EEOC NOTICE
Number 915.002
Date 12/03/97
1. SUBJECT: Enforcement Guidance: Application of EEO
Laws to Contingent Workers Placed by Temporary
Employment Agencies and Other Staffing Firms.
2. PURPOSE: This document provides guidance regarding the
application of the anti-discrimination statutes to
temporary, contract, and other contingent employees.
3. EFFECTIVE DATE: Upon receipt.
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this Notice will remain in effect until rescinded or
superseded.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/ADEA Division, Office of
Legal Counsel.
6. INSTRUCTIONS: File after Section 605 of Volume II of
the Compliance Manual.
12/3/97 \s\
________________________ ______________________________
Date Gilbert F. Casellas
Chairman
EXECUTIVE SUMMARY
This Guidance addresses the application of the federal
employment discrimination statutes to individuals placed
in job assignments by temporary employment agencies,
contract firms, and other firms that hire workers and
place them in job assignments with the firms' clients.
The term "staffing firm" is used in this document to
refer to these types of firms.
Staffing firm workers are generally covered under the
anti- discrimination statutes. This is because they
typically qualify as "employees" of the staffing firm,
the client to whom they are assigned, or both. Thus,
staffing firms and the clients to whom they assign
workers may not discriminate against the workers on the
basis of race, color, religion, sex, national origin,
age, or disability.
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.
TABLE OF CONTENTS
[NOTE: Page numbers removed in electronic version]
INTRODUCTION
STAFFING SERVICE WORK ARRANGEMENTS
COVERAGE ISSUES
DISCRIMINATORY ASSIGNMENT PRACTICES
DISCRIMINATION AT WORK SITE
DISCRIMINATORY WAGE PRACTICES
ALLOCATION OF REMEDIES
CHARGE PROCESSING INSTRUCTIONS
Enforcement Guidance: Application of EEO
Laws to
Contingent Workers Placed by Temporary
Employment
Agencies and Other Staffing Firms
INTRODUCTION
This Guidance addresses the application of Title VII of
the Civil Rights Act of 1964 (Title VII), the Age
Discrimination in Employment Act (ADEA), the Americans
with Disabilities Act (ADA), and the Equal Pay Act (EPA)
to individuals placed in job assignments by temporary
employment agencies and other staffing firms, i.e.,
"contingent workers." The term "contingent workers"
generally refers to workers who are outside an employer's
"core" work force, such as those whose jobs are
structured to last only a limited period of time, are
sporadic, or differ in any way from the norm of full-time,
long-term employment.
This guidance focuses on a large subgroup of the
contingent work force -- those who are hired and paid by
a "staffing firm," such as a temporary employment agency
or contract firm, but whose working conditions are
controlled in whole or in part by the clients to whom
they are assigned.
Recent statistics compiled by the National Association of
Temporary and Staffing Services (NATSS) show that the
temporary help industry currently employs more than 2.3
million individuals.1 That number represents a 100%
increase since 1991, when 1.15 million individuals were
employed in temporary help jobs. NATSS statistics also
show that the professional segment of the temporary help
industry (including occupations in accounting, law,
sales, and management) has risen significantly.
A 1995 survey by the Bureau of Labor Statistics (BLS)
showed that workers paid by temporary employment agencies
were more likely to be female and African American than
workers in traditional job arrangements,2 while workers
provided by contract firms were disproportionately male.3
BLS found that workers paid by temporary help agencies
were heavily concentrated in administrative support and
laborer occupations and earned 60 percent of the
traditional worker wage.4 The largest proportion of
contract workers was employed in the services industry,
and female contract workers earned slightly less than
traditional workers while male contract workers earned
more. BLS also found that contract and temporary
workers had lower rates of health insurance and pension
coverage than traditional workers, and that the majority
of temporary workers would have preferred traditional
work arrangements.
Staffing firms may assume that they are not responsible
for any discrimination or harassment that their workers
confront at the clients' work sites. Similarly, some
clients of staffing firms may assume that they are not
the employers of temporary or contract workers assigned
to them, and that they therefore have no EEO obligations
toward these workers. However, as this guidance
explains, both staffing firms and their clients share EEO
responsibilities toward these workers.
The Commission has addressed in previous guidance several
of the coverage issues discussed in this document.5
However, because use of contingent workers is increasing,
it is important to set out an updated and unified policy
that more specifically explains how the anti-
discrimination laws apply to this segment of the
workforce.
This document provides guidance concerning the following
issues:
coverage under the EEO laws, including coverage of
workers assigned to federal agencies;
liability of staffing firms and/or clients for
discriminatory hiring, assignment, or wage
practices;
liability of staffing firms and/or clients for unlawful
discrimination or harassment at the assigned work
site; and
allocation of damages where both the staffing firm and
its client violate EEO laws.
STAFFING SERVICE WORK ARRANGEMENTS
The activities of the following types of staffing firms
are addressed in this guidance6:
Temporary Employment Agencies
Unlike a standard employment agency, a temporary
employment agency employs the individuals that it
places in temporary jobs at its clients' work
sites. The agency recruits, screens, hires, and
sometimes trains its employees. It sets and pays
the wages when the worker is placed in a job
assignment, withholds taxes and social security,
and provides workers' compensation coverage. The
agency bills the client for the services performed.
While the worker is on a temporary job assignment,
the client typically controls the individual's
working conditions, supervises the individual, and
determines the length of the assignment.
Contract Firms
Under a variety of arrangements, a firm may
contract with a client to perform a certain service
on a long-term basis and place its own employees,
including supervisors, at the client's work site to
carry out the service. Examples of contract firm
services include security, landscaping, janitorial,
data processing, and cafeteria services.
Like a temporary employment agency, a contract firm
typically recruits, screens, hires, and sometimes
trains its workers. It sets and pays the wages
when the worker is placed in a job assignment,
withholds taxes and social security, and provides
workers' compensation coverage.
The primary difference between a temporary agency
and a contract firm is that a contract firm takes
on full operational responsibility for performing
an ongoing service and supervises its workers at
the client's work site.
Other Types of Staffing Firms
There are many variants on the staffing firm/
client model. For example, "facilities staffing" is
an arrangement in which a staffing firm provides
one or more workers to staff a particular client
operation on an ongoing basis, but does not manage
the operation.
Under another model, a client of a staffing firm
puts its workers on the firm's payroll, and the
firm leases the workers back to the client. The
purpose of this arrangement is to transfer
responsibility for administering payroll and
benefits from the client to the staffing firm. A
staffing firm that offers this service does not
recruit, screen, or train the workers.
The term "staffing firm" is used in this document to
describe generically these types of firms, although more
specific terms are used where necessary for purposes of
clarity.
COVERAGE ISSUES
This section sets forth criteria for determining whether
a staffing firm worker qualifies as an "employee" within
the meaning of the anti-discrimination statutes or an
independent contractor; whether the staffing firm and/or
its client qualifies as the worker's employer(s); and
whether the staffing firm or its client can be liable for
discriminating against the worker even if it does not
qualify as the worker's employer. This section also
discusses coverage of staffing firm workers assigned to
jobs in the Federal Government and coverage of workers
assigned to jobs in connection with welfare programs.
Finally, this section explains the method for counting
workers of a staffing firm or its client to determine
whether either entity has the minimum number of employees
to be covered under the applicable anti-discrimination
statute.
1. Are staffing firm workers "employees" within the meaning
of the federal employment discrimination laws?
Yes, in the great majority of circumstances.7 The
threshold question is whether a staffing firm
worker is an "employee" or an "independent
contractor." The worker is a covered employee
under the anti-discrimination statutes if the right
to control the means and manner of her work
performance rests with the firm and/or its client
rather than with the worker herself. The label
used to describe the worker in the employment
contract is not determinative. One must consider
all aspects of the worker's relationship with the
firm and the firm's client.8 As the Supreme Court
has emphasized, there is " no shorthand formula or
magic phrase that can be applied to find the
answer, . . . all incidents of the relationship
must be assessed with no one factor being
decisive.'"9 Factors that indicate that the worker
is a covered employee include:10
a) the firm or the client has the right to control
when, where, and how the worker performs the
job;
b) the work does not require a high level of skill or
expertise;
c) the firm or the client rather than the worker
furnishes the tools, materials, and equipment;
d) the work is performed on the premises of the firm
or the client;
e) there is a continuing relationship between the
worker and the firm or the client;
f) the firm or the client has the right to assign
additional projects to the worker;
g) the firm or the client sets the hours of work and
the duration of the job;
h) the worker is paid by the hour, week, or month
rather than for the agreed cost of performing
a particular job;
I) the worker has no role in hiring and paying
assistants;
j) the work performed by the worker is part of the
regular business of the firm or the client;
k) the firm or the client is itself in business;
l) the worker is not engaged in his or her own
distinct occupation or business;
m) the firm or the client provides the worker with
benefits such as insurance, leave, or workers'
compensation;
n) the worker is considered an employee of the firm or
the client for tax purposes (i.e., the entity
withholds federal, state, and Social Security
taxes);
o) the firm or the client can discharge the worker;
and
p) the worker and the firm or client believe that they
are creating an employer-employee
relationship.
