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Employers can’t contract out discrimination to temp agencies

An Alabama staffing firm (sometimes called a temp agency) has recently come under fire for employment discrimination. News reports allege that the firm honored requests for whites-only temporary workers. These reports indicate that, sometimes, the client would use code words like “country boys” to request white employees. In its defense, the firm has responded that it does not honor such requests.

Nevertheless, this news report raises an interesting question: Who is legally liable for the racial discrimination against the employee—the staffing firm (that directly pays the employee) or the client (the customer of the firm who actually supervises the employee and contracts with the staffing firm for the employee’s services)?

Although there can be exceptions, the answer is that both the staffing firm and its client may be held liable for the discrimination. In fact, the Equal Employment Opportunity Commission (EEOC) settled a lawsuit in 2010 in which both the staffing firm and its client paid several employees who had experienced sexual harassment at the hands of the client’s supervisor in a plastics manufacturing plant. In this case, the workers complained to the staffing firm, but it did nothing to remedy the situation and apparently even terminated one of the victims of the harassment.

The issue of joint liability for discrimination is not new. The EEOC has had enforcement guidance about this issue since 1997. The executive summary of this guidance says:

The guidance makes clear that a staffing firm must hire and make job assignments in a non-discriminatory manner. It also makes clear that the client must treat the staffing firm worker assigned to it in a non-discriminatory manner, and that the staffing firm must take immediate and appropriate corrective action if it learns that the client has discriminated against one of the staffing firm workers. The document also explains that staffing firms and their clients are responsible for ensuring that the staffing firm workers are paid wages on a non-discriminatory basis. Finally, the guidance describes how remedies are allocated between a staffing firm and its client when the EEOC finds that both have engaged in unlawful discrimination.

This guidance also covers situations that can develop in government contracting situations when a contractor has a subcontractor that provides employees whom the contractor directly supervises. Although the EEOC guidance explains this application, it was litigated last year in Byorick v. CAS, Inc., 2015 WL 4113727 (D. Colo. July 8, 2015). A somewhat similar case was recently litigated in north Alabama. See Watson v. Tennessee Valley Authority, 867 F.Supp.2d 1215 (N.D. Ala. 2012).

Staffing firms may assume that they are not responsible for any discrimination or harassment that their workers experience at a client’s work site. And clients of staffing firms may assume that they are not liable for discriminatory practices because they are not truly the employers of the workers. Such clients are mistaken: The clients of staffing firms can’t contract out their discriminatory practices to the staffing firm.

One of the major exceptions to this legal reality is when the temporary worker doesn’t tell his or her staffing firm about the discriminatory practices. See Medina v. Adecco, 561 F.Supp.2d 162 (D. P.R. 2008). In this case, a worker sued both the client and Adecco (the staffing firm) for pregnancy discrimination. Because the worker never provided any evidence that she had informed Adecco about any discriminatory actions that occurred at the client’s work site, Adecco was dismissed from the suit on a motion for summary judgment.

In such a case, if we assume the worker can prove her case, the staffing firm’s client will be left holding the whole bag of legal liability.

Another thing: Joint liability can also be incurred with safety violations. See this article about both the general contractor and a temp agency being held responsible for violating rules promulgated by the Occupational Safety and Health Administration (OSHA).

Items on this web page are general in nature. They cannot—and should not—replace consultation with a competent legal professional. Nothing on this web page should be considered rendering legal advice.

© 2016

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