### AUSTIN. TEXAS April 6, 1950

**Hon.** M. B. Morgan, Commissioner Bureau ofLabor Statistics Austin, Texas Opinion No. v-1035
Re: .Validity ofproposed contract between National Sales Pe.rsonnel System

Dear Sir: .qd licensed private employment agencies inTexas.

Your request for.~.~~opinio~,present~s the qu?stion of whether the National S$ee. PersonneJ :Syste~‘s mode ,of‘operation in,Texas wasevidenced 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 ofthis proposed contract which you have sub: mitted is called an “Operating Agreement.” Itprovides 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 fna_par&lar.,area. .,Whe$ such business is. acqu,ied. the National Sales Persopnel System .w.illrefer itto fhe member office $utae particular,Jocaljtywho will inturn locate aprospective 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. ~Theagreement states that ~theNational 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 ~opiniqnthat~such plan of operation as evidenced by this agreezneatydoes not amount to aviolation. ofthe “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 requireHon. M. B. Morgan, page 2 (V-1035)

alicense within the contemplation ofthis Act. This Act provides for criminal prosecutions (Art. 522la-6, Sec. 13, V.C.S.) and the rule of strict construction applies inthe sense that a statute ofapenal nature will not be extended by construction beyond the necessities ofthe case. 39 TexJur. 276, Statutes, Sec. 146. The provisions ofthis law do not reveal any specific intent onthe part ofthe Legislature to regulate out-of-state agencies as was done inthe “Labor Agency Law”.passed atthe same session ofthe 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 inview inenacting such law. 27 TexJur. 870, Licenses, Sec. 20. The conclusion is inescapable that the law is intended for the protection ofpersons seeking employment. Ribnik v. McBride, 277 U.S. 375 (1928). (See annotations in 56 A.L.R. 1327 and 133A.L.R. 1500 concerning this type oflegislation.) The law seeks to place responsibility onthe person or agency inactual contact with these persons by requiring alicense. 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 ofthe law., .We do not think the ‘Operating Agreement” ofthe National Sales Personnel System with licensed Texas private employment agencies on its face can violate this purpose.

We are further ofthe opinion that the agreement to divide fees collected from applicant employees who have secured employment through the promotion efforts ofthe 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 ahiring 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 inthe United States Bureau ofLabor Bulletin No. 109, p. 36, published in October, ~1912;which states inpart as follows:Hon. M. B. Morgan, page 3 (V-1035)

“A most pernicious practice is the collusion with foremen or superintendents bywhich 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 ofby railroad and construction laborers, namely, one gang working, another coming to work from the employment agent, and athird going back to the city.”
This opinion is limited tothe question presented and other provisions ofthe 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 alicensed Texas Private Employment Agency is not required to have alicense as aPrivate 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