What is it Mo? ? only 10% according to Wheeler ? of a typical recruiter?s time is spent on names sourcing (hopefully our article will appear soon on ERE that speaks to the business cases of names sourcing). All one has to do is read many of the requests on ERE for assistance in passive sourcing to recognize that the profession has a severe identity and implementation crisis. For all the Mike Homula?s and Rob McIntosh?s there are hundreds of ineffective recruiters and recruiting leaders who are cemented into old fashioned ways of thinking, sourcing, recruiting, and hiring. And no, executive recruiters are not necessarily the cream of the crop ? they are no better nor worse at penetrating corporate gatekeepers than their contingent counterparts; in fact, I?d go as far as saying that it?s harder to source the newbies and middies than executives because they are less in the public eye ? conferences, news articles, etc., than C-level candidates. Don?t believe me? After Carly Fiorina was fired from H/P, the next two weeks were replete with ?Who will replace Carly articles?? Wow, the reporters were easily able to put together a short list. Tough?
As far as tortuous interference of direct recruiting ? well, the number of cases filed has little to do with the death notice of recruiting. Yes, Reeves v. Hanlon 95 P.3d 513 (2004) did result in the California Supreme Court ruling that an employer ? a law firm (surprise!) – whose workers were solicited away by a former employee can, in some cases, sue the former employee for associated damages, including the costs of recruiting replacements.
The details of the case are unique so let?s focus on these for the time being. Daniel Hanlon, a law partner of Robert Reeves, and Colin Greene, an associate in the firm, resigned without notice on June 30, 1999 and formed their own law firm, Hanlon & Greene. For up to five months prior, Hanlon and Greene had accessed their former firm?s data base and printed out information on 2200 clients, created a great sense of dissatisfaction among the firm?s staff, and left without providing status reports or upcoming deadlines.
[no reason for Reeves to angry, eh?]
Just before leaving, Hanlon and Greene intentionally erased extensive computer files containing client documents and forms and personally solicited the firm?s key personnel. Over the next sixty days, the firm lost 9 employees, 6 of whom joined Hanlon & Greene; the new firm solicited and picked up more than 100 of Reeves? clients in the first year of business.
[sounds ethical to me]
Plaintiff Reeves sued, claiming intentional interference with contractual relationship, interference with prospective economic advantage, misappropriation of confidential information in violation of the Uniform Trade Secrets Act, destruction of company property, and losses attributable to the defendants? solicitations because clients failed to pay Reeves fees that they owed. The trial court found that the plaintiff had been damaged, and awarded damages.
On appeal, the California Supreme Court rejected an earlier ruling of a lower court that an employer may never sue a competitor for intentional interference with its at-will employee where the employer enjoys the probability of a future economic benefit from that relationship. The
Hanlon Court noted long-standing precedents holding that a business may lawfully solicit a competitor?s employees as long as the inducement to leave is not accompanied by any unlawful conduct (this is key). Citing its earlier decision in Korea Supply Company v. Lockheed Martin Corporation, 63 P.3d 937 (2003), the Hanlon Court held that where a plaintiff proves the defendant engaged in an ?independently wrongful act?, damages may be awarded for intentional interference. Accordingly, it upheld the trial court?s award of damages and costs.
Under the Hanlon standard, an employer is not subject to liability merely because it has extended a job offer that induces an employee to terminate the at-will relationship. Immunity from liability is lost if an employer or ex-employee uses unfair methods to interfere with such advantageous relations. To obtain damages, the former employer must prove that the competitor/defendant who hired its former employee had knowledge of the relationship and that the defendant intentionally acted to disrupt the relationship.
So here we have the bottom-line: Hanlon was an attorney who engaged in unlawful activity both prior to and subsequent to leaving Reeves that negatively impacted the business of his former employer. Had Hanlon and Greene been hired by another firm which later employed their former coworkers, that firm would have had no liability. The take home lesson IMHO is that when hiring higher-level executives who bring staff with them, employers in California may need to take steps to ensure that the competitive advantage gained is not denuded by the potential of litigation that might result from independently illegal conduct that accompanied the executives? departure.
So much for playing taps for recruiting?