This list is not exhaustive. Other aspects of the
relationship between the parties may affect the
determination of whether an employer-employee
relationship exists. Furthermore, not all or even
a majority of the listed criteria need be met.
Rather, the fact-finder must make an assessment
based on all of the circumstances in the
relationship between the parties.
Example 1: A temporary employment
agency hires a worker and assigns
him to serve as a computer
programmer for one of the agency's
clients. The agency pays the worker
a salary based on the number of
hours worked as reported by the
client. The agency also withholds
social security and taxes and
provides workers' compensation
coverage. The client establishes
the hours of work and oversees the
individual's work. The individual
uses the client's equipment and
supplies and works on the client's
premises. The agency reviews the
individual's work based on reports
by the client. The agency can
terminate the worker if his or her
services are unacceptable to the
client. Moreover, the worker can
terminate the relationship without
incurring a penalty. In these
circumstances, the worker is an
"employee."
2. Is a staffing firm worker who is assigned to a client an
employee of the firm, its client, or both?
Once it is determined that a staffing firm worker
is an "employee," the second question is who is the
worker's employer. The staffing firm and/or its
client will qualify as the worker's employer(s) if,
under the factors described in Question 1, one or
both businesses have the right to exercise control
over the worker's employment. As noted above, no
one factor is decisive, and it is not necessary
even to satisfy a majority of factors. The
determination of who qualifies as an employer of
the worker cannot be based on simply counting the
number of factors. Many factors may be wholly
irrelevant to particular facts. Rather, all of the
circumstances in the worker's relationship with
each of the businesses should be considered to
determine if either or both should be deemed his or
her employer. If either entity qualifies as the
worker's employer, and if that entity has the
statutory minimum number of employees (see Question
6), then it can be held liable for unlawful
discriminatory conduct against the worker. If both
the staffing firm and its client have the right to
control the worker, and each has the statutory
minimum number of employees, they are covered as
"joint employers."11
a. Staffing Firm:
The relationship between a staffing firm and each
of its workers generally qualifies as an employer-
employee relationship because the firm typically
hires the worker, determines when and where the
worker should report to work, pays the wages, is
itself in business, withholds taxes and social
security, provides workers' compensation coverage,
and has the right to discharge the worker. The
worker generally receives wages by the hour or week
rather than by the job and often has a continuing
relationship with the staffing firm. Furthermore,
the intent of the parties typically is to establish
an employer-employee relationship.12
In limited circumstances, a staffing firm might not
qualify as an employer of the workers that it
assigns to a client. For example, in some
circumstances, a client puts its employees on the
staffing firm's payroll solely in order to transfer
the responsibility of administering wages and
insurance benefits. This is often referred to as
employee leasing. If the firm does not have the
right to exercise any control over these workers,
it would not be considered their "employer."13
b. Client:
A client of a temporary employment agency typically
qualifies as an employer of the temporary worker
during the job assignment, along with the agency.
This is because the client usually exercises
significant supervisory control over the worker.14
Example 2: Under the facts of
Example 1, above, the temporary
employment agency and its client
qualify as joint employers of the
worker because both have the right
to exercise control over the
worker's employment.
Example 3: A staffing firm hires
charging party (CP) and sends her to
perform a long term accounting
project for a client. Her contract
with the staffing firm states that
she is an independent contractor.
CP retains the right to work for
others, but spends substantially all
of her work time performing services
for the client, on the client's
premises. The client supervises CP,
sets her work schedule, provides the
necessary equipment and supplies,
and specifies how the work is to be
accomplished. CP reports the number
of hours she has worked to the
staffing firm. The firm pays her
and bills the client for the time
worked. It reviews her work based
on reports by the client and has the
right to terminate her if she is
failing to perform the requested
services. The staffing firm will
replace her with another worker if
her work is unacceptable to the
client.
In these circumstances, despite the
statement in the contract that she
is an independent contractor, both
the staffing firm and the client are
joint employers of CP.15
Clients of contract firms and other types of
staffing firms also qualify as employers of the
workers assigned to them if the clients have
sufficient control over the workers, under the
standards set forth in Question 1, above.16 For
example, the client is an employer of the worker if
it supplies the work space, equipment, and
supplies, and if it has the right to control the
details of the work to be performed, to make or
change assignments, and to terminate the
relationship. On the other hand, the client would
not qualify as an employer if the staffing firm
furnishes the job equipment and has the exclusive
right, through on-site managers, to control the
details of the work, to make or change assignments,
and to terminate the workers.
Example 4: A staffing firm provides
janitorial services for its clients.
It hires the workers and places them
on each client's premises under the
supervision of the contract firm's
own managerial employees. The
firm's manager sets the work
schedules, assigns tasks to the
janitors, provides the equipment
they need to do the job, and
supervises their work performance.
The client has no role in
controlling the details of the work,
making assignments, or setting the
hours or duration of the work. Nor
does the client have authority to
discharge the worker. In these
circumstances, the staffing firm is
the worker's exclusive employer; its
client is not a joint employer.
Example 5: A staffing firm provides
landscaping services for clients on
an ongoing basis. The staffing firm
selects and pays the workers,
provides health insurance and
withholds taxes. The firm provides
the equipment and supplies necessary
to do the work. It also supervises
the workers on the clients'
premises. Client A reserves the
right to direct the staffing firm
workers to perform particular tasks
at particular times or in a
specified manner, although it does
not generally exercise that
authority. Client A evaluates the
quality of the workers' performance
and regularly reports its findings
to the firm. It can require the
firm to remove the worker from the
job assignment if it is
dissatisfied. The firm and the
Client A are joint employers.
3. Can a staffing firm or its client be liable for
unlawfully discriminating against a staffing firm
worker even if it does not qualify as the worker's
employer?
An entity that has enough employees to qualify as
an employer under the applicable EEO statute can be
held liable for discriminating against an
individual who is not its employee. The anti-
discrimination statutes not only prohibit an
employer from discriminating against its own
employees, but also prohibit an employer from
interfering with an individual's employment
opportunities with another employer.17 Thus, a
staffing firm that discriminates against its
client's employee or a client that discriminates
against a staffing firm's employee is liable for
unlawfully interfering in the individual's
employment opportunities.18
Example 6: A staffing firm assigned
one of its employees to maintain and
repair a client's computers. The
firm supplied all the tools and
direction for the repairs. The
technician was on the client's
premises only sporadically over a
three to four week period and worked
independently while there. The
client did not report to the firm
about the number of hours worked or
about the quality of the work. The
client had no authority to make
assignments or require work to be
done at particular times. After a
few visits, the client asked the
contract firm to assign someone
else, stating that it was not
satisfied with the worker's computer
repair skills. However, the worker
believes that the true reason for
the client's action was racial bias.
The client does not qualify as a
joint employer of the worker because
it had no ongoing relationship with
the worker, did not pay the worker
or firm based on the hours worked,
and had no authority over hours,
assignments, or other aspects of the
means or manner by which the work
was achieved. However, if the
client's request to replace the
worker was due to racial bias, and
if the client had fifteen or more
employees, it would be liable for
interfering in the worker's
employment opportunities with the
staffing firm.
Example 7: A company puts its
employees on the payroll of a
staffing firm solely in order to
transfer the responsibility of
administering wages and insurance
benefits for the company's workers.
The staffing firm administers a
health insurance policy for its
client's workers that does not cover
AIDS-related illness. Two workers
file ADA charges against the
staffing firm and the client. The
staffing firm claims that it is not
an employer of the workers and
therefore falls outside ADA
coverage.
The staffing firm does not qualify
as a joint employer of the workers
because it does not have the
requisite degree of control -- it
did not hire the workers; establish
their wage rates or hours; control
the conditions of work; manage
personnel disputes; or have the
right to fire the workers.
Nevertheless, the firm shares
liability with its client for the
discriminatory health insurance plan
if it has fifteen or more employees
of its own to fall under the
coverage of the ADA.19 This is
because the firm's administration of
the insurance plan interferes in the
workers' access to employment
opportunities or benefits.20
4. Do the same coverage principles apply when a staffing
firm assigns a worker to a federal agency?
