Court Opinion

ID: 4132681
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:29:14.998674+00
Date Added: 2024-06-11T14:33:57.051208
License: Public Domain

September                 29,     1975

The     Honorable                Jackie      W.     St.     Clair                             Opinion            No.        H-      699
Commissioner,                     Department               of
     Labor       and     Standards                                                            Re:      Whether               executive            search
P.     0.     Box      12157                                                                  firms        are        private         employment
Austin,          Texas            78711                                                       agencies               for    purposes           of article
                                                                                              5221a-6.

Dear         Commissioner                 St.     Clair:

               You       have      requested            our          opinion        regarding          whether               executive            search
firms        are       private      employment                   agencies            for    paposes             of article           5221a-6,         V. T. C. S.
You      state      that     executive            search             firms         contract         with        employers                 to secure
prospective              employees              to interview                 for     executive         positions.                   Generally,           such
firms        do not        advertise            in the public                media.           A fee        is     usually          charged         to the
prospective              employer            at an hourly                   rate     or    on some              other       basis         which    does     not
include        the      contingency              factor         that        prospective             employees                actually         be hired      by
the     contracting              company.

               A    “private          employment                     agency        ” is    defined         in section              I(e)     of article
5221a-6          as:

                             any      person,           place          or     establishment                within           this     state
                             who       for      a fee      or without               a fee     offers            or    attempts,
                             either          directly           or     indirectly,            to procure                   employtint
                             for     employees                  or    procures             or attempts                to procure.
                             employees              for         employers,                 except      as he.reinafter                    exempted
                             from         the     provisions                hereof.

No      exemption           is     specifically            applicable                to executive                sear&           firms..

                                                                       p.     3029
The      Honorable       Jackie            W.    St.     Clair           - page      2          (H-699)

              On the    basis         of the        facts        which      you      have        indicated,          we   cannot         avoid
the conclusion.          that        executive          search            firms      are        private       employment               agencies
within     the meaning               of section          l(e),       since        such      firms         “procure        or    attempt             to
procure        employees             for    employers.               ”     So long         as a significant               portion        of the
activity      of a particular               firm       involves            the procuring              of or     the attempt              to
procure        employees             for    employers,                   such     firm      must      be deemed              to fall        within
the   regulatory         ambit         of the        statute.             In our      opinion,            however,           a management
consultant       firm        which         merely           occasionally             matches          an employee~with                      an
employer        does     not     thereby            qualify         as an “executive                  search         firm.      ”   As        the
Court      of Appeals          for     the      Eighth           Circuit         stated     in Telex          Corporation              v.     Balch,
382 F. 2d 211, 219 (8th              Cir..       1967):

                         [w]hen            a state      enacts           regulatory             provisions           governing
                         a specified                business,             isolated         or    individual          transactions
                         are     generally             not       prohibited.

              On the    other         hand,         a management                   consultant        firm      which         performs               a
diversified          group      of functions                is    not,     by sole         reason         of that     diversification,
excluded        from     coverage               of the Act.                The     ultimate         determination               requires                a
resolution         of factual         questions.

                                                         SUMMARY

                         So long as a significant                            portion        of its activity    involves
                         the procuring  of or the                           attempt         to procure      employees
                         for     employers,                  an executive                search       firm     is a private
                         employment                  agency          for     purposes            of article          522la-6,
                         V. T. C. S.

                                                                                          Very      truly     yours,

                                                                                          JOHN       L.      HILL
                                                                                          Attorney          General          of Texas

                                                                    p*      3030
        I
    I

,

            The   Honorable   Jackie   W.   St.   Clair       - page   3   (H- 699)

                                            rst   Assistant

            Opinion   Committee

            jwb

                                                      p.   3031