Academic journal article American University Business Law Review

“It’s Not You, It’s Me” - When Are Client Companies Liable for Staffing Firms’ Discriminatory Hiring Practices?

Academic journal article American University Business Law Review

“It’s Not You, It’s Me” - When Are Client Companies Liable for Staffing Firms’ Discriminatory Hiring Practices?

Article excerpt

INTRODUCTION

"It's not you, it's me." A defendant in a civil action will likely never utter this popular phrase from the dating world. Yet, businesses readily concede client company liability for the actions by staffing agencies in an effort to educate the workforce and prevent investigation and legal action by the Equal Employment Opportunity Commission ("EEOC").1 This suggested liability is based primarily on the Commission's liberal interpretation of discrimination liability: the notion that liability based on employer-status should be assigned to non-employers.2

As employers increased their use of staffing agencies to hire workers, the EEOC, commentators, and the courts have paid much attention to staffing firm liability for employment discrimination by its clients.3 The EEOC has explained that a staffing firm and its client may both be held liable for discrimination when the staffing firm follows its client's discriminatory orders with regard to hiring practices.4 The EEOC has further clarified that in situations where the staffing agency has knowledge that its client discriminates against the agency's workers, but fails to take appropriate measures, the agency may also be held liable for discrimination.5 However, it remains unclear whether a client company similarly faces liability if it knows or should know of a staffing firm's discriminatory practice but nonetheless maintains a contractual relationship with said firm.6 Even though common sense and morality dictate that a company should sever ties with an agency that discriminates against employees or job seekers, such liability assessment and assignment of responsibilities should be firmly rooted in the law.7

This Comment argues that Congress should clarify the principle and rationale underlying the liability for staffing firms whose clients discriminate, as well as for client companies who maintain relationships with discriminatory staffing agencies to preserve the uniform character of Title VII of the Civil Rights Act of 1964 ("Title VII").8 Part II of this Comment describes the rules and guidelines that currently hold staffing firms and their clients liable for employment discrimination. Part III explains that the current body of law fails to establish an adequate standard of liability and causes uncertainty among client companies as to how far their liability extends. Part IV argues that the principles and rationales on which client company liability is based should be articulated in Title VII, so as to ensure uniformity and awareness, as well as to avoid costly litigation.

I. THE CURRENT LAW SURROUNDING STAFFING FIRMS' DISCRIMINATORY HIRING PRACTICES

The EEOC has issued a number of guidelines detailing the standard and scope of liability for staffing companies and client firms in a wide variety of circumstances.9 Similarly, the common law suggests several theories of liability.10 Taken together, these guidelines and court rulings establish liability for client companies who make discriminatory hiring requests and staffing firms who honor such requests." They further establish that both client companies and staffing firms may be liable to workers in cases where discrimination occurs at the client's workplace, even if the claimant is technically the employee of the staffing company but not of the client.12

On a few occasions, the EEOC suggested that client companies may face liability for maintaining a relationship with discriminatory staffing firms.13 Furthermore, several states have recently passed legislation making it unlawful to discriminate against a job applicant based on his or her status as unemployed, a widespread practice among employment agencies.14

A.Parties who may be Involved in Employment Discrimination Litigation

The types of employment discrimination disputes discussed in this Comment generally involve workers, staffing firms, client companies, and the EEOC.

1. Workers, Staffing Firms, and Client Companies

To avoid drawing legal conclusions about the liability and coverage that an individual may receive,15 this Comment frequently uses the term "worker" instead of "employee" (individuals who are engaged by an employer). …

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