The principles regarding joint employer coverage
are the same. Thus, a federal agency qualifies as
a joint employer of an individual assigned to it if
it has the requisite control over that worker, as
discussed in Questions 1 and 2. If so, and if the
agency discriminates against the individual, it is
liable whether or not the individual is on the
federal payroll.21
In contrast to private employers, a federal agency
that does not qualify as a joint employer of the
worker assigned to it cannot be found liable for
discrimination under a "third party interference"
theory. This is because Title VII, the ADEA, and
Section 501 of the Rehabilitation Act only permit
claims against the federal government by "employees
or applicants for employment."22
5. Are workers participating in work-related activities in
connection with welfare programs protected by the
federal employment discrimination laws? If so, who
is the employer of such a worker? What types of
claims might arise?
a. Employee Status
Welfare recipients participating in work-related
activities23 are protected by the federal anti-
discrimination statutes if they are "employees"
within the meaning of the federal employment
discrimination laws.24 See Question 1. The simple
fact of participation in one of these activities is
not dispositive of the question of whether the
federal employment discrimination laws apply.
Rather, the same analysis applies which is used to
determine whether any other worker is covered by
the federal employment discrimination laws. Under
the criteria that have been set out, welfare
recipients would likely be considered employees in
most of the work activities described in the new
welfare law, including unsubsidized and subsidized
public and private sector employment, work
experience, and on-the-job training programs.25 On
the other hand, individuals engaged in activities
such as vocational education, job search
assistance, and secondary school attendance would
probably not be covered.26
b. Employer Status
While some workers participating in these programs
will have a single employer, others may have joint
employers. For example, a state or local welfare
agency may function as a staffing firm and the
"direct" employer may function as the client. In
some cases, a state or local welfare agency may
contract with a temporary employment agency to
place the welfare recipients in job assignments.
The determination of whether any or all of these
entities are employers of the worker is based on
the same criteria set forth in answer to Questions
1 and 2 that apply to any other employment
situation. The fact that an entity does not pay
the worker a salary does not, by itself, defeat a
finding of an employment relationship. Moreover,
even if an entity is not the worker's employer, it
can be found liable under the employment
discrimination laws based on the interference
theory explained in the answer to Question 3.
c. Types of Claims
Types of claims which may arise include, for
example, harassment, discriminatory assignments,
discriminatory termination, failure to provide
reasonable accommodation to persons covered under
the Americans with Disabilities Act, and
retaliation.
6. Which workers are counted when determining whether a
staffing firm or its client is covered under Title
VII, the ADEA, or the ADA?
The staffing firm and the client each must count
every worker with whom it has an employment
relationship.27 Although a worker assigned by a
staffing firm to a client may not appear on the
client's payroll, (s)he must be counted as an
employee of both entities if they qualify as joint
employers.28 Questions 1 and 2, above, set forth
the legal standards for determining whether a
worker has an employment relationship with either
the staffing firm or its client, or both.
The Supreme Court has made clear that a respondent
must count each employee from the day that the
employment relationship begins until the day that
it ends, regardless of whether the employee is
present at work or on leave on each working day
during that period.29 Thus, a client of a staffing
firm must count each worker assigned to it from the
first day of the job assignment until the last day.
The staffing firm also must count the worker as its
employee during every period in which the worker is
sent on a job assignment.
Staffing firms are typically covered under the
anti- discrimination statutes, because their
permanent staff plus the workers that they send to
clients generally exceeds the minimum statutory
threshold. Clients may or may not be covered,
depending on their size.
In cases where questions are raised regarding
coverage, the investigator should ask the
respondent to name and provide records regarding
every individual who performed work for it,
including all individuals assigned by staffing
firms and any temporary, seasonal, or other
contingent workers hired directly by the
respondent. If the investigator has questions
about the documents produced and cannot otherwise
obtain the necessary information, he or she may
consider deposing the respondent. The investigator
should then determine which of the named
individuals qualified as employees of the
respondent rather than independent contractors,
according to the standards set forth in Questions
1 and 2, above.
DISCRIMINATORY ASSIGNMENT PRACTICES
A staffing firm is obligated, as an employer, to make job
assignments in a nondiscriminatory manner.30 It also is
obligated as an employment agency to make job referrals
in a nondiscriminatory manner. The staffing firm's
client is liable if it sets discriminatory criteria for
the assignment of workers. The following question and
answer explore these issues in detail.
7. If a worker is denied a job assignment by a staffing
firm because its client refuses to accept the
worker for discriminatory reasons, is the staffing
firm liable? Is the client?
a. Staffing Firm
The staffing firm is liable for its discriminatory
assignment decisions. Liability can be found on
any of the following bases: 1) as an employer of
the workers assigned to clients (for discriminatory
job assignments); 2) as a third party interferer
(for discriminatory interference in the workers'
employment opportunities with the firm's client);
and/or 3) as an employment agency for
(discriminatory job referrals).31
The fact that a staffing firm's discriminatory
assignment practice is based on its client's
requirement is no defense. Thus, a staffing firm
is liable if it honors a client's discriminatory
assignment request or if it knows that its client
has rejected workers in a protected class for
discriminatory reasons and for that reason refuses
to assign individuals in that protected class to
that client. Furthermore, the staffing firm is
liable if it administers on behalf of its client a
test or other selection requirement that has an
adverse impact on a protected class and is not job-
related for the position in question and consistent
with business necessity. 42 U.S.C. § 2000e-2(k).
b. Client
A client that rejects workers for discriminatory
reasons is liable either as a joint employer or
third party interferer if it has the requisite
number of employees to be covered under the
applicable anti-discrimination statute.
Example 8: A staffing firm that
provides job placements for nurses
receives a job order from an
individual client for a white nurse
to provide her with home-based
nursing care. The firm agrees to
refer only white nurses for the job.
The firm is violating Title VII,
both as an employment agency for its
discriminatory referral practice and
as an employer for the
discriminatory job assignment. The
client is not covered by Title VII
because she does not have fifteen or
more employees.
Example 9: A temporary employment
agency receives a job order for a
temporary receptionist. The client
requires that the individual
assigned to it speak English
fluently because a large part of the
job entails communication with
English-speaking persons who call
the client or who come to the
client's work place. The agency
assigns an Asian American individual
who speaks English fluently, but
with an accent. The client insists
that the agency replace her with
someone who can speak unaccented
English. The agency complies with
that request and sends an individual
who speaks English fluently with no
accent.
The Asian American individual files
a charge with the EEOC. The
investigator determines that English
fluency was necessary for the job.
However, he further determines that
CP's accent does not interfere with
her ability to communicate and that
she has effectively performed
similar jobs. The investigator
properly concludes that both the
client and the staffing firm are
liable for terminating CP on the
basis of her national origin.
Example 10: A staffing firm provides
machine operators to its clients.
One of its clients requires that all
workers assigned to it pass a
certain paper and pencil test. The
firm administers the test to its
available workers and refers only
those who pass the test. An African
American individual who is denied an
assignment with the client files
charges against both the staffing
firm and its client, alleging that
administration of the test results
in the disproportionate exclusion of
African Americans. An investigation
shows that the test does have an
adverse impact on African Americans
and does not accurately measure the
skills that are necessary for job
performance. Therefore, both the
staffing firm and its client are in
violation of Title VII.
DISCRIMINATION AT WORK SITE
A client of a staffing firm is obligated to treat the
workers assigned to it in a nondiscriminatory manner.
Where the client fails to fulfill this obligation, and
the staffing firm knows or should know of the client's
discrimination, the firm must take corrective action
within its control.32 The following questions and
answers explore these issues in detail.
8. If a client discriminates against a worker assigned by a
staffing firm, who is liable?
Client: If the client qualifies as an employer of
the worker (see Questions 1 and 2), it is liable
for discriminating against the worker on the same
basis that it would be liable for discriminating
against any of its other employees.
Even if the client does not qualify as an employer
of the worker, it is liable for discriminating
against that individual if the client's misconduct
interferes with the worker's employment
opportunities with the staffing firm, and if the
client has the minimum number of employees to be
covered under the applicable discrimination
statute. See Question 3.
Staffing Firm: The firm is liable if it
participates in the client's discrimination. For
example, if the firm honors its client's request to
remove a worker from a job assignment for a
discriminatory reason and replace him or her with
an individual outside the worker's protected class,
the firm is liable for the discriminatory
discharge. The firm also is liable if it knew or
should have known about the client's discrimination
and failed to undertake prompt corrective measures
within its control.33
The adequacy of corrective measures taken by a
staffing firm depends on the particular facts.
Corrective measures may include, but are not
limited to: 1) ensuring that the client is aware of
the alleged misconduct; 2) asserting the firm's
commitment to protect its workers from unlawful
harassment and other forms of prohibited
discrimination; 3) insisting that prompt
investigative and corrective measures be
undertaken; and 4) affording the worker an
opportunity, if (s)he so desires, to take a
different job assignment at the same rate of pay.
The staffing firm should not assign other workers
to that work site unless the client has undertaken
the necessary corrective and preventive measures to
ensure that the discrimination will not recur.
