Policy Guidance: What constitutes an employment agency under Title VII, how should charges against employment agencies be investigated, and what remedies can be obtained for employment agency violations of the Act?

N-917-002

09/20/91

 

1.         SUBJECT: Policy Guidance: What constitutes an employment agency under Title VII,         how should charges against employment agencies be investigated, and what remedies can      be obtained for employment agency violations of the Act?

 

2.         PURPOSE: This policy guidance sets forth the Commission's position as to what entities    qualify as employment agencies under Title VII and what procedures should be used in        order to investigate charges against employment agencies. It also suggests remedies to be          considered for Title VII violations by those agencies.

3.         EFFECTIVE DATE: September 20, 1991

4.         EXPIRATION DATE: As an exception to EEOC Order 205.001, Appendix B,             Attachment 4, § a (5), this Notice will remain in effect until rescinded or superseded.

5.         ORIGINATOR: Title VII/EPA Division, Office of Legal Counsel.

6.         INSTRUCTIONS: File as an appendix to § 631 of Volume II of the EEOC Compliance     Manual.

 

7.         SUBJECT MATTER:

 

            This policy guidance discusses the application of Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq., to employment agencies and the circumstances under which an entity that does not identify itself as an employment agency may be considered as such for purposes of the Act. In addition, this guidance discusses procedures typically used to discover employment agency discrimination and remedies that may be imposed against these agencies.

            Title VII prohibits discrimination not only by employers, but by employment agencies as well. Section 703(b) of the Act, 42 U.S.C. § 2000e-2(b), reads:

[i]t shall be an unlawful employment practice for an employment agency to fail or refuse to refer for employment, or otherwise to discriminate against, any individual because of his race, color, religion, sex, or national origin, or to classify or refer for employment any individual on the basis of his race, color, religion, sex, or national origin.

            Section 701(c) of the Act, 42 U.S.C. § 2000e(c), defines the term "employment agency" as:

 

any person regularly undertaking with or without compensation to procure employees for an employer or to procure for employees opportunities to work for an employer and includes an agent of such a person.

            The following discussion addresses the application of these provisions to the discriminatory practices of employment agencies.

DISCUSSION

I.          Types of Employment Agencies

            A.        Commercial Employment Agencies

            Sections 631.1, 631.2, 631.3, and 631.7 of the EEOC Compliance Manual, Volume II, set out in detail the coverage of entities that qualify as employment agencies under Title VII and the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq. ("ADEA"). Where a private company advertises itself as an employment agency and recruits employees to fill positions for various employers, there is no jurisdictional question under § 703(b) of Title VII. EEOC Compl. Man., Vol. II, § 631.2; Ostroff v. Employment Exchange, Inc., 683 F.2d 302, 29 EPD ¶ 32,966 (9th Cir. 1982); Ruhe v. Philadelphia Inquirer, 9 EPO ¶ 9984 n.3 (E.D. Pa. 1975); Barnes
v. Rourke, 8 EPD ¶ 9772 (M.D. Tenn. 1973). See also Hodgson v. Approved Personnel Serv.,529 F.2d 760, 10 EPD ¶ 10,472 (4th Cir. 1975) (decided under the ADEA, which includes a definition of "employment agency" that is nearly identical to that in Title
VII).[1]

 

            B.        Non-Commercial Entities Qualifying as Employment Agencies

There are different types of entities that regularly procure employees for employers and that are therefore subject to Title VII. Entities that have been held to be employment agencies include: government agencies that administer employment referral services;[2] schools that operate placement offices;[3] professional associations that refer members to positions;[4] newspapers that exercise control over discriminatory job listings rather than merely printing them;[5] and individuals who, without compensation, provide persons with aid in their job searches, including advice and referrals.[6] The operative factor is whether the entity regularly refers potential employees to employers or provides employers with the names of potential employees.[7]

            C.        Temporary Agencies Which Directly Pay Employees' Salaries and/or Benefits

            An employment agency that directly pays an employee's salary and benefits but refers him/her to employers for whom he/she actually performs work under the supervision and direction of those employers, is an employment agency under Title VII. Section 701(c), 42 U.S.C. § 2000e(c), does not distinguish between temporary employment agencies and agencies that place persons on a permanent basis. Both are in the business of regularly procuring employees for employers.

