Instant Falloff? Worry About Protection, Not Collection

Hi Jeff,

I am a big fan of yours, and have followed the Jeff’s On Call! column for years.

We just just heard something very disturbing, and need your help.

Our client is in in Pennsylvania, and we made two placements with them in the past. We were paid with no problems.

Our most recent hire is a controller who lives here in Florida and was expecting a moving company to arrive tomorrow for relocation to her new position. She just received an email from our client telling her that they lost a big contract, and decided not to have her start with them. She is furious, as you might expect.

The candidate has an offer letter that includes the moving expense reimbursement, details the position, salary, severance package, etc. The client didn’t inform us about any of this.

We feel we’re entitled to our fee, and want to help the candidate. What should we do?

Thank you in advance!

Linda Faulkner

Jeff’s Reply

Hi Linda,

Wow. So sorry you’ve encountered an instant falloff.

There’s nothing like watching from Placement Place as the Fun Factory truck rolls out of the diner and the candidate falls off. A “whiplash!” cry, a heartbreak feel. Then a heart attack worry.

A wild ride ensues on the way to the Demolition Derby, and you need to be ve-r-r-ry careful. So let’s give everyone in Placeland driver training.

  1. Go to www.placementlaw.com.
  2. Click the Placement Manager’s Law Quiz button on the bottom row.
  3. Take the PMLQ.
  4. Click the Placement Law Language Quiz button on the bottom row.
  5. Take the PLLQ.
  6. Click the Answers to Placement Law Quizzes button on the bottom row.
  7. Grade yourself on the PMLQ and PLLQ.
  8. Get back to this screen.

Okay, speed-searchers — pedal to the metal. Let’s hit the road. Vr-o-o-om!

Feels good, ay? You needed that. But now quick – slam on the brakes!

Why? Because the instant falloff scenario isn’t about collection. It’s about protection. The conned candidate can be expected to allege many legal things against the conning client — and too often, the allegedly conning consultant.

What Did You Say?

Whether you will be named will depend on the answers to the following questions:

  1. Did you call your recruiter self a consultant or counselor?
  2. Did you call the contingency-fee employer your client?
  3. Did you make any representations about the client’s stability?
  4. Did you make any representations about the candidate’s job security?
  5. Did you make any representations about the candidate’s promotion potential?
  6. Did you participate in extension of the offer?
  7. Did you participate in a counteroffer rejection?
  8. Did you participate in any relocation arrangements?
  9. Did you say or do anything that could be reasonably construed as false (regardless of your knowledge or intent)?
  10. Were any of your representations in writing (including emails)?

Any “Yes” and nobody will accuse you of driving a Smart car. An armored car would be nice. So brake hard, listen for the scr-e-e-e-ch, then slowly pull over to the side of the road.

Think protection.

Immediately stop any involvement with the candidate. This means curbing your primordial urge to:

  • Persuade the candidate to blame the client.
  • Promise you’ll place the candidate somewhere else.
  • Exculpate (escape liability) for your participation in the hire.

The reason for this is that the likelihood of you admitting liability – either expressly or impliedly – is somewhere around 100%. That is about the same probability as the candidate getting a lawyer faster than you can say “falloff fault.”

2. Stay away from the un-client.

This oft-needed procedure is known as “zipping-the-quivering-lip” (or “freezing-the-keyboard-finger”) so you don’t instinctively:

  • Persuade, cajole, threaten or otherwise attempt to force the client to hire the candidate. (This includes your brilliant, objective, knowledgeable, unsolicited employer lawyer advice.)
  • Pursue collection of your wannabefee.
  • Ask for indemnification (being “kept” like a mistress – or mister too I guess) from the mistakes, misdeeds and mismanagement that you can’t miss.

I know what you’re thinking, Linda and you Speed Searchers. You think, “I can do this! I can just get back in the driver’s seat, snap the buckle, pump the pedal and race down Placement Place.” Fine. Pile in.

That’s me in front of you waving the red flag. You’ll just have to run me over. Surely this will demonstrate the depth of my commitment to making the world safe for placement.

Here are some rules of the road to stop you too. Please read them before you kick through the floorboard:

1. Breach of Contract

When a candidate receives an offer, the client impliedly promises there will be a steady gig. The candidate accepts the offer and starts working. If the candidate is canned, how does he enforce the promise? There’s no consideration (something of value) paid for the promise of continued employment.

So under traditional theory, no consideration, no contract.

But the trend is for the courts to use detrimental reliance as a substitute for consideration. Did the candidate give up a secure job? A pension plan vesting? Medical insurance coverage? Extended vacation benefits? A chance to perform his putaway in the company badminton tourney? Did he turn down a counteroffer? Another job offer? Did he relo (as he tried to do here)? Did he lose a spouse’s second income? Were his kids uprooted? Did he take a loss on the sale of his house? Can this be a really long paragraph?

