The Placement Fee Collection Quiz

THE PLACEMENT FEE COLLECTION QUIZ

By Jeffrey G. Allen, J.D., C.P.C.

You need to be more than just a good recruiter. You need to get paid!

Nothing is more important to your survival than collecting full fees upon the start of each candidate placed.

In recent years, placement fee avoidance has increased at the rate of over 20% annually. This has been primarily due to economic uncertainty and more sophisticated techniques to resist payment.

One of the most valuable aids we use for our clients is the Placement Fee Collection Quiz. Using this diagnostic can dramatically increase your ability to collect full fees, more of them, faster, and usually without an attorney.

Print out and complete the PFCQ under examination conditions, timing yourself for one hour, and circling the answer you think is correct. Then click the "Answers to Placement Law Quizzes" button at www.placementlaw.com and check your answers.

If you can't figure out why you got an answer wrong, click the flashing red "Jeff's On Call!" button at www.placementlaw.com, and send me an e-mail with your question.

Unless otherwise stated, assume we're discussing contingency fee placements.

Ready? Begin . . . and GOOD LUCK!

1. The offer in a placement fee contract is:
1. a. Simultaneous with the job offer to the candidate.
2. b. Implied when the employer furnishes specifications for a job order.
3. c. Expressed when the employer consents to payment of a fee if a candidate is hired.
4. d. None of the above.

2. The acceptance of a placement fee contract is:
1. a. Simultaneous with acceptance of the job by the candidate.
2. b. Implied when the employer doesn't object to the fee, either during a presentation or upon receipt of a fee schedule.
3. c. Implied when the client agrees to interview a candidate.
4. d. All of the above.

3. The consideration in a placement fee contract is:
1. a. Payment of the fee.
2. b. Hiring the candidate.
3. c. Usually not there, because clients are only considerate before they hire someone.
4. d. "a" and "b" above.

4. Placement fees are more difficult to recover than most service charges because:
1. a. They often involve complex factual situations.
2. b. Signed fee agreements are not generally used.
3. c. The fee is based on the result rather than the effort.
4. d. All of the above.

5. The placement fee agreement is a unilateral contract because:
1. a. Any acceptance by an employed candidate is subject to a counteroffer.
2. b. The client may be accepting referrals from other recruiters.
3. c. A fee schedule is generally printed only on one side.
4. d. No contract arises until the recruiter fully performs and the candidate starts working.

6. The placement fee agreement is also a reverse unilateral contract because:
1. a. The initial offer to present candidates is made by the recruiter.
2. b. There is a guarantee if a "falloff" occurs.
3. c. The client can revoke the offer to the candidate any time before the start date.
4. d. None of the above.

7. The placement fee agreement would be a bilateral contract if:
1. a. The client used two or more recruiters to fill the position.
2. b. The client agreed to pay a two fees for the recruiter placing two candidates.
3. c. The client agreed to pay an advance retainer to cover the actual expenses for the search.
4. d. All of the above.

8. The significance of the placement fee agreement being a unilateral contract is that:
1. a. The recruiter will usually discover legal defects only after the placement has been made.
2. b. It invites fee avoidance, since clients are not obligated to pay anything before a candidate starts and have no inducement to pay anything thereafter.
3. c. There is no legal relationship until a candidate starts, at which time the the offer, acceptance and consideration merge to form a contract.
4. d. All of the above.

9. Placement fees are particularly difficult to collect without the client's signature or acknowledgement in writing because:
1. a. The amount of the fee is unascertained until the job offer is accepted.
2. b. The fee is based on unearned compensation to the candidate.
3. c. The agreement must be implied from the client's conduct.
4. d. "a" and "c" above.

10. A guarantee on placements is based on the assumption that:
1. a. The client has the ultimate responsibility for hiring and managing its employees.
2. b. The recruiter is able to control one person working for another.
3. c. It will not need to be honored, since many defenses to a replacement or refund exist.
4. d. "Falloffs" occur less than 5% of the time.

11. A replacement guarantee:
1. a. Is based on the assumption that it is possible to place another candidate with the same qualifications and attributes.
2. b. Eliminates the necessity for "good faith," "cooperation," "reasonableness" and other objective criteria.
3. c. Forecloses the client from enforcing a refund.
4. d. Shifts the burden of proof to the client to justify why the candidate "fell off."

12. The use of a replacement guarantee is:
1. a. One of the best ways for a recruiter to get a retainer up front.
2. b. A serious mistake, since there are an infinite number of ways the client can frustrate attempts to replace the candidate.
3. c. A way to ensure retention of the fee, since it provides an objective standard of performance.
4. d. The only way a recruiter can legally spend the fee before the guarantee expires.

