On November 19, 2008, I was interviewed on Blog Talk Radio’s show the Recruiting Animal.
The Recruiting Animal interviewed me on a number of labor & employment law related topics germane to recruiters. One topic seems to have created a MINOR controversy in the blogosphere.
The issue of ruse calling or “rusing” came up. In the context of recruiting, this is when an HR person or recruiter (usually an external or 3rd party person) reaches a company “gatekeeper” (i.e., someone who protects or guards what information is distributed) & pretends to be someone else in order to get past the gatekeeper. By doing this, the recruiter hopes to get to the person in charge of hiring, or who has the most information about the position, so that they can bypass bureaucracy & get an advantage over other recruiters. The gatekeeper is usually an administrative assistant or someone else designated to screen phone calls. Specifically, I was asked whether rusing is legal.
Generally, under federal law it’s not civilly or criminally illegal. I’ve seen blog posts from professionals, & even another management side labor & employment attorney, saying that rusing violates federal law such as Federal Trade Commission rules. Others argue that it violates the Uniform Trade Secret Act, but this isn’t federal law. It’s a doctrine which can be adopted by the states; i.e., unless codified as law, it’s persuasive but not mandatory as an authority.
As best as I can tell rusing only violates FTC law when the recruiter is lying for the purpose of obtaining something of concrete value such as money, trade secrets or inside information in order to gain a direct pecuniary advantage. There’s potential criminal and civil liability with these types of thefts. Still, most trade secret & intellectual property law & doctrine doesn’t address the type of conduct I’m talking about here.
My contention is that rusing for the purpose of getting past a gatekeeper to get the real person in charge, & then disclosing that the purpose of your call is for information regarding an open position isn’t the same as what’s prohibited by the FTC or other laws. Again, it’s worth repeating that there are no other U.S. laws in existence, or even proposed, which addresses rusing in the aforementioned recruiting context.
Now if you change the context to obtaining information regarding the separation of a C-level executive or director that has a substantial impact on that business’ operations, then this MIGHT be illegal under civil law, maybe criminal law too (though that’s a weaker argument and probably only a misdemeanor at best). Intent to damage the company or someone else’s reputation, & the nature of what’s communicated, could factor into whether or not someone is criminally charged, & any actual resulting damage could factor into civil liability.
Also to be considered is whether the information sought is considered very valuable by the company it’s sought from. More specifically, if a company has gone to great lengths to protect the information solicited, either through technology, policy, practice or binding agreements, then that might make a stronger case for recognizing it as being legally protected property.
If you change the context to an in-house recruiter for a company trying to steal employees from a competitor, this MIGHT be illegal under state civil law dealing with trade secrets (unlikely illegal per criminal law) or some sort of tortious interference with business, which is more likely a common law argument (i.e., violates case law not statute). The nature of our legal system dictates that actual damage & intent factor into whether it’s illegal per civil law. It probably won’t be illegal per criminal law, and if it is, it will probably be a misdemeanor at best.
Ultimately, all the public can do is debate this issue. It will take at least one court case to start defining in a more definite manner whether or not ruse calling or rusing is illegal in either criminal or civil courts.
If I’m wrong, please correct me. But so far, all of the research I’ve done, and all of the comments from those who contend that it violates federal law have been unable to point out the specific law that’s violated. Additionally, relative to state law, I can’t find anything on that either.
Is there a point where recruiting out of a company would/could, itself, be illegal?
bill
Misrepresenting yourself to steal arguably the greatest property asset in the company – their employees.
Sound like this:
Wirefraud
Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined under this title or imprisoned not more than 20 years, or both. If the violation affects a financial institution, such person shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.
JImbo:
Isn’t that the whole Federal Trade Commission prohibition which Mr. Krugel just refuted, if I’m not mistaken? Harping on this FTC language is counter-productive and out of context to this issue. More credible argument, please.
Bill, Yes, if your intention is to DESTROY that company.
From my MagicMethod Telephone Names Sourcing training:
A very good guiding principle for hiring a competitor’s employees should be:
“Any employee is not entitled to use or disclose the former employer’s trade secrets, and the new employer is not entitled to use the employee as a conduit to gain the benefit of the former employer’s secrets.”
In other words:
DO NOT hire a competitor’s employees if your intention is to put the competitor out of business.
DO hire a competitor’s employees if your intention is to gain good employees.
