Monday Morning Memo: The #5 & #6 Excuse That Your Debtor Uses When You Get Back Door Hired

Wilson Cole, President of Adams, Evens, & Ross (AER) and Samantha Cole, in-house counsel for AER, continue the theme of the previous podcast; “excuses debtor companies give for back door hires.” First up for this podcast is “we hired the candidate, but they did not last the 90 days.” When Wilson hears this excuse, his first hope is that the creditor’s signed contract with the company has a clause that says something to the effect of “our guarantee is contingent upon payment being made in a timely manner.”

There are of course examples where a client honestly just lost track of time and ended up paying slightly behind schedule or outside of a defined “timely manner” window. If the client company is otherwise punctual with payments or a longtime client, it is probably better for business to just let go of honest mistakes. Wilson makes clear these are not the types of client companies being talked about here. The companies being talked about here are ones that never paid, had no desire to pay, and/or ignored multiple invoices along the way.

Samantha talks about some specific situations she’s experienced related to this excuse. While the previously mentioned language about the guarantee being contingent upon payment being pad in a timely manner is generally helpful to creditors, Samantha explains how sometimes it can cause further confusion depending on how it is phrased. If there is language that mentions prorating the fee for candidates that do not last (30, 60, 90 days for example), it is helpful to have language specifying the pro-rating amounts and the time periods for prorating.

Language for “90 day guarantees” that include an outright refund is generally not a good idea and leaves a door wide open for companies to take advantage of staffing or recruiting firms. Wilson also adds the reminder that if the debtor or debtor’s attorney asks for the contract after the dispute has started, they are definitely not doing so to figure out how to pay you, but always to build a defense. The next excuse for this podcast is “we weren’t interested in the candidate when presented to us, but the candidate contacted us on their own after a period of time, saying that they don’t have a contract with your firm, so we don’t see how we owe your firm a fee after hiring the candidate.”

Wilson talks about how ridiculous this excuse is given that the series of events after the candidate was presented by the staffing or recruiting agency, however accurate or inaccurate as described by the company, would not have happened in the first place if the agency didn’t present the candidate to the company. Samantha says that on the legal side, her argument is similar to Wilson’s, though she typically phrases it as “but-for.” In other words, “but-for the actions (of the agency filing suit), the candidate would have never known there was a job available.” This is especially true if the job was not posted to any job boards.

This excuse is commonly linked to salespeople who are back door hired because the skill set of the salesperson lines up perfectly with the type of candidate who would reach out directly to make a sale (in this case, that they should be hired for a position). If you have a back door hire that you want to get an opinion on, you can send an email to [email protected].

2 Key Quotes

· Language (in contracts) for “90 day guarantees” that include an outright refund is generally not a good idea and leaves a door wide open for companies to take advantage of staffing or recruiting firms.

· The excuse “we weren’t interested in the candidate when presented to us, but the candidate contacted us on their own after a period of time, saying that they don’t have a contract with your firm, so we don’t see how we owe your firm a fee after hiring the candidate” is commonly linked to salespeople who are back door hired because the skill set of the salesperson lines up perfectly with the type of candidate who would reach out directly to make a sale (in this case, that they should be hired for a position).