Suppose you retain the services of Sensational Staffing Company to temporarily augment your workforce. Things move along very well for about a month and you are very happy with the arrangement–until Sensational advises you that Tricia Temp complained that one of your employees, who supervises her work, sent her a number of sexually explicit emails, swatted her on the rear and every day told her that if she would not go out with him he would have her terminated. While you are not happy with your supervisor, you leave it to Sensational to deal with the matter, because, you reason, Tricia is not your employee, and therefore not your problem. Tricia quits the assignment about three weeks later. You think nothing of it–until 6 months later when you receive a summons and complaint. Tricia has sued you and Sensational, alleging sexual harassment. Can she do that? What if, instead of using Sensational Staffing, you instead use Perfect PEO, but the facts are otherwise still the same. What happens now? Are you liable? Is the PEO? Find out more after the jump…
Let’s look at the first scenario. Both you and Sensational have potential liability. Remember last week’s introduction to the world of co-employment? (Click here if you didn’t catch it yet.) You and Sensational are likely co-employers of all those temporary employees. How do we know that? The EEOC and the federal courts say so. The EEOC published an Enforcement Guidance on the application of EEO laws to contingent workers supplied by staffing firms. Those interested, can access it — all 35 pages– by clicking here . Alternatively, here is the nutshell version:
- Staffing firm workers are covered under federal anti-discrimination laws.
- Staffing firm workers are typically employees of both the staffing firm and the staffing firm client. While the EEOC considers several factors, generally if the client firm has the right to control significant aspects of the contingent worker’s employment, it is likely the contingent worker’s co-employer.
- Staffing firms and their clients therefore may not discriminate against staffing firm employees on the basis of race, color, religion, sex, national origin or disability. Both parties must take prompt remedial action once they become aware of discriminatory behavior against a contingent worker.
- Even if a staffing firm’s client does not qualify as the worker’s employer, it can still be liable for discrimination. Really????? Yep. The federal anti-discrimination laws apply to the client if it has the enough employees to qualify as an “employer” under the specific statutes; these laws further prohibit discriminatory behavior that interferes with an individual’s employment with another employer. Therefore, in our example,assuming that you do not qualify as Tricia’s employer, if your supervisor has Tricia removed from her assignment, then he has, on behalf of your company, interfered with Tricia’s employment opportunities with Sensational.
- Suppose after the incident with Tricia, you ask Sensational to send you male candidates only. Guess what. Both you and Sensational can be sued and found liable for discrimination if a rejected applicant files a charge or lawsuit. That Sensational was merely acceding to your request is no defense for Sensational. That you did not screen the candidates and merely accepted or rejected whoever was sent to you is no defense for you.
- When the combined discriminatory behavior of co-employers results in harm to the employee(s) then both are jointly and severally liable for back pay, front pay and compensatory damages. In plain English, that means that the employee can get the entire amount of back pay, front pay and compensatory damages from one or both parties. Punitive damages are assessed in accordance with the degree of recklessness or maliciousness of each party’s conduct, subject to statutory caps.
Up until now I have been talking about how the EEOC treats discrimination charges involving staffing firms and their clients. What about the courts? I have, in other posts, mentioned instances in which courts choose not to follow the EEOC. In this case, though, while courts may not always agree with the EEOC’s findings, they generally do follow the above principles. For example, in Hexemer v. General Electric Company et al, Case No. 1:12-cv-1808 (N.D. N.Y Sept. 11, 2013) the court ruled that a staffing company employee could proceed with a discrimination and retaliation lawsuit against both G.E. and the staffing company, based on discriminatory behavior by G.E. employees and G.E.’s decision to have the employee removed from the assignment after she complained. Since the staffing company had no other assignments for her, it terminated her employment. The court found that G.E. could be sued as a joint employer based on its ability to dismiss her and to control her conduct. Similarly, in EEOC and Maurice Knox v. Skanska U.S.A. Building, Inc. No. 12-6236 (6th Circuit Dec. 10, 2013), the 6th Circuit Court of Appeals found that Skanska, the general contractor was a joint employer of one of its subcontractor’s employees. Some of the court’s reasons were based on the fact that Skanska routinely directed and controlled Knox’s work, could set subcontractor employees’ work hours and assigned Knox’s supervisors. The court cited other factors as well in its opinion, which is available here.
If you walk away with only one key point from this post, let it be this one: Don’t assume that you can treat someone less favorably just because s/he is a temporary (or sub-contractor or similar type of) employee, particularly if you know that treatment would violate anti-discrimination laws if s/he was your direct employee.
What if, instead of using Sensational Staffing, you use Perfect PEO? Perfect PEO would also assume a lot of employer responsibilities, such as payment of wages, administration of benefits. Perfect will not pre-screen or provide the employees to you. If, however, you, without Perfect, have fewer than 15 employees, you would not be an “employer” as defined by the anti-discrimination laws. Your relationship with Perfect might render your workers part of Perfect’s larger workforce, which would now provide these workers protection under federal anti-discrimination laws. You also would be controlling your business operations, and your employees’ work activities and the work environment. Depending on the specific relationship with and services offered by Perfect, you might also receive through Perfect insurance coverage under an Employment Practices Liability Insurance (EPLI) policy ( a subject of a future Emplawyerologist post–keep an eye out for it!)
Who is responsible for ADA (or ADAAA) compliance in the scenarios discussed in this post? That will be next week’s topic!
Disclaimer: This post’s contents are for informational purposes only, are not legal advice and do not create an attorney-client relationship. Always consult with competent local employment counsel on any issues discussed here.
Click here to learn more about Janette Levey Frisch, author of The Emplawyerologist.
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