Causation Issues In Staffing Fee Disputes (Part 1— Did You Really Cause The Hiring?)

Imagine your staffing agency has a non-exclusive agreement to fill a position.  You refer a candidate and ask to arrange an interview, but the employer never responds.  It then hires your candidate but refuses to pay you, saying you didn’t earn your fee.

Causation Challenges are what I call fee disputes where the employer claims, despite your referral, that someone else caused the hiring.  They come in many different fact patterns.

For example, let’s say the employer claims a subsequent agency also referred your candidate, arranged for an interview, and helped the parties negotiate.  Even though you referred him first, the employer prevented you from making the arrangements and now says you didn’t earn the fee.

Or say you refer the candidate and arrange an interview, but the employer doesn’t hire him right away.  Instead, it hires him months later, claiming it placed a help-wanted ad and the candidate responded. Therefore, it says, the candidate got the job himself and you didn’t earn the fee.

Finally, let’s say you refer the candidate, arrange an interview and the employer hires him right away.  However, the employer’s owner says he and the candidate already knew each other, so you didn’t really earn a fee. 

Each case will turn on its own facts, but as a general rule, a mere introduction, by itself, is not enough to earn your fee.  In New Jersey, you must generally be the “procuring cause” of the candidate’s employment, unless your contract says otherwise or you have an exclusive listing.  “Procuring cause” means you brought the parties together and caused events (like an interview and negotiations) which directly led to the employment, without a substantial break in the process. 

In Part 2, we’ll discuss strategies for avoiding and defeating Causation Challenges. 

For more information on fee disputes and how to defeat (or avoid) them, see The National Fee Collection Guide for Staffing & Placement Agencies and The Employment Agency’s Guide to Getting Paid (Quickly) in New Jersey

This material is for informational purposes only and should not be construed as legal advice.  No person should rely on this information without seeking the advice of an attorney.

This article was first published on the NJSA’s Staffing News website.

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