The FTC isn’t the only agency that codifies wire fraud. Wire fraud is merely a definition. There are 50 states that can use this term as a basis for their laws. Other definitions that come into play here both criminally and civilly are pretexting and unauthorized disclosure. Take a state like California and reference some of their penal codes like section 530 and 538.5. It’s interesting to see how the states can use the aforementioned definitions to make the ‘ruse call’ a crime.
The broader question is: Should the industry address the issues and self-regulate prior to an actual case being argued or should it remain a horrible present waiting to be unwrapped.
I’d be interested in hearing you expand more on this concept:
“…arguably the greatest property asset in the company – their employees” and how one actually “steals” another. That thought process, please.
To follow Maureen’s comment – I think what she is suggesting is that employees are not property that a company owns.
California Penal Code Section 530 specifically says “receives any money or property”. The information – the fact of a person working for a company – is nether money nor property, and as such doesn’t apply.
California Penal Code Section 538.5 appears to be specific to public utilities. Even so, the language states, “confidential, privileged, or proprietary information, trade secrets,trade lists, customer records, billing records, customer credit data,or accounting data”. None of applies here.
Thanks for your response Jeremy!
We speak only of state law, but we forget that with interstate commerce that the issue of state law can create federal jurisdiction.. not to mention that the states with the most stringent laws tend to prevail.
Let’s look at the following –cut and pasted — Colorado’s Uniform Trade Secrets Act (CUTSA) provides employers with a statutory method to combat solicitation of customers and employees. CUTSA prohibits the misappropriation (the acquisition or use of a trade secret by someone who knows or has reason to know it was acquired through improper means) or threatened misappropriation of an employer’s trade secrets. The Act also specifically allows for a court to issue an injunction to prevent misappropriation or threatened misappropriation of a trade secret. Thus, employers often argue that a former employee soliciting customers is relying on trade secret information in doing so. In particular, if an employer can establish that the customer list is a trade secret under CUTSA, a former employee’s use of the list is a wrongful misappropriation.” — this was Cut and pasted from CoBar
Though we may not believe employees to be “property” the concerns also come about with contracts of non disclosure as well. As Charles krugel even mentions, when a company creates these contracts, and maintains continuous effort to keep those employees lists / names as a secret
using Colarado again – As used in this article (Statute Definitions), unless the context otherwise requires:
(1) “Improper means” includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means.
(2) “Misappropriation” means:
(a) Acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or
(b) Disclosure or use of a trade secret of another without express or implied consent by a person who:
(I) Used improper means to acquire knowledge of the trade secret; or
(II) At the time of disclosure or use, knew or had reason to know that such person’s knowledge of the trade secret was:
(A) Derived from or through a person who had utilized improper means to acquire it;
(B) Acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or
(C) Derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or
(III) Before a material change of such person’s position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.
Rotheberger has a great article on this act http://www.rothgerber.com/showarticle.aspx?Show=656 How Can an Employer Protect Confidential Information?
This is a fantastic comment karenm. Thanks for posting this! Your remarks & the rothgerber article point out the shades of gray encountered when trying to outlaw rusing. This is part of the problem I have with other writers who flat out say that rusing is illegal. It could be illegal; it could be criminal. It isn’t necessarily though. This is why I say that in most real world instances, using ruse calling to just get past a gatekeeper of information, probably isn’t civilly or criminally illegal.
[…] it’s generally frowned upon and forbidden by many organizations, rusing isn’t illegal. It is, however, deceptive. Joseph Daniel McCool describes it pretty well in an article for […]
hi Charles; hope you’re doing well – will you be on the @animal show anytime soon?
Here’s an interesting late update to the ever-popular “rusing” subject:
http://stevelowisz.com/wp-content/uploads/2013/11/Competitive-Research-vs-Espionage-Final.pdf
Thanks Maureen. Hopefully, I’ll be on the @animal show again soon. Nothing scheduled yet.
I just read Lowisz’s white paper. It’s really good. He does a good job of identifying & discussing the ambiguities involved, & doesn’t make incorrect blanket statements about the law. Also, he gives recruiters really good advice.
Thanks for that opinion! Those blanket statements are what always get us into so much trouble, aren’ they?! I’m gonna let @animal know you’re game for another show!
Are you on Twitter yet?
Best wishes and Happy Holidays!
Maureen
Thanks Maureen & likewise to you too.
I’m not on Twitter (yet). Still haven’t found it to be advantageous for marketing.
[…] it’s generally frowned upon and forbidden by many organizations, rusing isn’t illegal. It is, however, deceptive. Businessweek’s Joseph Daniel McCool describes it pretty well in an […]