Otherwise, the staffing firm will be liable along
with the client if a worker later assigned to that
client is subjected to similar misconduct.34
Example 11: A temporary
receptionist placed by a temporary
employment agency is subjected to
severe and pervasive unwelcome
sexual comments and advances by her
supervisor at the assigned work
site. She complains to the agency,
and the agency informs its client of
the allegation. The client refuses
to investigate the matter, and
instead asks the agency to replace
the worker with one who is not a
"troublemaker." The agency tells
the worker that it cannot force the
client to take corrective action,
finds the worker a different job
assignment, and sends another worker
to complete the original job
assignment.
The client is liable as an employer
of the worker for harassment and for
retaliatory discharge.
The temporary employment agency also
is liable for the harassment and
retaliatory discharge because it
knew of the misconduct and failed to
undertake adequate corrective
action. Informing the client of the
harassment complaint was not
sufficient -- the agency should have
insisted that the client investigate
the allegation of harassment and
take immediate and appropriate
corrective action. The agency
should also have asserted the right
of its workers to be free from
unlawful discrimination and
harassment, and declined to assign
any other workers until the client
undertook the necessary corrective
and preventive measures. The agency
unlawfully participated in its
client's discriminatory misconduct
when it acceded to the client's
request to replace the worker with
one who was not a "troublemaker."
If the replacement worker is
subjected to similar harassment, the
agency and the client will be
subject to additional liability.
Example 12: A staffing firm
provides computer services for a
company that has more than 15
employees. The staffing firm
assigns an individual to work on-site
for that client. When the
client discovers that the worker has
AIDS, it tells the staffing firm to
replace him because the client's
employees fear infection. The
staffing firm alerts the client that
they are both prohibited from
discriminating against the worker,
and that such a discharge would
violate the ADA. The client
nevertheless continues to insist
that the firm remove the worker from
the work assignment and replace him
with someone else. The staffing
firm has no choice but to remove the
worker. However, it declines to
replace him with another worker to
complete the assignment because to
do so would constitute acquiescence
in the discrimination. Furthermore,
the firm offers the worker a
different job assignment at the same
rate of pay. The client is liable
for the discriminatory discharge,
either as an employer or third party
interferer. The staffing firm is
not liable because it took immediate
and appropriate corrective action
within its control.
9. If a staffing firm sends its employee on a job
assignment with a federal agency and the individual
is subjected to discrimination while on the
assignment, is the federal agency liable? Is the
staffing firm? What procedures should the
individual follow in filing a complaint?
The federal agency is liable for discriminating
against the worker if it qualifies as an employer
of the worker. If the federal agency does not
qualify as an employer of the staffing firm worker
under the criteria in Questions 1 and 2, it will
not be liable for discriminating against that
worker under the statutes enforced by the EEOC. A
federal agency is liable for employment
discrimination under these statutes only where it
has sufficient control to be deemed an employer of
the worker. See Question 4.
The staffing firm is liable if it participated in
the federal agency's discrimination or if it knew
or should have known of the discrimination and
failed to intervene, under the principles discussed
in Question 8, above.
If the staffing firm worker seeks to pursue a
complaint against the federal agency as his or her
employer, (s)he should contact an EEO Counselor at
the federal agency within 45 days of the date of
the alleged discrimination. If the individual also
seeks to pursue a claim against the staffing firm,
(s)he should file a separate charge with an EEOC
field office. In such circumstances, the EEOC
investigator should alert the individual as to the
different time frames and procedures in the federal
and private sectors.35 The investigator should
also contact the EEO office of the federal agency
once the individual files the federal sector
complaint in order to coordinate the federal and
private sector investigations.36
DISCRIMINATORY WAGE PRACTICES
A staffing firm may not discriminate in the payment of
wages on the basis of race, sex, religion, national
origin, age, or disability. Its clients share that
obligation.
10. If a staffing firm assigns a male and female to a client
to perform substantially equal work, and the female
is paid a lower wage than the male, would the firm
and/or the client be subject to Equal Pay Act or
Title VII liability?
Under the EPA, men and women must receive equal pay
for equal work.37 The jobs need not be identical,
but they must be substantially equal. It is job
content, not job titles, that determines whether
jobs are substantially equal. Specifically, a sex-
based wage disparity violates the EPA if the jobs
are in the same establishment, require
substantially equal skill, effort, and
responsibility, are performed under similar working
conditions, and if no statutory defense applies.
Wage differences that are not based on sex, but on
bona fide distinctions between temporary and
permanent workers, can be justified under the EPA
as based on a "factor other than sex."38 Both the
staffing firm and its client are liable for a
violation of the Equal Pay Act if they both qualify
as "employers" of the worker bringing the
complaint.39
A violation of the EPA also constitutes a violation
of Title VII as long as there is Title VII
coverage.40 Furthermore, a sex-based wage
disparity violates Title VII even if the jobs are
not substantially equal under EPA standards, if
there is other evidence of wage discrimination.41
Moreover, an entity with fifteen or more employees
is liable under Title VII for wage discrimination
even if it does not qualify as an employer of the
worker assigned to it, if the wage discrimination
interferes in the worker's employment
opportunities.
Example 13: A temporary employment
agency assigned CP (female) to a
temporary job as a hospital aide.
CP discovered that the agency had
also assigned a male to a temporary
job as an "orderly" at the same
hospital at a higher wage. CP files
charges against the agency and the
hospital, alleging that her job and
that of the male orderly were
substantially equal, and that the
wage disparity violated the Equal
Pay Act and Title VII. CP's charge
against the hospital also challenges
a disparity between her wages and
those of permanent male aides and
orderlies at the hospital.
The investigator determines that the
temporary employment agency and the
hospital were joint employers of CP
and that both entities had control
over the rates of pay for the
hospital aide and orderly jobs. The
investigator also determines that
the temporary aide and orderly jobs
were substantially equal under EPA
standards, and that no defense
applies. Therefore, he finds that
the agency and the hospital are both
liable under the EPA and Title VII
on the claim that the temporary aide
and orderly should have received the
same wage. The investigator further
determines that the wage
differential between the temporary
and permanent aide and orderly jobs
was based on a factor other than
sex, since the hospital paid all its
temporary workers less than
permanent workers filling the same
jobs, regardless of sex. Therefore,
"no cause" is found on this latter
claim.
ALLOCATION OF REMEDIES
11. If the Commission finds reasonable cause to believe that
both a staffing firm and its client have engaged in
unlawful discrimination, how are back wages and
damages allocated between the respondents?
Where the combined discriminatory actions of a
staffing firm and its client result in harm to the
worker, the two respondents are jointly and
severally liable for back pay, front pay, and
compensatory damages. This means that the
complainant can obtain the full amount of back pay,
front pay, and compensatory damages from either one
of the respondents alone or from both respondents
combined.42 Punitive damages under Title VII and
the ADA,43 and liquidated damages under the ADEA,44
are individually assessed against and borne by each
respondent in accordance with its respective degree
of malicious or reckless misconduct.45 This is
because punitive damages are designed not to
compensate the victim for his or her harm, but to
punish the respondent.46 Of course, no respondent
can be required to pay a sum of future pecuniary
damages, damages for emotional distress, and
punitive damages, in excess of its applicable
statutory cap. The investigator should contact the
legal unit in his or her office for advice in
determining how to allocate damages between the
parties.
Computation of Monetary Relief
The first step is to compute lost wages (including
back and front pay); compensatory damages for both
pecuniary loss and emotional distress; and punitive
damages.47 This computation should be made without
regard to the statutory caps on damages,48 and,
except for punitive damages, without regard to
either respondent's ability to pay.49 This initial
computation will establish the charging party's
total wage and other compensable losses, as well as
the full calculation of punitive damages.
Back Pay, Front Pay, and Past Pecuniary Damages
The next step is to determine the allocation
between the respondents of back and front pay and
past pecuniary damages. The charging party can
obtain the full amount of these remedies because
they are not subject to the statutory caps. The
Commission can pursue the entire amount from either
the staffing firm or the client, or from both
combined.50 However, the total amount actually
paid cannot exceed the sum of back and front wages
and past pecuniary damages owed to the worker.
Application of the Statutory Cap on Damages
The final step is to determine each respondent's
liability for compensatory and punitive damages
subject to the statutory caps. The total amount
paid by a respondent for compensatory damages for
emotional distress and future pecuniary harm, and
for punitive damages, cannot exceed its statutory
cap. Thus, while the initial determination of the
appropriate amount of compensatory and/or punitive
damages is made without regard to the caps, the
caps may affect the allocation of damages between
two respondents as well as the total damages paid
to the charging party. In applying the caps to the
actual allocation of damages, the following
principles apply:
For compensatory damages subject to the caps, each
respondent is responsible for any portion of
the total damages up to its cap.