13. If a candidate does not remain through the replacement guarantee period, collecting the fee is:
1. a. No problem, since sending three qualified candidates discharges any further obligation by the recruiter.
2. b. Impossible, since each replacement candidate starts a new guarantee period running.
3. c. Frustrating, since it will be necessary to concentrate on the replacement search to the exclusion of others.
4. d. A problem, since a replacement guarantee is really a free trial period.

14. A provision in a fee schedule for reasonable attorney's fees to collect the placement fee is:
1. a. Likely to interfere with the trust and confidence in the recruiter-client relationship.
2. b. The only way you will receive reimbursement for attorney's fees in most jurisdictions.
3. c. An indication that the recruiter is not in business solely to lower the unemployment rate.
4. d. Not enforceable in most jurisdictions.

15. Requiring the client to sign a fee schedule in the space provided is:
1. a. A way to prove knowledge and acceptance of the fee upon its return.
2. b. Only advisable if it is the sole basis on which you will refer candidates, since otherwise the client can assert it didn't agree.
3. c. Likely to interfere with the trust and confidence in the recruiter-client relationship.
4. d. "a" and"b" above.

16. The best way to ensure payment for a contingency placement fee is to send a copy of the fee schedule:
1. a. By first class mail.
2. b. By certified mail, return receipt requested.
3. c. By e-mail, requesting and receiving an e-mail acceptance of the terms.
4. d. By e-mail, stating that acceptance of referrals constitutes acceptance of the terms.

17. Sending a fee confirmation by e-mail is:
1. a. Often deemed to be acceptance as well as delivery if no objection is received by e-mail from the client.
2. b. Likely to interfere with the trust and confidence in the recruiter-client relationship.
3. c. Not binding, since e-mail can be hacked.
4. d. Legally the same as sending a fee confirmation by first class mail.

18. Upon closing each placement, a congratulatory letter should be sent to:
1. a. The candidate with a copy to the client.
2. b. The candidate only, since he or she will be the key witness in a placement fee dispute.
3. c. The client with a copy to the candidate.
4. d. The client only, since the candidate is not a contracting party and is merely the subject matter of the contract.

19. Including the candidate in a placement fee dispute is often:
1. a. Unprofessional, unpredictable, unpleasant and unnecessary.
2. b. Unprofessional, unpredictable and unpleasant, but unavoidable.
3. c. Unethical.
4. d. Unlawful.

20. A retainer agreement is one where the client pays:
1. a. A refundable fee prior to a search beginning and a percentage of the annual starting salary of each candidate placed.
2. b. A non-refundable fee in progress payments, conditioned upon receipt of satisfactory status reports and time records, and no additional payment for candidates placed.
3. c. A refundable fee and grants exclusive assignments in exchange for a reduced percentage of the annual compensation of the first candidate placed.
4. d. All of the above.

21. A retained search balance is difficult to collect if no placement is made because:
1. a. Only about 10% of all recruiters work solely on a retainer basis.
2. b. There is a failure of consideration, since the client is bargaining for the result rather than the effort,.
3. c. The recruiter should have known the search was impossible to complete.
4. d. The performance can't be documented objectively, since the amount of time expended has little to do with recruiting suitable candidates.

22. One of the difficulties with a recruiter stating that it checks references on candidates is that:
1. a. It is ultimately the responsibility of the client and invites the defense that the recruiter should have checked further.
2. b. Is time consuming and prevents the recruiter from "cold calling" to identify other candidates.
3. c. It is then bound to do so, and has an absolute duty to disclose the complete result to the client.
4. d. It will be deemed invasion of privacy and libel unless a written release is obtained from the candidate pursuant to the Fair Credit Reporting Act.

23. If a candidate is terminated after the guarantee period for embezzling, and the recruiter didn't disclose a known conviction for embezzlement, the recruiter will be:
1. a. Able to collect the fee because it is under no duty to check references.
2. b. Unable to collect the fee because it is under an absolute duty to reveal derogatory information.
3. c. Unable to collect the fee but is under no duty to reveal derogatory information.
4. d. Any of the above, depending on the jurisdiction.

24. The "unauthorized hiring authority" defense asserts that the employee who agreed to pay the fee was not permitted to do so by the client. This is valid only if:
1. a. The recruiter was informed of this prior to the "sendout" and no contact information was used by the client.
2. b. The employee was a receptionist, assistant or other gatekeeper.
3. c. The job order was for another department.
4. d. The employee worked in a branch office.

25. The "slow hand shake" defense asserts that a long period of time elapsed between the referral and the hire. Assuming your fee schedule has no referral period, this is valid only if:
1. a. More than one year elapsed.
2. b. Michael Jackson sang a medley of Slow Hand and Whole Lotta Shakin' Goin' On in his acclaimed Filler & Biller album.
3. c. The statute of limitations in the jurisdiction where the client is located has not expired.
4. d. The candidate recontacted the client as a result of the referral.

