Friday, March 5, 2021
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Commissioned Based Recruiters Left Out In The Cold

We never really think about it much. We never really ask how it is that talent is acquired by one firm when yet another firm may actually have a better product. It happens each and every day and generally, all parties benefit. The amount of time, effort and expense that goes into presenting a qualified candidate to a third party is extensive and for those folks whom rely on this as their sole source of income, firms refusing to pay what they owe can break the proverbial bank. In full disclosure, Foreclosurepedia receives a portion of its revenue from Commissioned Based Recruiting. As such, we have seen the ups and downs and as we began to hear about how COVID is changing the landscape — Recruiters having difficulties getting paid — we thought we would lay out how to best defend yourself against the unscrupulous people whom are out to get your money.

When a third party recruiter submits a job candidate to a company and the company hires that candidate, the recruiter is typically entitled to compensation in the form of a recruitment fee (or placement fee). But in some cases, a company hires a candidate provided by a recruiter [and] fails to pay the recruiter.

While Recruiters run the gambit of talent acquisition, we are going to focus on construction based entities — Field Service Technicians and General Contractors. Both are represented in the Mortgage Field Services Industry. And as opposed to say, assembly line workers, construction based talent require licensing, verifiable revenue, and a proven track record. This means that the pool of potential candidates are far more limited than others. General Contractors are easily identifiable: They pull permits which may be tracked anywhere in the US; they maintain personal and business accounts which are easily obtainable; and they purchase land for development which are reported by local tax assessors.

The Business Trial Group discusses the two generalized ways of Commissioned Based Recruiting,

Once an employer decides to hire a recruiting firm or a recruiting firm reaches out to an employer about hiring a particular candidate that has been vetted by the recruiter, a formal or informal (verbal) agreement may be worked out between the two parties. Often, there is an understanding between the parties that the recruiter will get paid for the job placement services.

Most recruiters charge their clients in one of two ways:

Using a retained fee structure (an upfront, guaranteed fee paid to the recruiter for finding and placing a candidate); or Using a contingency fee structure (a performance-based fee based on the employee’s first year compensation or production).

Generally speaking, recruiting for both Field Service Technicians and General Contractors falls under the latter proviso of performance-based payments. With General Contractors, it is pretty cut and dry. For example, John Doe recruits ABCD Builders to perform institutional rehabs on behalf of EFGH Home Sellers. In this case, the Recruiter is compensated a percentage of the gross revenue. If ABCD builds $100 worth of homes and the Recruiter is entitled to 2% of the gross, the Recruiter would receive $2. With respect to Field Service Technicians it is a bit more creative in that oft times a flat fee is paid, per candidate, as the Field Service Technicians are performing thousands or tens of thousands of services per year.

When things go south, as we are seeing across the US today, there are two primary vehicles available in order to get paid. While I am not a lawyer nor giving legal advice, it appears that one option is straight forward litigation under Breach of Contract. In essence, the plaintiff — Recruiter — typically must show that there was a contract; that the other side breached; and that the breach resulted in damages to the plaintiff. Pretty straight forward. The other is to file lien upon the property(s) in which the General Contractor is currently working upon which, additionally, creates a cascade of liens upon all future property(s). Many states are divided upon the lien clauses, though, at it would be wise to obtain counsel either way.

Whether or not General Contractors have the stomach to continue building, while simultaneously mounting a costly legal defense, depends upon the amount of profit which is at stake. What makes Investors — the ultimate parties overseeing the financial relationships — most nervous, is battling over a clear title. And that is precisely what a lien may do. While singularly, the lien may impose little hardship, when dealing with multiple assets, the tainting alone often acts as the castor oil necessary to cure the ailment. Many times, a simple Notice of Intent to all parties — from the Investor to the General Contractor — is enough to bring common sense to the room.

While many deals with General Contractors are done with a flurry of emails and a verbal agreement, those pertaining to Field Service Technicians are a bit more complicated. Standardized Contracts need to be in place and the ability to enforce them are often outweighed by the enormity of multiple jurisdictions without such.

Many first year Recruiters are swayed by the thoughts of future profits if they simply keep their mouth shut and stay the course. And it is fair to say that no single recruitment is identical to another — smooth sailing is never guaranteed. Guideposts to be aware of, though, include a lack of transparency. What I mean is this: Your candidate represents your investment; your candidate represents your liberty interest in being compensated; and your candidate represents your intellectual property. If the firm you are working with refuses to keep you updated on milestones such as initial calls, progress, and vetting, then you may have a problem. Always chronicle your information in notes and always follow up with the candidate to ask about how the process is going. Always save all of your emails. The candidate is in the best capacity to allow you to understand — firsthand — how all parties are behaving.

Accepting the benefits of the Recruiter and refusing to pay that individual tends to muddy the waters. Each and every day it seems we read about another occasion of a large firm refusing to pay a ma and pa operation. It is as if there is a belief that people without money have no understanding of how the law works or the power of the media when information is distributed in a viral effect. Foreclosurepedia has been privy to both instances. In fact, Foreclosurepedia spearheaded the efforts to force the Involuntary Bankruptcy of National Field Network (NFN). It was the first and only Involuntary Bankruptcy of a multi-million dollar firm in the 70 some year history of the Mortgage Field Services Industry.

We went further, though. Our Motion to Intervene in the Bankruptcy is the first time, that we are aware of, in the then 239 year history of the State of New Jersey that a media outlet was allowed to challenge for access to documents.

With respect to the constructive application of advocacy journalism, Foreclosurepedia has been at the forefront of reporting upon tens of millions of dollars in fraud and repatriating funds to International Association of Field Service Technicians (IAFST) members. With over 2,000 articles published, to date, we are a force to be reckoned with. For years, we have found that our 10,000+ strong Foreclosurepedia Nation has been the most important force in disseminating information, in a timely fashion.

There are hundreds of law firms whom will help you with Breach of Contract litigation. A simple Google search will make them available. With respect to the filing of liens, there is only one firm I recommend and I do not receive any compensation for naming them: Levelset!  Simply comb through their Q&A for any state and there are dozens of similarly situated cases with legal answers from their lawyers. While it is truly disheartening that an article like this has to be written, the reality is I am hopeful it will help some of you whom have reached out over the past several weeks for guidance.

Paul Williams
Linux addict buried deep in the mountains of East Tennessee.



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