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are temp staffing "Perm" fees legal?

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mrbluejay

Guest
What is the name of your state? california
i am a professional who worked through a temporary staffing agency for one of their clients for about one week over 1 & 1/2 years ago. their client recently called me and wants me to work for them directly. i no longer work for the temp agency. the contract the client signed with the agency states that if any of their personnel are hired in any way by the client, they must pay the agency a substantial "Perm" fee (about $45,000) unless the client cancels the contract in writing and waits one year. the contract the client signed also self-renews each year unless canceled in writing.

is this a legal and enforceble contract? is there a time limit after which i can work for the client without the "Perm Fee" being paid if the client never cancels the contract in writing.
 


I AM ALWAYS LIABLE

Senior Member
mrbluejay said:
What is the name of your state? california
i am a professional who worked through a temporary staffing agency for one of their clients for about one week over 1 & 1/2 years ago. their client recently called me and wants me to work for them directly. i no longer work for the temp agency. the contract the client signed with the agency states that if any of their personnel are hired in any way by the client, they must pay the agency a substantial "Perm" fee (about $45,000) unless the client cancels the contract in writing and waits one year. the contract the client signed also self-renews each year unless canceled in writing.

is this a legal and enforceble contract? is there a time limit after which i can work for the client without the "Perm Fee" being paid if the client never cancels the contract in writing.

My response:

Yes, it's a binding contract which requires the client/employer to do something; i.e., "cancels the contract in writing and waits one year."

It's a terrific "workaround" to California's prohibition to "Non-Compete contracts" because THIS non-compete has nothing to do with "employees"; rather, it restricts the "employER".

IAAL
 

Beth3

Senior Member
FYI, bluejay, such agreements between a staffing/consulting agency and their client companies are extremely common. You'd be very hard pressed to find an agency that didn't have such an agreement in place with their clients.
 
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mrbluejay

Guest
thank you both for your quick and accurate responses.
but isn't this method of contract between the client and staffing agency in effect indirectly limiting my future employability (and the spirit of california's prohibition of non-compete agreements). ie: 2 equally qualified candidates vie for the same job, one has worked there before and has a "perm fee" in effect with employer and a staffing agency. who do you think will get the job?

fyi, this "800lb gorilla" staffing agency has sent me to many different major clients in my industry over the 2 years i worked part-time for them. they do not disclose (and refuse to when asked) any such "perm fee" information to employees. i would never have worked for them if i knew i was compromising future career prospects. is there a law that requires staffing agencies to disclose to employees the creation of "perm fees" between them and the clients they send them to work at?
 

Beth3

Senior Member
but isn't this method of contract between the client and staffing agency in effect indirectly limiting my future employability Sure - but only with the handful of client companies where you were placed. There are thousands and thousands of other employers you could work for - theoretically at least. Plus, no one is preventing you from working at any of these client companies or the client from hiring you. The only thing at issue is that the client company has to pay a placement fee if they hire you and many, many employers do just that.

is there a law that requires staffing agencies to disclose to employees the creation of "perm fees" between them and the clients they send them to work at? Nope. These are private contracts between two entities. No law requires they be made public.
 
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mrbluejay

Guest
what you say would seem logical, but the reverse is actually true. i am a pharmacist and the "handful of client companies" i was sent to; CVS (4132 stores), Rite-Aid (3801 stores), Vons/Kroger (2429 stores), Safeway (1659 stores), Albertsons (1713 stores), and Sav-on (530 stores), resulted in establishing "Perm fees" at 14,264 stores or possible job locations. had i also worked at a walgreens (4224 stores) and a Eckards (2805 stores) add another 7029 possible jobs. i found this out when i had worked at one of the above stores in San Diego through the staff agency and later tried to work in Northern California for the same pharmacy chain. the staffing agency demanded to be paid a "perm fee" if i was hired.
what is worse is that there are fewer independent pharmacies, and they definitely will take into consideration the added costs of perm fees.

would it be legal to post the finder or "perm fee" policy of staffing agencies that i have discovered on pharmacy web forums or job finder sites to inform others?
 

Beth3

Senior Member
If the agreements are already in the public sector, then you are free to post it anywhere you like. If not, then you should think twice about this.

From what I understand, there is a significant shortage of pharmacists in many if not most areas of the country. I would imagine if one of these client companies really wanted to hire you, they'd be willing to pay the fee. In any event, if you wish to pursue this further and see if the client agreements unduly restrict your opportunity to obtain gainful employment, you'll need to speak to an attorney at this point. This is a case law (court ruling) issue.
 
M

mrbluejay

Guest
thank you for your answer beth3. you're absolutely right, there are many pharmacy jobs out there right now, just like computer jobs in silicon valley in the late 90's. but ask a software programmer about their job security today. the number of pharmacy schools in california has doubled in the last 5 years and the CA board of pharmacy has relaxed its liscensing/testing procedures to allow out of state pharmacist to practice here to meet the demand.

the insidious nature of the staffing/client agreement is that it "self renews" each year unless "canceled in writing". how many of these staffing clients actually take the time to compose and send a certified and legal contract termination letter (let alone even read the fine print and understand the specifics of the contract)? my guess is that many just languish in a file cabinet long after the staffing agency was last used. meanwhile i am still under its enforcement.
ps: i would like to contact an attorney, do you have any recommendations? thanks
 

cbg

I'm a Northern Girl
mrbluejay, what you are failing to take into consideration is that the client companies enter into these agreements KNOWINGLY. They are not blindsided by this; they are aware from BEFORE they sign the agreement that they will have to pay this fee if they choose to hire someone that was brought to their attention by the agency.

I have worked with many of these agencies, and never once did they fail to bring these fees to my attention BEFORE I signed any agreement.

The client companies have a choice. They knew from day one that they would have to pay a fee if they wanted to hire you. It's up to them which they want more; to hire you, or to save the fee.

No one in these forums can or will refer you to a specific attorney. There is a "find a lawyer" section elsewhere on this site.
 

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