The Top 5 Things to Do to Prevent Backdoor Hires
Wilson Cole | October 4, 2021
At some point, every staffing and recruiting firm will have to deal with the trouble of tracking backdoor hires. For those who have not encountered the term yet, backdoor hires are the candidates that a client employs without the knowledge of their staffing or recruiting company. A client does so when they believe that they do not owe a fee for certain reasons, or they just want to avoid payment. It is not ideal but it is a reality that recruiters have to face.
Some clients can be more difficult to approach than others so, before you become a victim of backdoor hires or before you begin tracking, you need to recheck a few things to raise your chances of collection.
To help you out, we’ve compiled the top 5 things that you need to do to avoid backdoor hires or to make your collection less complicated. Some of these things are often overlooked but each one is equally important.
1. Secure a signed contract.
In our opinion, a signed contract should be a basic requirement for business dealings, but 50% of the accounts that come as backdoor hires do not have a signed contract. The recruiter may have been too trusting or simply unorganized, but whatever reasons they may have, not having a signed contract weakens their position.
2. Have a 12-month possessory period from the last presentation.
In our opinion, a signed contract should be a basic requirement for business
A possessory period is an agreement between the hiring company and the agency that, if the client hires the candidate within a certain time frame, they owe a fee.
A 12-month possessory period provides a safety net because anything less is simply too short. It is also important to mention that the count should begin from the last and not the initial presentation of the candidate.
3. Do a name-clearing provision.
For niche industries where everybody knows everybody, it is highly possible that the client and candidate may have encountered each other before the presentation. Lay it out on the agreement that, if the client has interviewed the candidate within the last 30 days, they will inform you in writing within a 24-hour name-clearing provision, so they won’t be able to use this as an excuse in the future.
4. Know the affiliates of the company.
It is not unlikely that your client will refer your candidates to an affiliate company or a different division so, it’s best to know the affiliates, branches, or subsidiaries of the company that you’re dealing with. State in your contract that if the parent company refers the candidate to an affiliate and they get hired, the said client will still be liable for the hiring fee.
Never forget to have the contract signed by the parent company because an unsigned contract weakens your case before it even begins.
5. Know who you are dealing with.
You might think this is basic but you would be amazed by how many times we have dealt with scenarios where the indicated business name of the client does not match their legal name.
Be careful with every detail, down to the exact punctuation marks, of your client’s business name on the contract because a slight mistake may invalidate your right to collect.
Every staffing and recruiting company will encounter a problematic client sooner or later. As you conduct your business, remember that it is important to check every part of your contract including the signature, possessory period, the inclusion of a name-clearing provision, the exact business name of your client, and if you have stated the liability they shoulder if an affiliate hires your candidate through their referral.
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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.