For punitive damages, each respondent is only
responsible for the damages which have been
assessed against it and only up to its
applicable statutory cap.
After the fact-finder has determined the amount of
compensatory damages for emotional distress
and future pecuniary harm, and the amount of
punitive damages for which either or both
respondents are liable, these amounts should
be allocated between the two respondents in
order to yield the maximum payable relief for
the charging party.
If the total compensatory damages are within
the sum of the two respondents' caps, the
damages should be allocated to assure that
the full amount is paid.
If one or both respondents are liable for punitive
damages as well as compensatory damages,
and the total sum of damages is within
the applicable caps, the damages should
be allocated, both between the
respondents, and between compensatory and
punitive damages for each respondent, to
assure full payment. Thus, each
respondent should pay the full amount of
punitive damages for which it is liable,
and any portion of the compensatory
damages up to its statutory cap.
If the sum of damages exceeds the sum of the applicable
caps, the damages should be allocated,
both between the respondents and between
compensatory and punitive damages for
each respondent, to maximize the payment
to the charging party.
Example 14: CP was assigned by
Staff Serve to work as a security
guard at a store called Value,
U.S.A. ("Value"). CP was subjected
to persistent and egregious racial
epithets by two supervisory
employees of the store. CP
complained several times to both a
higher level manager at Value and to
a supervisor at Staff Serve, but
neither took any action to address
the problem. After being subjected
to egregious racial epithets that
involved his family, CP informed the
manager at Value and the supervisor
at Staff Serve that the situation
was intolerable. These individuals
told CP to stop complaining and to
live with these epithets as the
price of holding the job. CP
stopped reporting to work and asked
Staff Serve to assign him elsewhere,
but the firm failed to do so. CP
was unable to find work for eight
months.
CP files a charge against Staff
Serve and Value. The investigator
determines that both are liable for
the racial harassment and
constructive discharge. The
investigator further determines that
CP is due $40,000 in back pay and
$60,000 in damages for emotional
distress and that Staff Serve and
Value are jointly and severally
liable for these amounts. Although
Value's conduct was at least as
egregious as Staff Serve's, the
investigator determines that Value's
financial position is relatively
weak, and that a punitive damage
award of $30,000 against Value is
appropriate, as compared to $50,000
for Staff Serve.
Staff Serve employs 137 employees
(counting its regular staff people
and the workers it has sent on
assignment), and is subject to the
$100,000 damages cap. Value employs
45 workers and is subject to the
$50,000 cap on damages.
In conciliation, the investigator determines
that Staff Serve and Value should
work out a division of the $40,000
in back pay, for which they are
jointly and severally liable. The
investigator further determines that
the damages should be allocated as
follows: Staff Serve should pay
$40,000 and Value $20,000 in
compensatory damages, and Staff
Serve should pay $50,000 and Value
$30,000 in punitive damages. CP can
thus obtain the full amount of
damages due him, with neither
respondent's liability exceeding its
cap.
Example 15: Same facts as in Example 14, but
CP only names Staff Serve as a
respondent because Value has gone
bankrupt. The sum of compensatory
and punitive damages assessed by the
Commission is $110,000 ($60,000 for
emotional distress and $50,000 in
punitive damages assessed against
Staff Serve). The Commission
pursues $100,000 in combined damages
due to Staff Serve's statutory cap.
The Commission and Staff Serve may
agree to deduct the $l0,000 in
excess of the caps from either the
emotional distress or the punitive
damages. The Commission also
pursues the full $40,000 in back pay
from Staff Serve, which is not
subject to the cap.
Example 16: Same facts as Example
14, except that both Staff Serve and
Value are subject to the $50,000
cap. CP could obtain only a total
of $100,000 in damages, even though
the sum of compensatory and punitive
damages was $140,000. The
investigator works with CP and the
respondents to determine how to
allocate the damages between
compensatory and punitive damages.
The full amount of back-pay remains
payable since it is not subject to
the caps.
CHARGE PROCESSING INSTRUCTIONS
When a charge is filed by a worker who was hired by a
temporary agency, contract firm, or other staffing firm
and who alleges discrimination by the staffing firm or
the firm's client, consider the following questions
(refer to the questions and answers in the guidance for
detailed information):
I. Coverage
1. Is the charging party (CP) an employee or an
independent contractor? (Q&A 1)
- Determine whether the right to control the
means and manner of CP's work performance
rested with the staffing firm and/or the
client or with the worker herself.
Consider the factors listed in Question
and Answer 1 of this guidance and all
other aspects of CP's relationship to the
firm and its client.
If CP is an independent contractor, dismiss the
charge for lack of jurisdiction. If CP is an
employee, determine who qualifies as his or her
employer. It is possible that both the staffing
firm and its client qualify as joint employers. In
that regard consider the following:
2. Is CP an employee of the staffing firm? (Q&A 2(a))
- Consider the factors listed in Question 1 as
they apply to the relationship between CP
and the staffing firm.
3. Is CP an employee of the firm's client? (Q&A 2(b))
- Consider the factors listed in Question 1 as
they apply to the relationship between CP
and the client.
Even if the client does not qualify as CP's
employer, it is still covered under the applicable
anti-discrimination statute if it interfered on a
discriminatory basis with CP's employment
opportunities with the staffing firm and has the
requisite number of employees. (Q&A 3) The same is
true if the staffing firm does not qualify as CP's
employer. However, a federal agency can only be
held liable as an employer, not as a third-party
interferer. (Q&A 4)
If CP is a welfare recipient alleging
discrimination in a work-related activity connected
with a welfare program, the above considerations
apply to determine coverage. (Q&A 5) In such
circumstances, the state or local welfare agency
may function as a staffing firm and the employer
for whom CP performed work as the client.
4. If there is a question about coverage, does the
staffing firm and/or the client have the
minimum number of employees to be covered
under the applicable anti- discrimination
statute? (Q&A 6)
- Ask the respondent to name and provide records
regarding each individual who performed
work for it during the applicable time
period, including individuals assigned by
staffing firms and any temporary,
seasonal, or other contingent workers
hired directly by the respondent.
Determine which of these individuals
qualified as employees rather than
independent contractors.
II. Assignment Practices (Q&A 7)
If CP alleges that a staffing firm declined to
assign him or her to its client for discriminatory
reasons, consider the following questions:
1. Does the evidence show that the staffing firm
denied CP a job assignment for discriminatory
reasons?
- If so, the staffing firm is liable as an
employer of CP for its discriminatory
assignment practice, as a third party
interferer, and/or as an employment
agency for its discriminatory referral
practice.
2. Does the evidence show that the client set
discriminatory criteria for assignments by the
staffing firm?
- If so, the client is liable either as a joint
employer of CP or a third party
interferer.
III. Discrimination at Work Site (Q&A 8, 9)
If CP alleges that (s)he was subjected to
discrimination while performing a job assignment
for the staffing firm's client, consider the
following questions:
1. Client: Does the evidence show that the client
discriminated against CP?
- If so, the client is liable as CP's employer
or as a third party interferer. However,
if the client is a federal agency it can
only be held liable as an employer.
2. Staffing firm:
a. Does the evidence show that the staffing firm
participated in its client's
discrimination, e.g., by honoring the
client's discriminatory request to
replace CP with someone outside his or
her protected class?
b. Does the evidence show that the staffing firm
knew or should have known of its client's
discrimination and failed to take
immediate and appropriate corrective
measures within its control?
If the answer to (a) or (b) is "yes," the
staffing firm is liable for its
discrimination.
IV. Discriminatory Wage Practices (Q&A 10)
If CP alleges that the staffing firm paid
discriminatory wages for his or her work for the
firm's client, consider the following:
1. Is there an Equal Pay Act violation?
- Did the staffing firm assign a person of the
opposite sex to the same client to
perform substantially equal work and pay
that individual a higher wage?
If so, the staffing firm is liable for the EPA
violation. The client also can be found
liable if it qualified as CP's joint employer.
2. Is there a violation of Title VII, the ADEA, or the
ADA?
- A violation of the EPA also constitutes a
violation of Title VII as long as there
is Title VII coverage.
- A sex-based wage disparity violates Title VII
even if the jobs are not substantially
equal under EPA standards, if there is
other evidence of wage discrimination.
Title VII also prohibits wage
discrimination based on race, national
origin, and religion.
If the respondent committed wage
discrimination in violation of Title VII, the
ADEA, or the ADA it is liable as CP's employer
or as a third-party interferer.
V. Allocation of Remedies (Q&A 11)
If both the staffing firm and its client have
unlawfully discriminated against CP, remedies can
be allocated as follows:
1. CP can obtain the full amount of back pay, front
pay, and compensatory damages from either
respondent, or from both combined.
2. Punitive damages under Title VII and the ADA, and
liquidated damages under the ADEA, are
individually assessed against each respondent
according to its degree of malicious or
reckless misconduct.