26. The passage of time can defeat the right to a placement fee if:
1. a. The fee schedule limits the referral period.
2. b. An intervening act occurs that results in the hire.
3. c. The client forgets about the referral and recontacts the candidate directly.
4. d. "a" and "c."

27. The "placement plunder" occurs when an "open" resume with contact information is sent to the client and the candidate is hired directly. Upon discovering this, a recruiter should immediately:
1. a. File a lawsuit, since the statute of limitations is running.
2. b. Call the client, listen carefully to the explanation, take detailed notes, and not attempt to correct the facts or convince the client to pay.
3. c. Call the candidate at work and confront him or her.
4. d. Send the client an invoice, even if it's for the wrong amount.

28. The "coincidence conspiracy" is a "dual referral," but where the other recruiter obtained the contact information from the client. Which of the following theories is not used in prosecution of these cases?
1. a. Breach of contract.
2. b. Fraud.
3. c. Mopery.
4. d. Conspiracy.

29. The "but for" rule was formerly used to determine which of two or more sources caused a hire. It states that "but for:"
1. a. Interference from the human resources department, a recruiter who contacted the hiring authority first is entitled to the fee.
2. b. A mistake by the client, would the recruiter have received the fee?
3. c. The actions of the recruiter, the candidate would not have been hired.
4. d. None of the above.

30. The "but for" rule has been discredited by legal authorities because it:
1. a. Doesn't consider the actual "what if" problems that occur in the placement process.
2. b. Is based on the assumption that there can only be one source responsible for a placement.
3. c. Doesn't have enough syllables.
4. d. "a" and "b" above.

31. The "substantial cause" test is replacing the "but for" rule to determine which of two or more sources is entitled to a fee because it:
1. a. Looks particularly professional on a fee schedule.
2. b. Recognizes the reality that several sources can be responsible for a placement.
3. c. Leads to the payment of more than one fee for the same placement.
4. d. Involves the candidate and therefore embarrasses the client into paying the full fee.

32. If a candidate is hired as an independent contractor ("consultant"), temporary employee or pert-time employee, the recruiter is generally:
1. a. Not entitled to be paid, since full-time employment is the basis for computing the fee.
2. b. Entitled to be paid, but the fee may require adjustment.
3. c. Entitled to be paid a full fee pursuant to the terms of the fee schedule, since a placement was made.
4. d. None of the above.

33. One of the most common mistakes recruiters make with regard to candidates is that they:
1. a. Think of them as allies and don't realize that they are likely to testify favorably for their employer.
2. b. Think that confirming the fee with the candidate is important, since he or she will legally become an agent of the client when hired.
3. c. Don't realize that the candidate should be the one to confirm fee at the time of the initial interview.
4. d. Don't ask them where they have already been referred or applied.

34. One thing clients and candidates usually have in common is:
1. a. Their desire for a lower starting salary to reduce the fee.
2. b. Their version of how the candidate was referred.
3. c. Their desire that the recruiter continue to communicate with the candidate after the placement is made.
4. d. Their willingness to sign a pre-employment "employee payback" agreement whereby the candidate reimburses the client if he or she leaves within a specified period.

35. If a recruiter agrees to indemnify a client in exchange for payment of the fee, then another recruiter files a lawsuit to collect it, the indemnifying recruiter is liable for:
1. a. The client's costs of defense.
2. b. The client's attorney's fees for defense.
3. c. The amount of any judgment against the client.
4. d. Any of the above, depending on the agreement..

36. If Recruiter A e-mails a resume to the client, then Recruiter B calls and schedules an interview, who is entitled to the fee?
1. a. Recruiter A because "first in time is first in right."
2. b. Recruiter B because it incited the client to hire.
3. c. Recruiter A or Recruiter B, depending on who the client selects.
4. d. Recruiter A and Recruiter B are each entitled to half, since it is impossible to determine who is responsible for the placement.

37. If Recruiter B schedules the interview, is informed that Recruiter A did so a week earlier, and is asked by the client to call Recruiter A to "work it out," Recruiter B should:
1. a. Ignore the request, since this invites imposition of a split fee by the court.
2. b. Call Recruiter A and negotiate a "prior to hire" settlement.
3. c. E-mail Recruiter A and threaten litigation if it attempts to "scream fee."
4. d. Decline to do so, but explain that it will discuss the amount of the fee with the client "in good faith."