 

 

 

            In some instances, an employment agency that sends employees to work for other employers also may be an employer. For example, a company may train and supervise its own workers to perform a particular type of job and send the workers to perform this service for another company, often accompanied by the first company's own supervisors. This arrangement would make both companies employers of the employee under Title VII, because the agency would be acting more like a subcontractor than a referral service. The Commission's Policy Guidance on "Integrated Enterprises and Joint Employers," EEOC Compl. Man., Vol. II, § 605, Appendix G, is relevant to this issue and analyzes hypothetical situations in which the company receiving the service argues that it is not an employer of the employee sent to it by the referring company. It is often appropriate to charge an agency both as an employment agency and as an employer since it may not be clear at the time of the filing of the charge whether the agency qualifies as one or both.

II.         Procedures Used to Uncover Employment Agency Discrimination

            Charges against employment agencies may be filed on precisely the same bases as charges against employers. See EEOC Compl. Man., Vol. II, § 631.4, for a full discussion of applicable theories of employment agency discrimination and id., § 631.8, for general guidance on how to investigate.

            In early cases against employment agencies, some types of discrimination, such as sex discrimination, were blatant and openly documented.[8] For example, in Barnes, 8 EPD ¶ 9772, the employment agency maintained separate male and female desks for interviews, listed positions in newspapers under "male" or "female" columns and told the plaintiff, who was qualified as a "chemist trainee," that she would not be referred for the position, despite her qualifications, because the employer preferred a male. Similarly, in Ruhe, 9 EPD ¶ 9984, a class action suit was brought in the name of all women who were, had been, and would be seeking employment through the defendant agency and/or newspaper which blatantly listed job openings in "male" and "female" columns. The named plaintiff charged that she had called in response to an advertisement for a job opening and had been told that the position was for "males only." Id. at n.5. See also Commission Decision No. 75-004, CCH EEOC Decisions (1983) ¶ 6468 ("office type position" advertised under "female help wanted" violated Title VII).

            Some employment agency violations are still blatant and documented, but in a way that is not readily apparent to the public. For example, an employment agency may classify job applicants by race, sex or another prohibited basis (see EEOC Compl. Man., Vol. II, § 631.4(e)). Similarly, a job order (job listing given to an agency by an employer) may contain a notation indicating that an employer will not consider or would prefer not to have a member of a protected group (see EEOC Compl. Man., Vol. II, § 631.4(f)).[9] Such notations may be coded so that they are not readily apparent even when looking at the document or computer program.[10] Any documentation of such notations is "smoking gun" evidence, and investigators must be alert for any indication that it might be destroyed. See below at Section II B.

            The Commission may learn of discriminatory activities of employment agencies in several ways, not all of which will lead to immediate charge filing. The intake officer or other staff person who receives the information should evaluate whether and what kind of a charge may be warranted and which other offices or divisions, such as systemic processing, may be able to use the information. In addition, investigators should consider taking steps to investigate any employers identified by employment agencies as entities that have requested or received discriminatory referral services, and should consider recommending Commissioner charges as necessary.

            A.        Applicants or Potential Applicants

            First, an applicant or potential applicant may seek to file a charge alleging discriminatory referrals. When discrimination in referrals is alleged and there is no evidence of a policy or practice or other direct evidence of discriminatory referrals, the investigator must determine whether there were job referrals available for which the charging party was qualified. In such cases, a mere failure to refer, without evidence of qualifications and availability, is not generally enough to make out a prima facie case. Vick v. Texas Employment Comm'n, 514 F.2d at 737.

            Commonly, an applicant for employment may believe that (s)he is qualified for a certain position which (s)he has reason to believe is available through the agency but is not considered or referred for this job. The applicant may be aware of similarly qualified -- or less qualified -- persons in a different class (race, color, sex, religion, or national origin) who were referred for such jobs by the agency.

