Jeff’s On Call!: Split Fee Owed?

This week’s inquiry comes from Sue Yager:

Jeff, I really need your help. As an avid reader of The Fordyce Letter for 10 years now, I have always appreciated your insight and knowledge of the recruiting industry, and find myself needing your help for the first time.

I believe I have more of a moral dilemma than a legal dilemma. Here’s the story: 4 years ago I worked with another recruiter, who was with another agency, and we sometimes did splits. This other recruiter emailed a resume to me and told me this candidate was fantastic, and asked whether she would be a good fit with any of my clients. I called the candidate and did a full interview with her even though I didn’t have any job opportunities for her at the time. I kept in touch with this candidate over the past 4 years, and she is now actively interviewing with one of my clients. I have not spoken to the recruiter who sent me her resume for about 2 years, and the candidate hasn’t spoken to her for several years.

Here’s my dilemma: Do I still owe that recruiter part of the fee? I want to do the right thing, but I don’t want to give away money unnecessarily either. (P.S., there was never a formal split fee agreement in place between us.)

Thank you for all of your help.

Respectfully,

Sue

Hi Sue,

I haven’t heard from you for a while, so it was nice to receive the JOC inquiry. So glad you’ve been benefiting from The Fordyce Letter — for ten years!

Yours is both a moral and a legal question. Moral because four years have passed. Legal because it was an oral agreement – an enforceable contract with your associate four years ago.

For analysis purposes, the contact information on the candidate was a trade secret. This was part of your associate’s proprietary database, and it was given to you with the agreement that you would split the fee if you placed the candidate. Knowing you, there was no moral or legal challenge with this four years ago.

Technically, information doesn’t lose its trade secrets status with the passage of time. But it can lose its protection.

Here’s my trick to “objectifying” this dilemma, so you have (1) peace of mind, and (2) legal cover:

Google the statute of limitations (SOL) in your state. Since I know you’re in Nebraska, I just Googled “Nebraska statute of limitations oral contract.” and Poof! There it is! Four years. Fair enough. This means that once the statutory period has elapsed, the contract can no longer be enforced. “It’s legally “old and cold.”

If you had a written split-fee agreement (which you should), you’d Google “Nebraska statute of limitations written contract.” That would pop up as five years.

So if it’s been four years since that oral split-fee deal with the other recruiter, I’d say that candidate is yours.

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Why did I pick your state? Why not? There’s no federal SOL on an oral contract. With no written contract containing a jurisdiction clause, the other recruiter would probably need to file a lawsuit in Nebraska. Unless she’s a Nebraskan, that’s unlikely because of the cost, your home-field advantage, and the difficulty of finding, using, and enthusing a lawyer near you.

Just for fun, Google her state’s SOL. Four years is a long SOL for an oral contract, so it’s likely the one in her state is even shorter.

Only ethical recruiters ask ethical questions, and I’m delighted to answer yours with a “Yes!”

Now I have a question. Did that help every split-fee’er out there to resolve these everyday disputes fairly? If your answer is “Yes!” too, we’ve done our job.

So happily place, and best wishes for continued success!

Jeff


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.

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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1 Comment on “Jeff’s On Call!: Split Fee Owed?

  1. I love this response. I’ve been on the other end where a candidate I introduced to a fellow Recruiter decided to place the candidate a year later without informing me. I was informed by the candidate with whom I stayed in touch.

    Despite all attempts, I was unable to reach the other Recruiter (someone I had worked with for years). I made the mistake of having a verbal agreement, but have now learned that ethics is not everyone’s priority.

    Losing half a commission for one placement isn’t worth ruining a long-standing relationship. As Recruiters and Account Managers, we ARE indeed salespeople, but we’ll be far more successful if we proceed with our business with a commitment to ethics.

    Thanks again for this article!

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