AUSTIN. TEXAS
April 6, 1950
Hon. M. B. Morgan, Commissioner
Bureau of Labor Statistics
Austin, Texas Opinion No. v-1035
Re: .Validity of proposed con-
tract between National
Sales Pe.rsonnel System
.qd licensed private em-
ployment agencies in Texas.
Dear Sir:
Your request for.~.~~opinio~,present~s the qu?stion of
whether the National S$ee. PersonneJ :Syste~‘s mode ,of ‘opera-
tion in ,Texas wasevidenced ay their contract to beg.+x+cuted ‘with
license&priyate,~pJoyment agencie.6 amounts to-a viplation of
the YTexas .Private ,JZmpl*e& Ageqcy Law,? (A@ 53st Leg.,
1949, cb. 245, up. 453, and codified as Art. 522la~6..V..C.S.).
The copy of this proposed contract which you have sub:
mitted is called an “Operating Agreement.” It provides that the
National Sales Personnel.Gystem will do advertising and promo-
,tional work fn securing.bus@ess of ~employers~who desire to hire
sales employees fn a_par&lar.,area. .,Whe$ 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 lo-
cate 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 evi-
denced 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 pro-
vides 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 there-
fore 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 legisla-
tion.) 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 pro-
curement of and contact with applicant employees is conducted
through such licensed agencies, sufficient control may be exer-
cised to effect the purpose of the law., .We do not think the ‘Op-
erating 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 employ-
ment 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 em-
ployment 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 sys-
tem of private employment agencies which led to theii regulation.
This abuse is described in the United States Bureau of Labor Bul-
letin 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 em-
ployment agent ‘splits fees’ with them. That is,
the foreman agrees to hire men of a certain em-
ployment 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 dis-
charge 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 labor-
ers, 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 consid-
ered herein.
SUMMARY
Under the facts submitted, an out-of-state or-
ganization 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 em-
ployment inquiries are referred to the Texas agency,
so long as no fees are divided with the employers. Ar-
ticle 52Zla-6, V.C.S.
Yours very truly,
PRICE DANIEL
APPROVED:
Ned McDaniel
State Affairs
i5-&zA-,
Charles D. Mathews
Executive Assistant Walter F. Woodul, Jr.
Assistants
JSM/WFW:v