            When an applicant is summarily rejected for consideration for a position without an examination of his/her credentials, this may indicate an impermissible discriminatory purpose. In Ostroff v. Employment Exchange, Inc., 683 F.2d 302, 29 EPD ¶ 32,966 (9th Cir. 1982), a female applicant called an agency in response to its advertisement for a position, and, without an inquiry as to her qualifications, was curtly told that the position had been filled. Later that day, her husband inquired about the same position and was invited to apply. The court held that the plaintiff was not considered for the position because of her sex. In short, where an employment agency rejects an applicant without considering his/her qualifications, those qualifications are irrelevant to the determination of discrimination.[11]

            B.        Employees of Employment Agencies

            Employees of an employment agency may be able to provide information that the agency is engaging in discriminatory classifications or referrals. Generally, such employees will be important witnesses. However, if such employees allege personal injury resulting from the discrimination, they may under some circumstances be "persons aggrieved" and may be able to file charges under Title VII on their own behalf.[12] For example, a placement counselor[13] who refuses to discriminate or comes forward with evidence of discrimination and is penalized by an employment agency for such action may bring an action against the agency for retaliation.[14] Additionally, employees who are forced to implement the agency's discriminatory policies would appear to have standing to file a charge challenging those policies.[15] Finally, because "an employee's legitimate interest in the terms and conditions of his employment comprehends his right to work in an atmosphere free of unlawful employment practices and their consequences," Commission Decision No. 70-09, CCH EEOC Decisions (1973) ¶ 6026, employees of an employment agency may be able to file charges if the discrimination is sufficiently pervasive to create a hostile working environment.[16]

            Even if they have standing to file charges, employees (or former employees) of employment agencies who report discriminatory practices may be reluctant to have their identities revealed to their present or former employers for fear of losing their jobs, being subject to negative references for future employment, or losing clients. As previously noted, such employees are protected from retaliation for their opposition to unlawful employment practices or participation in EEOC processes. If such employees are, nonetheless, reluctant to have their identities revealed, they can provide a confidential witness statement. The information provided may then help to identify other witnesses or serve as evidence.

            In addition, whether employees of discriminating employment agencies choose to file charges on their own behalf or not, the information such employees can provide and/or recall may be more concretethan any evidence which could be obtained through other means and may be a basis for a Commissioner's charge. The information should, therefore, be given to the systemic unit. In addition, the documentation that these employees may be able to provide is critical and should be obtained expeditiously. As noted above, the evidence is probably not limited to hard copy (or paper) but may also be available on computer equipment.[17] If there is any evidence that an employment agency is destroying or planning to destroy such evidence, the Commission should immediately move for a temporary restraining order.

            C.        Testers

            The procedure for gathering evidence of employment discrimination used by the plaintiff and her husband in Ostroff (discussed above at p. 5) was, in a sense, an informal form of "testing." Testing is a procedure that can be used to determine whether applicants are being referred on a discriminatory basis. As explained in EEOC's recent "Testers" policy guidance[18], anyone who has been rejected for a job, or a referral, for allegedly discriminatory reasons will be considered a "person aggrieved" and can file a charge, whether or not (s)he was acting as a tester. In a scenario like that in Ostroff, the wife would be a "person aggrieved" from whom a charge should be accepted; the husband would be a witness.

            D.        Employers

            Evidence of employment agency discrimination may also arise if an employer informs the EEOC that, for example, an employment agency that it contacted had inquired whether the employer had preferences based on race, religion, national origin, or sex. Employers can provide invaluable information which should be communicated to the appropriate unit or office.

 

            E.         Routine Inquiries

            Employment agency discrimination may also be uncovered by routinely asking charging parties who are filing charges against employers or unions whether they obtained or sought positions through any employment agencies. The investigator should gather as much information as possible about the screening and referral practices of such agencies (see EEOC Compl. Man., Vol. II, § 631.8 for specific questions to ask charging parties with respect to employment agency charges). Note, however, that the referring employment agency is not liable for unlawful discrimination committed by an employer or a union where the agency meets its own obligations under Title VII and does nothing to aid in the employer's discrimination. Kaplowitz v. University of Chicago, 387 F. Supp. 42, 49, 8 EPD ¶ 9762 (ND. Ill. 1974).

