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Dealing with Candidates Who Have Signed Non-competes

QUESTION: I placed a candidate on the 15th of this month for a $50,000 contingency fee. The client put my invoice on hold because the candidate’s former employer is trying to enforce a non-compete from 20+ years ago, which the candidate did not remember signing. This same client previously paid about $300,000 in legal fees trying to hire another candidate for the same position and ended up releasing the candidate due to the ongoing litigation because of the non-compete. How would you resolve this issue of the unpaid invoice? – Art

ANSWER: I can understand not recalling signing something 20 years ago. Considering today is the end of the month and the invoice is unpaid, if your terms are net 30, it is not even due yet.  

Regardless, this is a really good question.  Your only option to force the issue is taking a legal action which is going to take a year, and you are just going to tick him off. If he is a salt-of-the-earth good guy, I would honestly go to service mode. I would say, “What can I do to help you resolve this?” Be on his side. You mentioned that you do not know if the company is going to have the wherewithal to defend this 20-year-old lawsuit.  

I do not know what state it is in. Different states have different kinds of ideas on litigation and what noncompetes are, like in California a noncompete is worthless pretty much. I am not a lawyer, so I am not trying to give legal advice here. Depending upon the state is really depending on how much that stands up.  

You may want to contact an attorney that knows labor laws. Jeff Allen is a great attorney in the recruiting industry. You talk to him about it, and get some valid legal advice. It will be a worthwhile small investment to consult an attorney and specifically ask – How do I walk through these landmines?  

My suggestion in these situations is to find out how to help the client. Use this as an opportunity to show you care about him or her. That is one of the ways to become a trusted advisor. No matter what argument that you give him, it is only going to tick him off because if I am him, I am thinking also that part of your job as a recruiter was to figure this out. 

I do not know what is contained within your fee agreement. The thing is if you ever go to court, could the client claim negligence on your part? In front of a judge and you were doing a collection thing, depending on who the judge is, depending on their interpretation of the contract, a lot of things in law when they get in front of a judge are not black and white.

The quickest path to money is working with this client and asking, “How can I help?” If things seem like they are moving well, maybe you can say, “Look, to help me defer some of my cost, can you give me $5,000 or $10,000? Then worst scenario, if he leaves, I will credit that to his replacement cost.”  I do not know of an argument where I am going to go back to a guy that is a CEO of a company who is now facing not only the money but the pain in the butt part of defending this thing, where we can come up with an argument where he is going to have to give you $50,000 before this is resolved. If he is a good guy, you are going to get paid and that is why you are going to want to serve him.  

Great question. That is a sticky situation. I feel bad for you. 

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