Payment of Commission to Recruiters Who Resign

Morning! What’s your policy for paying recruiters commission on their placements after they leave your firm given the delay in payment from clients and the hire guarantee period?

How do you establish such a policy?

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Permalink Reply by Jerry Albright on February 28, 2013 at 9:22am

I can't see how an agency owner would even CONSIDER not paying a recruiter for a placement they made.

Of course you would want to wait for all guarantee periods, etc. but just how often do you have an issue during that time frame? I think I have once.

Dear agency owners that are wondering if they have to pay the recruiter who left money on the table: Yes, you do.

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Permalink Reply by Daren J. Mongello on February 28, 2013 at 9:55am

Kerry: Regardless of what you read here, can I suggest that any policy complies with your state's law?
Some here have given you advice that's just wrong. New York is pretty clear on "commissions after termination" issues.

http://www.ebglaw.com/files/38064_ClientAlertArbeeny.pdf
This is a New York court appeal that ruled in favor of a plaintiff against a search firm specific to commissions after termination.

In New York (where I work) : I am typically owed my part of the commission if I participated in a successful placement (survives the guarantee period, less any draw or other fees) regardless of my state of employment with the search firm. If your agreement doesn't align with state law, you may run into problems. Safest advice: have an employment attorney give you a legal opinion on your agreement if you have any concerns.

If you have a "commission after termination" issue now that is not specifically addressed in your agreement: pay what was earned.

Good luck.

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Permalink Reply by Daren J. Mongello on February 28, 2013 at 10:04am

Jerry:

Although I agree with you ethically, owners only need to comply with their state's labor laws.
Most states address "commissions after termination" issues and some here would do well to see if their policy complies with their state's labor law.

And owners that knowingly pocket someone else's earned commissions already know that they are nothing more than thieves.

Jerry Albright said:

I can't see how an agency owner would even CONSIDER not paying a recruiter for a placement they made.

Of course you would want to wait for all guarantee periods, etc. but just how often do you have an issue during that time frame? I think I have once.

Dear agency owners that are wondering if they have to pay the recruiter who left money on the table: Yes, you do.

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Permalink Reply by Amber on February 28, 2013 at 11:43am

Some here have given you advice that's just wrong.

Daren, I'm curious - What advice are you referring to that is "just wrong"?

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Permalink Reply by Daren J. Mongello on February 28, 2013 at 11:49am

Amber: that some owners, based on their advice, are not in compliance with their own state labor laws.

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Permalink Reply by Steve N Odell on February 28, 2013 at 11:56am

You pay as to what the agreement/contract states. All knew what the game rules were when they signed up. You don't change the rules in the middle of the game. By all means make sure it complies with State law. We did.

Daren J. Mongello said:

Amber: that some owners, based on their advice, are not in compliance with their own state labor laws.

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Permalink Reply by Daren J. Mongello on February 28, 2013 at 12:03pm

Based on her questions like "How do you establish such a policy?", we can assume that there was no agreement/contract was in place. If there are no agreements, then following state law is best practice.

Steve N Odell said:

You pay as to what the agreement/contract states. All knew what the game rules were when they signed up. You don't change the rules in the middle of the game. By all means make sure it complies with State law. We did.

Daren J. Mongello said:

Amber: that some owners, based on their advice, are not in compliance with their own state labor laws.

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Permalink Reply by Steve N Odell on February 28, 2013 at 12:13pm

Sounds like that. Always have an signed agreement so everyone knows the expectations. You wouldn't even work with other recruiters outside on splits w/o one.

Daren J. Mongello said:

Based on her questions like "How do you establish such a policy?", we can assume that there was no agreement/contract was in place. If there are no agreements, then following state law is best practice.

Steve N Odell said:

You pay as to what the agreement/contract states. All knew what the game rules were when they signed up. You don't change the rules in the middle of the game. By all means make sure it complies with State law. We did.

Daren J. Mongello said:

Amber: that some owners, based on their advice, are not in compliance with their own state labor laws.

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Permalink Reply by Kerry M. Beck Konstantin on February 28, 2013 at 1:51pm

I very much appreciate the time and expertise of everyone who has contributed in this discussion. I am pleasantly surprised at the robust nature of the discourse. I am also a bit taken aback by the fact that I am working at my third agency in my recruitment career and very few of the suggestions and policy initiatives that any of you suggested are in my current or former contracts with the agencies. I particularly appreciate the guidance from Daren regarding the NY State appellate ruling. I am including the link again because I think it is valuable.

As per Daren: http://www.ebglaw.com/files/38064_ClientAlertArbeeny.pdf
This is a New York court appeal that ruled in favor of a plaintiff against a search firm specific to commissions after termination.

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Permalink Reply by Steve Ross on March 7, 2013 at 5:51pm

First off, that should be clearly stated in a persons employment contract before he/she starts. Pay the full amount within a day after the guarantee period is completed, no excuses!