A Client Hired My Candidate and Won’t Pay the Fee: What Can a Recruiter Do?

What a signed fee agreement needs before the first submittal

The agreement does its work before there is a dispute. Signed before the first candidate goes out, it answers the common defenses before anyone raises them. Signed after, or never, it leaves the firm arguing over an email thread.

It does not need ink. For a transaction in or affecting interstate commerce, the federal E-SIGN Act says a contract “may not be denied legal effect, validity, or enforceability solely because it is in electronic form.” Whether an emailed reply to terms pasted into a message forms a contract is a state-law question for counsel; a signature takes the question off the table. The terms to ask counsel to draft:

• Who is bound: the client and its affiliates, signed by someone with authority to commit the client.
• What counts as an introduction: a résumé, a name, a profile link or a call, by any means, to anyone at the client.
• The window: how many months after an introduction a hire still earns the fee.
• What counts as a hire: any position, as an employee, contractor or contract-to-hire, directly or through another firm.
• The fee and its base: the percentage or flat amount, which salary it applies to, and what applies if the client will not disclose the salary.
• The client’s duties: to say in writing within a set number of business days if a submitted candidate was already known to it, and to report any hire and start date.
• When the fee is due, the payment terms, any late charge, and whether the guarantee depends on payment within terms.
• Disputes: governing law, where a claim is heard, any mediation or arbitration step, and who pays collection costs.

An employment attorney writes the wording; this list is what to ask for. The guarantee and conversion terms belong in the same document, and each has its own guide on this site: what refunds and free replacements cost the firm, and conversion fees earned and never invoiced.

Proof of introduction, and how long candidate ownership lasts

Proof of introduction is the dated record that the firm presented this candidate to this client, for this job order, before the client hired the person. The strongest proof is made by the system at the moment of submittal, not rebuilt from memory after a hire turns up. One row per submittal, kept in the ATS:

• Date and time sent, from the ATS or a logged company email, not from a personal phone.
• The named person at the client who received it, and the job order it was for.
• The résumé or profile exactly as sent.
• The candidate’s written OK to be presented to that client for that role, dated before the submittal.
• Every client reply: acknowledged, interview requested, feedback, declined.
• Any client note that it already knew the candidate, with its date.

Candidate ownership lasts as long as the window in the signed agreement, counted from the date it names, such as the introduction. Inside the window, the records above are what the firm will be asked to show. Outside it, or with no signed agreement, what the firm can still claim is a question for counsel.

What to send first when a client hires without paying

The first thing to send is the invoice, if none went out, with a short cover note: the candidate’s name, the submittal date, the start date as the firm knows it, and the clause the fee comes from. Then a call, before any letter, asking plainly how the hire happened. A hire can be news that never reached the client’s HR team, or a candidate the client honestly believes came from somewhere else.

Each reason a client gives points back to a clause or a record:

• “She applied to us directly.” The submittal’s date and time against the date of her application, and the clause that obliged the client to say so within a set number of days.
• “Another agency sent him first.” The firm’s submittal timestamp, and a request for the date of the other submittal.
• “We hired her for a different job.” The clause that covers a hire into any position.
• “We hired him months later.” The window in the agreement, counted from the introduction.
• “He’s a contractor, not an employee.” The clause that covers a hire in any capacity, including through another firm.
• “We never signed anything.” The email trail and the client’s replies, and a call to counsel before anything else goes out.

After the call, the written summary: what was said, the clause, the submittal record attached, the amount, and a date to pay or to answer in writing with the reason. Keep the tone of a firm that expects to keep working with this client, because it may. Ask counsel before any letter that threatens a lawsuit or cites a statute.

If the client still refuses: demand, mediation, small claims or court

A formal demand letter is the step before any filing. It states the amount, the basis (the agreement, the clause, the submittal, the hire), a deadline, and what the firm will do after it. California’s small claims form, SC-100, revised January 1, 2026, tells the plaintiff: “You must ask the defendant (in person, in writing, or by phone) to pay you before you sue.” A written demand covers that step and dates it.

Mediation puts a neutral person between the two sides to help them agree; the mediator does not decide the case. If the fee agreement requires mediation or arbitration first, that clause sets the next step; if not, both sides can still agree to mediate.