3. The total amount paid by a respondent for future
pecuniary damages, damages for emotional
distress, and punitive damages cannot exceed
its statutory cap.
Damages should be allocated between the respondents
in a way that maximizes the payable relief to CP.
Contact the legal unit for advice in determining
the allocation.
1 June 18, 1997 News Release of the National Association of Temporary and
Staffing Services.
2 Seasonal and temporary foreign employees performing work for companies
in this country form another category of the contingent workforce. The
Commission intends to address at a future date particular issues regarding
coverage of these workers.
3 Bureau of Labor Statistics, U.S. Dept. of Labor, Report 900, Contingent
and Alternative Employment Arrangements (August 1995).
4 For a discussion of wage data for contingent workers, see Steven Hipple
and Jay Stewart, Earnings and benefits of workers in alternative work
arrangements, Monthly Labor Review 46 (October 1996).
5 See Policy Statement on control by third parties over the employment
relationship between an individual and his/her direct employer, Compliance
Manual Section 605, Appendix F (BNA) 605:0087 (5/20/87); Policy Statement
on the concepts of integrated enterprise and joint employer, Compliance
Manual Section 605, Appendix G (BNA) 605:0095 (5/6/87); Policy Statement
on Title VII Coverage of Independent Contractors, Compliance Manual
Section 605, Appendix H (BNA) 605:0105 (9/4/87); and Policy Statement:
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, Compliance Manual
(BNA) N:3935 (9/20/91).
The above-referenced policy documents set forth some general principles
regarding coverage under the anti-discrimination statutes, and they remain
in effect. The current guidance explains more specifically how the
coverage principles apply to workers who are hired by staffing firms and
placed in job assignments with the firms' clients.
6 For a detailed explanation of the various types of staffing service work
arrangements, see Edward A. Lenz, Co-Employment - A Review of Customer
Liability Issues in the Staffing Services Industry, 10 The Labor Lawyer
195, 196-99 (1994).
7 See, infra, cases cited in notes 12, 14, and 15.
8 The coverage principles set forth here apply not only to workers who are
hired by staffing firms and assigned to the firms' clients, but also to
temporary, seasonal, part-time, and other contingent workers who are hired
directly by employers.
9 Nationwide Mutual Insurance Co. v. Darden, 503 U.S. 318, 324 (1992)
(quoting NLRB v. United Ins. Co. of America, 390 U.S. 254, 258 (1968))
(emphasis added).
10 The listed factors are drawn from Darden, 503 U.S. at 323-324 (quoting
Community for Creative Non-Violence v. Reid, 490 U.S. 730, 751-752
(1989)); Rev Ruling 87-41, 1987-1 Cum. Bull. 296 (cited in Darden, 503
U.S. at 325); and Restatement (Second) of Agency § 220(2) (1958) (cited in
Darden, 503 U.S. at 325). The Court in Darden held that the "common law"
test governs who qualifies as an "employee" under the Employee Retirement
Income Security Act of 1974 (ERISA). That test, as described by the Court,
is indistinguishable from the "hybrid test" for determining an employment
relationship adopted by the EEOC in the Policy Statement on Title VII
Coverage of Independent Contractors, Compliance Manual Section 605,
Appendix G (BNA) 605:0105 (9/4/87). Although the Supreme Court has not
had occasion to address the standards that govern who is an "employee"
under Title VII, the ADEA, and the ADA, the rationale in Darden should
apply. This is because the ERISA definition of "employee" that the Court
interpreted in Darden is identical to the definition of "employee" in
Title VII, the ADEA, and the ADA.
Courts have stated that the definition of "employee" is broader under
the Fair Labor Standards Act (FLSA), of which the Equal Pay Act is a part,
than under the other EEO statutes. However, there is no significant
functional difference between the tests. Under the FLSA, employees are
those who, as a matter of economic reality, are dependent upon the
business to which they render service. See 29 C.F.R. § 1620.8 (1996);
Hodgson v. Griffin & Brand of McAllen, Inc., 471 F.2d 235 (5th Cir.)
(under FLSA's "economic realities" test, fruit and vegetable company
qualified as joint employer of harvest workers supplied by crew leaders),
reh'g denied, 472 F.2d 1405 (5th Cir.), cert. denied, 414 U.S. 819
(1973). All three tests (common law, hybrid, and economic realities)
consider similar factors and often result in the same conclusions as to
"employee" status.
11 For additional guidance on criteria for determining whether two or more
entities are joint employers of a charging party, see EEOC's Policy
Statement on the concepts of integrated enterprise and joint employer,
Compliance Manual Section 605, Appendix G (BNA) 605:0095 (5/6/87).
12 For cases holding that a staffing firm is an "employer" of the workers
it sends on job assignments, see Magnuson v. Peak Technical Services,
Inc., 808 F. Supp. 500, 508 (E.D. Va. 1992) (personnel firm that provided
employees to clients pursuant to service contracts and the worker that it
assigned to one of its clients "clearly had the type of direct
employer-employee relationship that is typically the subject of Title VII
lawsuits"), aff'd mem., 40 F.3d 1244 (4th Cir. 1994); Amarnare v. Merrill,
Lynch, Pierce, Fenner & Smith, 611 F. Supp. 344, 349 (D.C.N.Y. 1984)
(worker paid by "Mature Temps" employment agency and assigned to Merrill
Lynch for temporary job assignment was employee of both Mature Temps and
Merrill Lynch during period of assignment), aff'd mem., 770 F.2d 157 (2d
Cir. 1985). Cf. NLRB v. Western Temporary Services, Inc., 821 F.2d 1258,
1266-67 (7th Cir. 1987) (NLRB correctly determined that temporary
employment service and its client were joint employers of temporary
worker); Maynard v. Kenova Chemical Company, 626 F.2d 359, 362 (4th Cir.
1980) (temporary employee injured while working on defendant's premises
could not sue defendant in tort because he was employee of both defendant
and temp agency, and workers' compensation provided sole remedy).
The Commission disagrees with the rulings of the District Court of
Delaware in Williams v. Caruso, 966 F. Supp. 287 (D. Del. 1997), and
Kellam v. Snelling Personnel Services, 866 F. Supp. 812 (D. Del. 1994),
aff'd mem., 65 F.3d 162 (3d Cir. 1996). In Williams, the court ruled that
a temporary employment agency was not a Title VII employer of a temporary
worker whom it hired and placed in a job assignment. The court followed
its earlier reasoning in Kellam, in which it declined to count the workers
assigned by a temporary employment agency as its employees on the ground
that the agency did not supervise the workers on a day-to-day basis. In
the Commission's view, the court in both cases placed undue emphasis on
daily supervision of job tasks and underestimated the significance of
other factors indicating an employment relationship.
13 See, e.g., Astrowsky v. First Portland Mortgage Corp., 887 F. Supp. 332
(D. Me. 1995) (holding that employee leasing firm was not a joint
employer of workers that it leased back to original employer; firm only
processed pay checks and made tax withholdings but did not exercise any
control over employees; original employer remained exclusive employer of
the workers for purposes of EEO coverage).
14 See Reynolds v. CSX Transportation, Inc., 115 F.3d 860 (11th Cir. 1997)
(finding that temporary employment agency's client qualified as employer
of worker assigned to it and upholding jury award for retaliation by
client); King v. Booz-Allen & Hamilton, Inc., No. 83 Civ. 7420 (MJL), 1987
WL 11546, n.3 (S.D.N.Y. May 21, 1987) (finding that plaintiff who was paid
by temporary employment agency and assigned to work at Booz-Allen was an
employee of Booz- Allen); Amarnare, 611 F. Supp. at 349 (finding that
temporary employment agency's client qualified as joint employer of worker
assigned to it).
15 See Rev. Rul. 87-41, 1987-1 Cum. Bull. 296, 298-99, cited in Nationwide
Mutual Insurance Company v. Darden, 503 U.S. 318, 324 (1992) (concluding
on above facts that the staffing firm was the individual's employer, but
not addressing the status of the client vis-a-vis the worker).
16 For examples of cases finding that a client of a staffing firm can
qualify as a joint employer of the worker assigned to it, see Poff v.
Prudential Insurance Co. of America, 882 F. Supp. 1534 (E.D. Pa. 1995)
(where plaintiff was hired by computer services contractor and assigned to
work on-site at insurance company, issue of fact existed as to whether
insurance company exercised sufficient control over the manner and means
by which plaintiff's work was accomplished to qualify as employer);
Magnuson, 808 F. Supp. at 508-10 (where car company contracted with
staffing firm for plaintiff's services and assigned her to work at its car
dealership, genuine issue of fact was raised as to whether car company,
dealership, and staffing firm all qualified as her joint employers);
Guerra v. Tishman East Realty, 52 Fair Empl. Prac. Cas. (BNA) 286
(S.D.N.Y. 1989) (security guard employed by management firm who worked in
building owned by insurance company could seek to prove that insurance
company exercised sufficient control over him to qualify as his
"employer"); EEOC v. Sage Realty, 507 F. Supp. 599 (S.D.N.Y. 1981)
(building management company that contracted with cleaning company for
services of building lobby attendant qualified as joint employer of lobby
attendant; contractor carried lobby attendant on its payroll but
management company supervised her day-to-day work).