Any of these things can establish enough detrimental reliance to give a court a hook so it can find a breach of contract. The client is estopped (stopped) from denying enforceability of the promise of continued employment.

Therefore, the theory is called promissory estoppel – a substitute for consideration.

Contract as promise bookIf you read the JOC’s like a serious speed-searcher, you know what I’m about to say. If you don’t, welcome to Harvard Law. Get your hands on Contract as Promise by Professor Charles Fried. It’s brilliant, and will enable you to impress your lawyer. This will tend to lower your legal fees, thereby paying for the book once you utter the title page aloud.

Article Continues Below

Oh, right. Back to our collision. (See? I’m fine. Gotta be quick tho.)

You get rear-ended by being involved as:

  1. An agent of the client in a lawsuit brought by the candidate.
  2. An independent contractor in a counterclaim for indemnification brought by the client.
  3. An agent who exceeded his authority or an independent contractor who promised directly in a lawsuit brought by the candidate or the client.

Even though breach of contract only invokes (puts in play) compensatory damages (an amount equal to the actual detrimental reliance), the damages can be astronomical. Wage loss projected to retirement, pension forfeiture, terminal illness med pay, losses on the sale of a shack, moving and storage expenses, etc. This can be a really long paragraph too.

2. Negligent Misrepresentation

Job offers are almost always coupled with overdoses of opium optimism. Why else would an employed, entrenched candidate accept?

Giving you (and the client) the benefit of the doubt, the representations (oral or written) were made in good faith.

Intent doesn’t matter to anyone but you, though. All the candidate needs to establish (prove) is that the representations were made, and that the detrimental reliance occurred.

 3. Fraud (Intentional Misrepresentation)

This is where the ambulance arrives, since anything the candidate can find to show (prove) that you (or the client) knew the promises were promiscuous will invoke:

  • Punitive damages to punish you (or the client).
  • Exemplary damages to make an example out of you (or the client).

These are basically unlimited, since they’re in the discretion of the judge or jury.

The ultimate goal after the dust settles is to have your lawyer confer (expensively talk) with the employer lawyer about the virtually unlimited exposure here. Employer lawyers have risk-averse DNA. So they’re surprisingly receptive to recommending company checks in exchange for releases of all parties (including you).

Payroll checks to the candidate for a year or so are the lowest insurance premiums available anywhere. Tax deductible as well.

Of course, your lawyer’s fee must be paid for this advice, along with your invoice for the full fee.

As everyone’s leaving the scene, here’s a gift that leverages promissory estoppel into placement fees. It digitizes the analog way you make placements into the legally-necessary form so a judge or jury can compute the amount of your reliance damages.

Those damages are organized by using our unique Pre-Placement Activities Worksheet.

To get it, say, “Charles Fried, friend in need!”

  • Go to www.placementlaw.com.
  • Click the red JEFF’S ON CALL! button.
  • Type Pre-Placement Activities Worksheet in the Subject field.
  • Click Send.

I’ll reply with the Worksheet.

Instant falloffs are a mess. How you react is crucial. Stop, look and listen.

I truly hope this helps Linda, and speed-searchers everywhere.

Best wishes for success!

Jeff

 

 

More than thirty-five years ago, Jeffrey G. Allen, J.D., C.P.C. turned a decade of recruiting and human resources management into the legal specialty of placement law. Since 1975, Jeff has collected more placement fees, litigated more trade secrets cases, and assisted more placement practitioners than anyone else. From individuals to multinational corporations in every phase of staffing, his name is synonymous with competent legal representation. Jeff holds four certifications in placement and is the author of 24 popular books in the career field, including bestsellers How to Turn an Interview into a Job, The Complete Q&A Job Interview Book and the revolutionary Instant Interviews. As the world?s leading placement lawyer, Jeff?s experience includes: Thirty-five years of law practice specializing in representation of staffing businesses and practitioners; Author of ?The Allen Law?--the only placement information trade secrets law in the United States; Expert witness on employment and placement matters; Recruiter and staffing service office manager; Human resources manager for major employers; Certified Personnel Consultant, Certified Placement Counselor, Certified Employment Specialist and Certified Search Specialist designations; Cofounder of the national Certified Search Specialist program; Special Advisor to the American Employment Association; General Counsel to the California Association of Personnel Consultants (honorary lifetime membership conferred); Founder and Director of the National Placement Law Center; Recipient of the Staffing Industry Lifetime Achievement Award; Advisor to national, regional and state trade associations on legal, ethics and legislative matters; Author of The Placement Strategy Handbook, Placement Management, The National Placement Law Center Fee Collection Guide and The Best of Jeff Allen, published by Search Research Institute exclusively for the staffing industry; and Producer of the EMPLAW Audio Series on employment law matters. Email him at jeff@placementlaw.com.

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