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