For examples of cases finding that the client did not qualify as a joint
employer of the contract worker because the client did not have sufficient
control over the worker, see Rivas v. Federacion de Asociaciones
Pecuarias, 929 F.2d 814 (1st Cir. 1991) (client of shipping services
contractor was not a joint employer of workers who unloaded ships;
although client set time for ship unloading, had some disciplinary
authority over foremen, and directed order of unloading, contractor
selected, scheduled, and supervised the workers and handled disciplinary
matters); King v. Dalton, 895 F. Supp. 831 (E.D. Va. 1995) (Navy was not
joint employer of worker assigned by contract firm to work on project due
to insufficient direct supervisory control over the daily details of the
plaintiff's work).
17 See 42 U.S.C. § 2000e-2(a) (Title VII), 29 U.S.C. § 623(a) (ADEA), and
42 U.S.C. § 12112(a) (ADA), which do not limit their protections to a
covered employer's own employees, but rather protect an "individual" from
discrimination. Section 503 of the ADA, 42 U.S.C. § 12203(b),
additionally makes it unlawful to "interfere with any individual in the
exercise or enjoyment of ... any right granted or protected by this
chapter." The EPA, 29 U.S.C. § 206, limits its protections to an
employer's own employees, and therefore third party interference theory
does not apply.
For cases allowing staffing firm workers to bring claims against the
firms' clients as third party interferers, see King v. Chrysler Corp., 812
F. Supp. 151 (E.D. Mo. 1993) (cashier employed by company that operated
cafeteria on automobile company's premises could sue automobile company
for failing to take sufficient corrective action to remedy sexually
hostile work environment; Title VII does not specify that employer
committing an unlawful employment practice must employ the injured
individual); Fairman v. Saks Fifth Avenue, 1988 U.S. Dist. LEXIS 13087
(W.D. Mo. 1988) (plaintiff who was employed by cleaning contractor to
perform cleaning duties at store and who was allegedly discharged due to
her race could proceed with Title VII action against store; store claimed
that it was not plaintiff's employer because it did not pay her wages,
supervise her or terminate her; however, even if the store was not
plaintiff's employer, it could be sued for improperly interfering with her
employment opportunities with the cleaning contractor); Amarnare, 611 F.
Supp. at 349 (temporary employee assigned by "Mature Temps" to work for
Merrill Lynch could challenge discrimination by Merrill Lynch either on
basis that Merrill Lynch was her joint employer or that Merrill Lynch
interfered with her employment opportunities with Mature Temps).
18 See Policy Statement on control by third parties over the employment
relationship between an individual and his/her direct employer, Compliance
Manual Section 605, Appendix F (BNA) 605:0087 (5/20/87).
19 While Title I of the ADA only applies to entities with fifteen or more
employees, the Commission has not yet addressed the scope of the
interference provision in Section 503, which applies to all titles of the
ADA and does not contain a specific coverage limitation. See n.17.
20 See Carparts Distribution. Ctr. v. Automotive Wholesalers, 37 F.3d 12,
17-18 (1st Cir. 1994) (trade association and its administering trust for
health benefit plan provided by plaintiff's employer was sued under Title
I for limiting coverage of AIDS; court held that defendants were covered
under Title I if they functioned as plaintiff's employer with respect to
his health care coverage or if they affected plaintiff's access to
employment opportunities); Spirt v. Teachers Insurance and Annuity Ass'n,
691 F.2d 1054, 1063 (2d Cir. 1982) (association that managed retirement
plans for college and university employees could be found liable for using
sex-based mortality tables to calculate benefits; although association was
not plaintiff's "employer" in any commonly understood sense, the term
"employer" under Title VII encompasses any party who significantly affects
worker's access to employment opportunities), vacated and remanded sub nom
Long Island University v. Spirt, 463 U.S. 1223 (1983), reinstated on
remand, 735 F.2d 23 (2d Cir.), cert. denied, 469 U.S. 883 (1984).
21 See Mares v. Marsh, 777 F.2d 1066 (5th Cir. 1985) (in determining
whether individual is a federal employee for purposes of Title VII
coverage, key issue is extent to which government exercises control over
that individual). For guidance on procedures in handling joint federal
sector/private sector complaints, see Question 9.
22 42 U.S.C. § 20003-16(a) (Title VII); 29 U.S.C. § 633(a) (ADEA); 29
U.S.C. § 794a (Rehabilitation Act, incorporating remedies, procedures and
rights set forth in 42 U.S.C. § 2000e-16). See King v. Dalton, 895 F.
Supp. at 836 n.7 (plain terms of § 2000e-16 require a plaintiff to be an
employee of the defendant agency); Spirides v. Reinhardt, 613 F.2d 826,
829 (D.C. Cir. 1979) (§ 2000e-16 "cover[s] only those individuals in a
direct employment relationship with a government employer").
23 A variety of work and work-related activities may be required as a
condition of receipt of welfare, food stamps, or other benefits. Under
the Personal Responsibility and Work Opportunity Reconciliation Act of
1996, P.L. 104-193, 110 Stat. 2105 (1996), for example, welfare recipients
may be required to perform work activities which are defined to include
unsubsidized employment, subsidized private or public sector employment,
work experience, on-the-job training, job search and job readiness
assistance, community service programs, vocational educational or job
skills training, educational activities, or child care services. Section
103 of Welfare Reform Act, 110 Stat. 2133, amending Part A of Title IV of
Social Security Act, 42 U.S.C. § 601, et seq. See also Section 824 of
Welfare Reform Act, 110 Stat. 2323, amending Section 6 of Food Stamp Act
of 1977, 7 U.S.C. § 2015.
24 The Balanced Budget Act of 1997, P.L. 105-33, 111 Stat. 251 (1997),
requires each state that receives a grant from the Secretary of Labor as a
"welfare-to-work state" to establish a procedure for handling complaints
by participants in work activities who allege certain violations,
including gender discrimination. The Act does not preempt application of
Title VII, the ADEA, the ADA, or the EPA. See Morton v. Mancari, 417,
U.S. 535, 550 (1973). Therefore, welfare recipients who perform work
activities and qualify as "employees" are covered under the anti-
discrimination statutes enforced by the EEOC.
25 Title VII specifically makes it unlawful to discriminate in admission
to or employment in any program established to provide apprenticeship or
other training. 42 U.S.C. § 2000e- 2(d). The ADA and the ADEA also
prohibit discrimination in job training and apprenticeship programs. 42
U.S.C. § 12112(a); 29 C.F.R. § 1625.21.
26 The Commission notes that other federal statutes prohibit
discrimination in federally-assisted education and training programs.
See, e.g., Title VI of the Civil Rights Act of 1964, 42 U.S.C.§ 2000d, et
seq.; Title IX of the Education Amendments of 1972, 42 U.S.C.§ 1681, et
seq., and Section 504 of the Rehabilitation Act of 1973, 29 U.S.C. § 794.
Complaints about discrimination in education or other non-employment
programs should be referred to the Offices for Civil Rights in the federal
agencies that fund such programs.
27 Title VII and the ADA apply to any employer who has fifteen or more
employees for each working day in each of twenty or more calendar weeks in
the current or preceding calendar year. 42 U.S.C. § 2000e(b). The ADEA
applies to any employer who has twenty or more employees for each working
day in each of twenty or more calendar weeks in the current or preceding
calendar year. 29 U.S.C. § 630(b). Counting issues do not arise in EPA
claims because that Act applies to any employer who has more than one
employee engaged in commerce or in the production of goods for commerce,
unless an exception applies. 29 C.F.R. § 1620.1 - 1620.7.
28 Cf. 29 C.F.R. § 825.106(d) (1996) (under the Family and Medical Leave
Act, employees jointly employed by two employers must be counted by both
employers, whether or not they are maintained on both employers' payrolls,
in determining employer coverage and employee eligibility).
29 EEOC & Walters v. Metropolitan Educ. Enterprises, 117 S. Ct. 660
(1997). For guidance on how to count employees when determining whether a
respondent satisfies the jurisdictional prerequisite for coverage, see
Enforcement Guidance on Equal Employment Opportunity Commission & Walters
v. Metropolitan Educational Enterprises, 117 S. Ct. 660 (1997), Compliance
Manual (BNA) N:2351 (5/2/97).