 

III.       Remedies

            Title VII does not distinguish between the remedies available against employers and employment agencies for violations of the Act:

the court may enjoin the respondent from engaging in [an] unlawful employment practice, and order such affirmative action as may be appropriate, which may include, but is not limited to, reinstatement or hiring of employees, with or without back pay (payable by the employer, employment agency, or labor organization, as the case may be, responsible for the unlawful employment practice), or any other equitable relief as the court deems appropriate.... Interim earnings or amounts earnable with reasonable diligence by the person or persons discriminated against shall operate to reduce the back pay otherwise allowable....

Section 706(g), 42 U.S.C. § 2000e-5(g) (emphasis added).  Based on Section 706(g), in charges brought against employment agencies the Commission will use all of the available remedies listed above as such remedies are applicable in a particular charge. See Barnes, 8 EPD ¶ 9772 (discussed above at p. 5). Where, for example, a charging party challenges an employment agency's failure to refer him/her to a single job for which there was a specified salary, the Commission will use the salary for that position as a benchmark for calculation of the charging party's entitlement to back pay.[19]

 

            Where a charging party alleges that an employment agency has discriminatorily failed to refer him/her for several available positions, it may be appropriate to average the salaries involved or to examine salaries paid for comparable positions in the relevant industry. Cf. Barnes, 8 EPD ¶ 9772 (calculating amount plaintiff could have been expected to earn had she been nondiscriminatorily referred by examining salary of the position for which she applied and comparing it to the salary range for that type of position in general; plaintiff's back pay award ultimately based on the difference between amount she could have earned absent the discrimination and amount she actually earned).[20]

            Although the above section is intended to set forth general guidelines governing the award of back pay against employment agencies, the calculation of back pay in each particular charge will depend on the facts of that charge. Thus, an individual's entitlement to back pay will depend partially on evidence of his/her date of application, availability throughout the alleged violation period, and dates of referral, if any.

            In addition to monetary damages, suitable non-monetary remedies should be considered, such as priority referral, active recruitment of members of the injured class, or other appropriate affirmative action. Imposition of specific reporting requirements should also be contemplated. Once discrimination against a class is proved, the burden shifts to the respondent to show that an individual class member is not entitled to relief. Franks v. Bowman Transportation Co., 424 U.S. 747, 772-73, 11 EPD ¶ 10,777 (1976).

            In some cases, injunctive relief and attorney's fees may be the only relief warranted. Where an employment agency refuses to refer an applicant for unlawful discriminatory reasons, but it subsequently becomes clear that the applicant was not qualified for the position and would not have been hired had the agency made the referral, injunctive relief is the only remedy that can be ordered since no wages have been lost. Cf. Ostroff v. Employment Exchange, Inc., 683 F.2d 302.[21]

IV. Conclusion

            Title VII covers employment agencies, as well as employers, and prohibits discrimination on the basis of race, color, sex, religion, or national origin. An entity that may not generally be considered an employment agency may be one for purposes of Title VII when it procures employment for employees. Such entities may include government agencies, schools that operate placement offices, professional or employee organizations, individuals who aid other persons in job searches through advice and referrals, and, in limited circumstances, even newspapers.

            Employment agency discrimination may be uncovered in many of the same ways that employer discrimination is uncovered. Typically, a charging party suspects that (s)he has been discriminated against based on the agency's treatment of him/her and files a charge. Evidence of employment agency discrimination may also be discovered when persons presently or formerly employed by agencies come forward and report the unlawful conduct. Finally, the use of testers, who pose as applicants for positions with other employers or as applicants for positions with the agency itself, is an effective tool for gathering evidence of discrimination. These sources of information may also enable investigators to uncover evidence of discrimination by employers in requesting or receiving discriminatory referrals.

            The remedies available for employment agency discrimination are the same as those that can be granted against an employer. Such remedies include injunctive relief, back pay, attorney's fees, and such affirmative relief as is deemed proper to achieve the purposes of the statute under the circumstances.

 

 

 

 

 

9-20-1991

____________________________                                    Approved: _____________________

Date                                                                                                       Evan J. Kemp, Jr.