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Employer’s Liability for Fees and Damages

An employer will be liable for fees and damages to an employment agency (agency), only if the following conditions are satisfied[i]:

  • there must be an employer’s request for guidelines about fees;
  • there must be suitable guidelines made by an agency in response to a request;
  • an employer must hire an applicant issued  by an agency; and
  • there must be an agreement about the fee for services offered.

A fact that a job applicant, who was hired by an employer from an agency for a temporary job, was in fact solicited for a permanent job by the employer will not relieve the employer from the agency’s fees that is due for a temporary job[ii].  However, where an employer contracts with an agency for a job seeker, and if such contract is terminated because of the fault of an employee, then an employer need not pay contractual fee.  If an employer unilaterally terminates a contract before a job applicant starts his/her work, then an agency is entitled for the contractual fee.

Similarly, noncompliance with contractual provisions by an employer will not take away an employer’s liability to pay a contractual fee. In order to prevent payment of a contractual fee, an employer cannot raise a defense of agency’s non compliance, if there is non compliance on the employer’s part.

An agency is entitled to damages if an employer violates a contractual obligation to pay the fee for services offered.  Such damages will be determined according to the provisions contained in the contract regarding the fee.  In order to obtain damages for an employer’s nonpayment of fee where the fee agreed upon is in terms of the salary of a hired person, an agency must produce sufficient evidence regarding the salary.

Where an agency seeks damages under the theory of quantum meruit, the amount of damages will depend upon services rendered by an agency and accepted by an employer[iii].  Sometimes treble damages and attorney’s fees are given to an agency.  In order to get treble damages, an employer must have intentionally refused to pay a contractual fee.

[i] Macro Group, Inc. v. Swiss Re Life Co. Am., 178 Misc. 2d 869 (N.Y. Civ. Ct. 1998)

[ii] Scheduling Corp. of America v. Massello, 119 Ill. App. 3d 355 (Ill. App. Ct. 1st Dist. 1983)

[iii] Thomas v. Kearney Little League Baseball Ass’n, 5 Neb. App. 405 (Neb. Ct. App. 1997)

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