Small claims has dollar limits that a placement fee can exceed. California’s SC-100 says “Corporations, partnerships, public entities, and other businesses are limited to claims of $6,250”; individuals and sole proprietors may claim up to $12,500. The same form says a party may not have a lawyer represent it in court, allows no more than two claims over $2,500 in California in a calendar year, and gives the plaintiff no right to appeal. In New York City, a corporation, partnership or association with its principal office in New York can file a commercial claim up to the $10,000 small claims limit against a defendant that lives or has a business office in the city, and must certify that no more than five have been filed that calendar month. For example, a hypothetical agreement that sets the fee at 20% of first-year base salary yields $18,000 on a $90,000 hire, above every limit quoted here.

Above the limit, the claim goes to civil court, or to arbitration if the agreement calls for it, through counsel. Whether to file in small claims for part of a fee, and whether attorney’s fees and collection costs can be recovered, depend on the agreement and the state. Time limits and licensing also go to counsel before filing. The texts below are quoted without the exceptions each one lists:

• California time limits: four years for an action “upon any contract, obligation or liability founded upon an instrument in writing” (Code of Civil Procedure §337), two years for one “not founded upon an instrument of writing” (§339).
• Florida time limits: five years for an action on a contract “founded on a written instrument” (Statutes §95.11(2)(b)), four years for one “not founded on a written instrument” (§95.11(3)(j)).
• New York time limit: six years for “an action upon a contractual obligation or liability, express or implied” (CPLR §213(2)).
• New York licensing: General Business Law §172 bars operating an employment agency “unless such person shall have first procured a license therefor,” and §171’s definition covers a person who, for a fee, procures “employees for employers seeking the services of employees.” Section 191 separately defines an “employer fee paid employment agency”: one that procures employees for “Class B” employment, charges job seekers no fee, and “engages in no activity constituting the operation of an employment agency as defined in section one hundred seventy-one of this chapter.”

None of this is legal advice. When the clock starts on a given fee, whether an emailed acceptance counts as a writing, and which New York category describes a given firm are questions for the firm’s attorney. Other states have their own limits and rules; this guide quotes these texts, not the law of every state.

The 12-month check for hires that never became an invoice

A refusal to pay is the dispute the firm knows about. The check below looks for the ones it does not: candidates the firm introduced who now work at that client, with no invoice and no conversation. It needs the ATS submittal export, the invoice register and the signed agreements.

• Export every submittal from the last 12 months, or from the longest window in the firm’s agreements if that is longer: candidate, client, job order, date and status.
• Remove the submittals that became invoiced placements.
• For the rest, check where the candidate works now: the recruiter’s own check-in call, the candidate’s public professional profile, the client’s announcements.
• Flag every candidate now working at a client the firm presented them to, with the start date if known.
• For each flag, read that client’s agreement: signed or not, the window, the positions and capacities it covers, and the fee formula.
• Sort the flags into four groups: invoice now, ask the client, ask counsel, outside the terms.

Illustrative example: a hypothetical firm made 900 submittals over the last 12 months and invoiced 30 placements. The check finds 6 candidates now working at a client the firm presented them to. Two started after the 6-month window in those clients’ agreements. One works at a client with no signed agreement on file, which goes to counsel. Three are inside the window under signed terms; at a fee of 20% of first-year base salary on salaries of $80,000, $95,000 and $110,000, that is $57,000 nobody has invoiced. The numbers are hypothetical; the firm’s own rows give its own. After the first pass, one named person checks weekly: job orders with no signed agreement, submittals sent outside the ATS, job orders closed as filled or canceled while the firm had candidates in play, and placement fees past due, each with a next step and a date.

When this needs an attorney, and where the Review fits

If one client owes one fee and refuses, the next call is to an attorney, not to a consultant. Nothing here replaces that call.

For an owner-led firm, the Revenue Review counts this under the Invoice → Payment hand-off. From read-only exports of the ATS, the invoice register and the receivables aging, plus copies of the signed client agreements, it lists every placement fee unpaid with its days past due, every placement with no invoice, and every client with submittals and no signed agreement, priced wherever a figure can be. It does not contact candidates or clients, collect anything, or give legal advice. It takes two weeks, and the report is the firm’s to keep.

The check above can be run in-house, and for a small desk that may be all it takes. If it is not, the next step is a free 20-minute call, where we say whether a Review is worth it for this firm, including when it is not.