30 Staffing firms and their clients are subject to the same record
preservation requirements as other employers that are covered by the
anti-discrimination statutes. They therefore must preserve all personnel
records that they have made relating to job assignments or any other
aspect of a staffing firm worker's employment for a period of one year
from the date of the making of the record or the personnel action
involved, whichever occurs later. Personnel records relevant to a
discrimination charge or an action brought by the EEOC or the U.S.
Attorney General must be preserved until final disposition of the charge
or action. 29 C.F.R. §§ 1602.14, 1627.3(b). The Commission can pursue an
enforcement action where the respondent fails to keep records pertaining
to all its contingent and non-contingent employees and applicants for
employment.
31 Section 701(c) of Title VII 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." For further
guidance, see 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?, Compliance Manual (BNA) N:3935 (9/29/91).
32 The questions and answers in this section assume that the staffing firm
is an "employer" of the worker.
33 See EEOC Guidelines on Sexual Harassment, 29 C.F.R. § 1604.11(3)
(1996) (an employer is liable for harassment of its employee by a
non-employee if it knew or should have known of the misconduct and failed
to take immediate and appropriate corrective action within its control).
See also Caldwell v. ServiceMaster Corp. and Norrell Temporary Services,
966 F. Supp. 33 (D.D.C. 1997) (joint employer temporary agency is liable
for discrimination against temporary worker by agency's client if agency
knew or should have known of the discrimination and failed to take
corrective measures within its control); Magnuson v. Peak Technical
Servs., 808 F. Supp. 500, 511-14 (E.D. Va. 1992) (where plaintiff was
subjected to sexual harassment by her supervisor during a job assignment,
three entities could be found liable: staffing firm that paid her salary
and benefits, automobile company that contracted for her services, and
retail car dealership to which she was assigned; staffing firm and
automobile company were held to standard for harassment by non-employees,
under which an entity is liable if it had actual or constructive knowledge
of the harassment and failed to take immediate and appropriate corrective
action within its control); EEOC v. Sage Realty, 507 F. Supp. 599,
612-613 (S.D.N.Y. 1981) (cleaning contractor and joint employer building
management company found jointly liable for sex discrimination against
lobby attendant on contractor's payroll where management company required
attendant to wear revealing costume that subjected her to harassment by
passersby, and where plaintiff was discharged for refusing to continue
wearing outfit; court rejected contractor's argument that management
company was exclusively liable because it had set the costume requirement;
contractor knew of plaintiff's complaints of harassment and there was no
evidence that it was powerless to remedy the situation); cf. Capitol EMI
Music, Inc., 311 N.L.R.B. No. 103, 143 L.R.R.M. (BNA) 1331 (May 28, 1993)
(in joint employer relationships in which one employer supplies employees
to the other, National Labor Relations Board holds both joint employers
liable for unlawful employee termination or other discriminatory
discipline if the non- acting joint employer knew or should have known
that the other employer acted against the employee for unlawful reasons
and the former has acquiesced in the unlawful action by failing to protest
it or to exercise any contractual right it might possess to resist it).
34 Cf. Paroline v. Unisys Corp., 879 F.2d 100, 107 (4th Cir. 1989)
(employer is liable where it anticipated or reasonably should have
anticipated that plaintiff would be subjected to sexual harassment yet
failed to take action reasonably calculated to prevent it; "[a]n
employer's knowledge that a male worker has previously harassed female
employees other than the plaintiff will often prove highly relevant in
deciding whether the employer should have anticipated that the plaintiff
too would become a victim of the male employee's harassing conduct"),
vacated in part on other grounds, 900 F.2d 27 (4th Cir. 1990).
35 If the federal agency refuses to accept the complaint based on a belief
that the staffing firm worker is not its employee, the worker can file an
appeal with the Commission's Office of Federal Operations.
36 If the federal agency does not wish to coordinate the investigations,
then the EEOC office should proceed independently. If the federal agency
refuses to provide documents or testimony requested by the EEOC
investigator, the Commission can issue a subpoena to compel production of
the evidence.
37 The EPA applies to any employer that has more than one employee engaged
in commerce or in the production of goods for commerce, unless a statutory
exception applies. 29 U.S.C. § 203(s).
38 See Compliance Manual Section 708.5(3) (BNA) 708:0023. As that
subsection explains, in determining whether a wage differential between
temporary and permanent employees is based on a factor other than sex, the
following issues should be considered: 1) whether the wage differential is
applied uniformly to males and females; 2) whether the differential
conforms with the nature and duration of the job; and 3) whether the
differential conforms with a nondiscriminatory customary practice within
the industry and establishment.
39 See 29 C.F.R. § 1620.8 (1996) (two or more employers may be jointly or
severally responsible for compliance with EPA requirements applicable to
employment of a particular employee). For guidance on elements of an EPA
claim, see Compliance Manual Sections 704 and 708 (BNA) 704:001 and
708:001, et seq. Cf., 29 C.F.R. § 791.2 (1996) (regulations issued by
Wage and Hour Division, Department of Labor, on Joint Employment
Relationship under FLSA) (joint employers are individually and jointly
responsible for compliance with FLSA, including overtime requirements).
The EPA, unlike Title VII, the ADA, and the ADEA, only permits claims by
employees against their employers, not against third party interferers.
40 If the EEOC determines that the client had no involvement in or control
over the wages paid to the worker, it may decline to pursue relief against
the client.
41 For guidance on wage discrimination claims under Title VII, see
Compliance Manual Section 633 (BNA) 633:001, et seq. Title VII prohibits
wage discrimination on the basis of race, national origin, and religion,
as well as sex.
42 However, even where there is joint liability, neither a charging party
nor the Commission is obliged to pursue a claim against both entities; nor
does one party have a right to bring the other into the proceeding, or a
right of contribution from the other. See Northwest Airlines, Inc. v.
Transport Workers Union of America, 451 U.S. 77, 91-95 (1981); EEOC v.
Gard Corp. v. Tall Services, Inc., 795 F. Supp. 1070, 1071-72 (D. Kan.
1992).
43 Punitive damages are not available against federal, state, and local
government agencies.
44 Liquidated damages under the ADEA are punitive in nature. Trans World
Airlines v. Thurston, 469 U.S. 111, 125 (1985). Therefore, each
respondent individually bears a liquidated damages award under the ADEA.
45 See Hafner v. Brown, 983 F.2d 570, 573 (4th Cir. 1992) (holding under
42 U.S.C. § 1983 that compensatory damages are joint and several but
punitive damages are born by each defendant individually); Erwin v. County
of Manitowoc, 872 F.2d 1292, 1296 (7th Cir. 1989) (same); Bosco v.
Serhant, 836 F.2d 271, 280-81 (7th Cir. 1987) (tort principles require
joint and several liability for compensatory damages but not punitive
damages), cert. denied, 108 S. Ct. 2824 (1988); Hurley v. Atlantic City
Police Dept., 933 F. Supp. 396, 420-23 (D.N.J. 1996) (reaching same
conclusion in a Title VII case).
46 The respondents are also jointly and severally liable for liquidated
damages in EPA claims because such damages are compensatory in nature.
Laffey v. Northwest Airlines, 740 F.2d 1071, 1096 (D.C. Cir. 1984), cert.
denied, 469 U.S. 1181 (1985); Marshall v. Bruner, 668 F.2d 748, 753 (3d
Cir. 1982).
47 Compensatory and punitive damages are available in Title VII and ADA
cases, and in retaliation cases under the ADEA and the EPA. The ADEA and
EPA damages, which are not subject to statutory caps, are available
pursuant to a 1977 amendment to the Fair Labor Standards Act that
authorizes both legal and equitable relief for retaliation claims. 29
U.S.C. § 216(b). See Moskowitz v. Trustees of Purdue University, 5 F.3d
279, 283-84 (7th Cir. 1993) (FLSA amendment allows common law damages
where plaintiff is retaliated against for exercising his rights under
ADEA); Soto v. Adams Elevator Equip. Co., 941 F.2d 543, 551 (7th Cir.
1991) (FLSA amendment authorizes compensatory and punitive damages for
retaliation claims under EPA, in addition to lost wages and liquidated
damages).
48 42 U.S.C. § 1981a(c)(2).
49 The financial position of the respondent is a relevant factor in
assessing punitive damages. City of Newport v. Fact Concerts, Inc., 453
U.S. 47, 270 (1981).
For guidance on the various factors to consider in calculating
compensatory and punitive damages, see Enforcement Guidance: Compensatory
and Punitive Damages Available under § 102 of the Civil Rights Act of
1991, Compliance Manual (BNA) N:6071 (7/14/92).
50 See EEOC v. Sage Realty, 507 F. Supp. 599, 612-13 (finding two joint
employers responsible for harassment of worker and holding them jointly
and severally liable for back pay).
