AUSTIN. TEXAS 

April 6, 1950 

Hon. M. B. Morgan, Commissioner 

Bureau of Labor Statistics 

Austin, Texas Opinion No. v-1035 

Re: .Validity of proposed contract between National 

Sales Pe.rsonnel System 

Dear Sir: 

.qd licensed private employment agencies in Texas. 

Your request for.~.~~opinio~,present~s the qu?stion of 

whether the National S$ee. PersonneJ :Syste~‘s mode ,of ‘operation in ,Texas was evidenced ay their contract to beg .+x+cuted ‘with 

license&priyate,~pJoyment agencie.6 amounts to-a viplation of 

the YTexas .Private ,JZmpl*e& Ageqcy Law,? (A@ 53st Leg., 

1949, cb. 245, up. 453, and codified as Art. 522la~6..V..C.S.). 

The copy of this proposed contract which you have sub: 

mitted is called an “Operating Agreement.” It provides that the 

National Sales Personnel.Gystem will do advertising and promo- 

,tional work fn securing.bus@ess of ~employers~who desire to hire 

sales employees fn a_par&lar.,area. .,Whe$ such business is. 

acqu,ied. the National Sales Persopnel System .w.ill refer it to 

fhe member office $u tae particular,Jocaljtywho will in turn locate a prospective employee for the employer. The National 

Sales Personnel,System,.is to be compensated-for its services 

by sharing ia..the ,fee -charged the applicant employee for whom 

employment his, .secured. ~The agreement states that ~the National 

Sales Personnel System will, have PO ~c.wMct with applicants for 

employment and that tbe member offices are to charge their - 

local contract rates to the applicant. 

-We are of the ~opiniqn that~ such plan of operation as evidenced by this agreezneatydoes not amount to a violation. of the 

“Texas Private Employment Agency Law.” ,We, of course, are 

cot at this time. confronted;withlactil practicee,oi. conduct of 

operation under this contract. 

We do not believe that National Sales Personnel System’s 

proposed activities under this agreement are such as would require 
Hon. M. B. Morgan, page 2 (V-1035) 

a license within the contemplation of this Act. This Act provides for criminal prosecutions (Art. 522la-6, Sec. 13, V.C.S.) 

and the rule of strict construction applies in the sense that a 

statute of a penal nature will not be extended by construction 

beyond the necessities of the case. 39 TexJur. 276, Statutes, 

Sec. 146. The provisions of this law do not reveal any specific 

intent on the part of the Legislature to regulate out-of-state 

agencies as was done in the “Labor Agency Law”.passed at the 

same session of the Legislature (Acts 51st Leg., 1949, ch. 234, 

p. 434, and codified as Art. 5221a-5, Sec. 6. V.C.S.). It is therefore necessary to determine the legislative intent from the terms 

used and the object in view in enacting such law. 27 TexJur. 

870, Licenses, Sec. 20. The conclusion is inescapable that the 

law is intended for the protection of persons seeking employment. 

Ribnik v. McBride, 277 U.S. 375 (1928). (See annotations in 56 

A.L.R. 1327 and 133 A.L.R. 1500 concerning this type of legislation.) The law seeks to place responsibility on the person or 

agency in actual contact with these persons by requiring a license. 

Such licensees are the ones regulated and, so long as actual procurement of and contact with applicant employees is conducted 

through such licensed agencies, sufficient control may be exercised to effect the purpose of the law., .We do not think the ‘Operating Agreement” of the National Sales Personnel System with 

licensed Texas private employment agencies on its face can violate 

this purpose. 

We are further of the opinion that the agreement to divide 

fees collected from applicant employees who have secured employment through the promotion efforts of the National Sales Personnel 

System does not violate Article 522la-6, Sec. 10 (h). This section 

provides that no private employment agent shall: 

“(h) Divide or offer to divide. directly or 

indirectly, any fee charged or received with any 

person who secures workers’through such~ agent, 

or to whom workers are referred, by such agent.“’ 

This prohibition against dividing fees was intended to prevent employment agents from dividing fees with employers or persons in 

a hiring capacity for the employer, and not intended to apply to the 

situation here questioned. This was an abuse incident to the system of private employment agencies which led to theii regulation. 

This abuse is described in the United States Bureau of Labor Bulletin No. 109, p. 36, published in October, ~1912; which states in part 

as follows: 
Hon. M. B. Morgan, page 3 (V-1035) 

“A most pernicious practice is the collusion 

with foremen or superintendents by which the employment agent ‘splits fees’ with them. That is, 

the foreman agrees to hire men of a certain employment agent on condition that one fourth or one 

half of every fee collected from mea whom he hires 

be given to him. This leads the foreman to discharge men constantly in order to have more men 

hired through the agent and more fees collected, it 

develops the ‘three-gang’ method so universally 

complained of by railroad and construction laborers, namely, one gang working, another coming to 

work from the employment agent, and a third going 

back to the city.” 

This opinion is limited to the question presented and 

other provisions of the contract are not passed upon or considered herein. 

SUMMARY 

Under the facts submitted, an out-of-state organization which does not deal directlywith persons 

in Texas seeking employment, but which forwards all 

inquiries for employees to a licensed Texas Private 

Employment Agency is not required to have a license 

as a Private Employment Agency in Texas. A licensed 

Texas Private Employment Agency may divide fees 

with an out-of-state organization through which employment inquiries are referred to the Texas agency, 

so long as no fees are divided with the employers. Article 52Zla-6, V.C.S. 

Yours very truly, 

PRICE DANIEL 

APPROVED: 

Ned McDaniel 

State Affairs 

Charles D. Mathews 

Executive Assistant 

i5-&zA-, 

Walter F. Woodul, Jr. 

Assistants 

JSM/WFW:v