38. If Recruiter A sends a resume to the human resources department and Recruiter B sends the same resume to the hiring authority at the same time, who is entitled to the fee?
1. a. Recruiter A, if the client has a procedure regarding all resumes being sent to the human resources department, whether or not recruiters were notified.
2. b. Recruiter A, if the interview is arranged through the human resources department before the interview is arranged by Recruiter B with the hiring authority.
3. c. Recruiter B, because the hiring authority is the "decision maker," and the client's procedure is not the recruiter's problem.
4. d. Recruiter B, if it confirms the fee with the hiring authority, and the interview is arranged without knowledge of a recent "sendout" from Recruiter A to the human resources department.

39. If Recruiter A calls as a result of an internet posting by the client, and Recruiter B cold-calls, the job order received is valid as to:
1. a. Recruiter A only, since the posting should state "placement fees not paid" or a similar notice.
2. b. Recruiter A or Recruiter B, since the way a job order was obtained is irrelevant.
3. c. Recruiter B only, since it has no knowledge that the client was recruiting directly.
4. d. Neither recruiter, since if the client wanted to pay a fee, it wouldn't have posted the job.

40. If Recruiter A has an "exclusive assignment", but Recruiter B presents the ideal candidate who is hired, who is entitled to the fee?
1. a. Recruiter B only, unless Recruiter A was promised a separate fee if the placement occurred through another recruiter.
2. b. Recruiter A only, since Recruiter B was referring a candidate to a client who couldn't enter into a contract to pay a fee.
3. c. Recruiter A and Recruiter B are each entitled to a full fee, because the client shouldn't have accepted the referral from Recruiter B.
4. d. Recruiter A and Recruiter B are each entitled to half, since equal employment is the law.

41. Generally, a client's "preferred list" means:
1. a. The client would prefer that recruiters think it exists.
2. b. Any recruiter who can be found on line.
3. c. The recruiter is considered an indispensable member of its management team.
4. d. "a" and "b" above.

42. The results obtained by collection agencies in fee disputes are generally:
1. a. Excellent, since they understand that time is on the client's side.
2. b. Good, since they have access to credit reporting data and attorneys who specialize in placement fee collections.
3. c. Fair, since they are more interested in pursuing accounts receivable for the sale of goods.
4. d. Poor, since they are unlikely to understand the legal and factual complexities of the placement process.

43. The results obtained by arbitration to recover placement fees are often:
1. a. Excellent, since the arbitrator is likely to be a lawyer with a large firm that hires through recruiters.
2. b. Good, since most employers can't defend themselves well in a less formal proceeding.
3. c. Fair, since arbitrators understand why signed fee agreements aren't always used.
4. d. Poor, since arbitrations are subject to subjectivity allowing candidates to bias the arbitrator.

44. An attorney should be willing to accept a case on a contingency fee basis because:
1. a. If the fee is due, the attorney should be able to recover it.
2. b. The practice of law is so competitive.
3. c. The recruiter was working on a contingency fee with the client.
4. d. None of the above.

45. If a client terminates employment of the candidate because the recruiter has filed a lawsuit to collect the fee:
1. a. There is an additional basis for collection, since this is a wrongful termination.
2. b. The candidate has a valid claim for recovery of lost wages and attorney's fees.
3. c. The recruiter is in a better position than if the termination had occurred prior to the filing, since evidence of the candidate's satisfactory performance can be introduced.
4. d. The recruiter is in a worse position than if the termination had occurred prior to the filing, since the candidate has a basis for recovery of lost wages and attorney's fees from the recruiter.

46. When the recruiter presents a business record showing that the fee was confirmed prior to the "sendout," it:
1. a. Should be accompanied by proof by similar business records that confirming the fee prior to a "sendout" is a routine business practice.
2. b. Shifts the burden of proof to the client to show that the fee wasn't confirmed.
3. c. Is persuasive to convince a client that the fee should be paid.
4. d. All of the above.

47. Shifting the burden of proof means that once the recruiter shows the fee was confirmed, the client must introduce evidence of:
1. a. Its policy regarding the payment of placement fees.
2. b. Who was responsible for the placement.
3. c. Its belief that no fee would be owed to the recruiter.
4. d. All of the above.

48. The way any recruiter can be certain a well-earned fee won't be collected is to:
1. a. Call the candidate at home and discuss the facts.
2. b. Send the client an explanation of why the fee is due.
3. c. Send the client an invoice upon acceptance by the candidate.
4. d. Send the client an invoice for the wrong amount.

49. A placement fee is legally the same as:
1. a. A finder's fee.
2. b. A real estate commission.
3. c. A consulting fee.
4. d. A talent agent's commission.

50. The National Placement Law Center Fee Collection Guide (with Case Citations):
1. a. Is available for $125 online at www.SearchResearchInstitute.com.
2. b. Contains official citations to every placement fee collection decision ever reported in the United States, along with Jeff Allen's analysis of each.
3. c. Contains every fee collection technique on the placement planet.
4. d. All of the above.

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