If you do not have a signed contract, we still have about a 70%-75% shot of getting it collected for you but it does make it more difficult. It also makes it more likely the debtor is going to push for a lower settlement figure than they would if you had a signed contract. In this scenario where they claim this and it is a Mom-and-Pop business, for about half of these we were able to collect the full balance. About half of the remaining ones are able to get an agreement to settle soon. In these types of situations, the debtor has more than likely set it up with no thought in the back of their mind of paying fees.
Case Study Number One:
Large-Sized 500 Million Dollar Company
Fee Owed: $39,000.00
Reason for Dispute: Our client signed a position specific agreement with a very large American-based company. Their candidate was not hired for the position of regional manager but was later hired as the VP of sales. The debtor hired multiple recruiters to fill multiple positions, and their argument as to the reason why they had a specific position agreement signed was that they could stop issues arising where the same candidate was being presented by multiple recruiters.
Resolution: The debtor’s attorney called and point out that the agreement was a “position specific search agreement”. We were able to get a 50% fee for our client because we discovered a few days after we had the conversation with the debtor’s attorney, there was another agreement they had signed on our client's behalf two years ago that was not position specific. Their agreement did not cancel out any other agreements, and therefore our argument was that agreement was specific to that hire. The fact that they hired one of our client’s candidates and placed them in another position meant that they owed a fee. I can tell you if this had been sent to one of our forwarding attorneys, they would not have filed suit on the clients for half of the fee. They would have told us that we did not stand a chance if this went to court. We just blew enough smoke and had the debtor’s attorney convinced that they were going to have to defend it, and the client assumed that they would spend about $20,000-$25,000 in legal fees. Our client can handle it on a contingency basis. I can tell you that we would not have been able to collect a dime if there had not been a previously signed agreement.
Case Study Number Two:
Small-Sized Startup Company
Fee Owed: $11,000.00
Reason for Dispute: Our client presented a general manager for a freight distribution center. The debtor claimed that the fee was not owed because our client originally presented the candidate for the general manager position, and he did not have any other qualifications that would have made him a good general manager. A few months later, they discovered that they needed a supervisor role position in the warehouse; they hired him as a warehouse manager.
Resolution: This was a longtime client that had been trained by our webinars for the last two decades. Our client had a signed contract which had the magic wording stating, “If the candidate was hired for any position and was hired within 12 months of the last presentation, they owe a fee”. Once we got involved, the debtor avoided us for a few weeks and eventually got their attorney involved. I brought it to the attorney’s attention that our client had a well-written, signed agreement, and if this escalated out, they would have to pay the legal fees on top of the recruitment fee. The attorney highly recommended to his client that they pay the fee immediately. The debtor overnighted the check to our office.
Wilson Cole is the founder and CEO of Adams, Evens & Ross, the nations largest credit and collection agency design exclusively for the staffing and recruiting industry. In 2008 he was inducted into INC Magazines, “INC 500” for being the CEO of Adams, Evens & Ross, the 307th fastest growing privately held company in America. This exclusive group of other INC 500 CEOs includes Bill Gates of Microsoft and Larry Ellison of Oracle.In 2007 Recruiting & Staffing Solutions Magazine’s Editorial Staff named him “ The Billion Dollar Man” due to the fact that he had collected or helped his clients collect more than 1 Billion dollars in past due debt over his career of almost 20 years as CEO of Adams, Evens & Ross.