When you use temporary workers hired and paid by a
staffing agency, you need to know if you are considered to be their
actual employer for legal purposes. Depending upon the arrangement,
your organization may be held responsible for employment
discrimination, the same as if the worker were on your payroll.
Get your FREE
access to this and 100's of FREE HR resources today.
The number of workers and employers
using temporary agencies is growing at a high rate. Employers enjoy
the flexibility of using workers who do not have to be on their
regular payroll, while workers like the ability to use short-term
assignments to accommodate both career and nonbusiness goals.
However, employers need to understand that they still may have legal
obligations to their temporary or contingent workers, particularly
in the area of discrimination.
EEOC Defines Contingent
The term “contingent worker” covers
a broad spectrum of temporary worker arrangements and flexible
working conditions. It includes temporary workers on your payroll,
independent contractors, temporary workers from agencies, and leased
employee arrangements. The Equal Employment Opportunity Commission (EEOC)
has published a directive, Enforcement Guidance: Application of EEO
Laws to Contingent Workers Placed by Temporary Employment Agencies
and Other Staffing Firms (Guidance), to address how discrimination
laws affect temporary employees and their employers. The EEOC
Guidance describes contingent workers as those who are generally
outside an employer’s core workforce and includes workers whose jobs
are irregular or will only last a short time. The Guidance deals
with a specific type of temporary worker: those who are hired and
paid by a staffing agency, but whose working conditions are totally
or partially controlled by clients (or employer organizations) who
use the agency. The main type of staffing agency described in the
EEOC Guidance is the temporary employment agency.
[Creating HR Policies or Employee Handbook?]
The EEOC Guidance establishes that
a temporary employment agency normally provides its clients with a
staffing arrangement in which the agency is nominally an employer.
It recruits, screens, hires, and may even train its employees. When
it places a worker in an assignment, it sets and pays the wages and
then bills the client who uses its services. The client usually
controls the working conditions, supervises the individual, and
determines how long the job will last.
Applying Discrimination Laws to Temporary Agency Workers
In order to determine when and how
the federal discrimination laws apply to temporary agency workers,
you must be able to answer the following questions.
1. Who is the employer?
The first question that both the agency and the client have to
answer is whether the worker is an employee or an independent
contractor. If the individual is an employee, that is, if the agency
and/or the client controls the when, where, and how of the
individual’s job performance, the worker may be covered by the
discrimination laws. Most workers obtained through a temporary
agency are considered to be employees, and not independent
contractors, because normally both the agency and the client
exercise control over their work.
A temporary agency usually has an
employer/employee relationship because, among other things, it does
the hiring, finds the job, provides workers’ compensation, pays the
worker, and, if necessary, terminates him. During the job
assignment, the client typically also is considered the temporary
worker’s legal employer if it does such things as supervise the
worker, provide work space, and furnish equipment for the job. The
EEOC Guidance gives the following example of “joint employers”:
A temporary employment agency hires
a worker and assigns him to serve as a computer programmer for one
of its clients. The agency pays the worker’s 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 also can terminate
the relationship without incurring a penalty. In these
circumstances, the worker is an “employee” … and the temporary
employment agency and its client qualify as joint employers because
both have the right to exercise control over the worker’s
2. Who is liable for
discrimination? Both the
agency and the client may be liable for discrimination if they
qualify as joint employers and each meets the employee size
threshold for coverage under the various laws. The threshold levels
under the federal laws are: Title VII of the Civil Rights Act
applies to employers with 15 or more employees; the Age
Discrimination in Employment Act applies to employers with 20 or
more; the Americans with Disabilities Act applies to employers with
15 or more; and the Equal Pay Act applies to employers who have more
than one employee. To determine coverage, both the agency and the
client must count every temporary worker who qualifies as an
employee, along with their regular staff.
3. What if the temporary agency or
the client is not the employer?
There are times when, even if the agency or the client is not the
employer, it may be liable under the antidiscrimination laws. The
reason for this is that the laws “prohibit an employer from
interfering with an individual’s employment opportunities with
another employer.” The EEOC Guidance uses an example where a
staffing agency provides an independent computer repair technician
to a client, and then the client asks for a replacement:
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 15 or more employees [i.e., Title
VII coverage], it would be liable for interfering in the worker’s
employment opportunities with the staffing firm.
Illustrates Discriminatory Practices
The EEOC Guidance describes some
situations where agencies and clients may be liable:
1. Discrimination in assignment
practices. A staffing
agency can be liable if it follows a client’s discriminatory
assignment request or preference. It can also be liable if it
administers a test which is not job-related and which
disproportionately excludes members of a protected class. The
discrimination laws in these situations may cover the client if it
has the minimum number of employees for legal coverage under the
2. Discrimination at the work site.
If a client fails to treat the workers assigned to it in a
nondiscriminatory manner, it may be liable. In addition, if the
agency knows about the discrimination, it must take whatever means
of corrective action is in its control, or it also may be found
liable for discrimination.
3. Discrimination in the payment of
wages. The Equal Pay Act
(EPA) requires that men and women receive equal pay for equal work.
Thus, if a temporary worker receives less pay than a temporary
worker of the opposite gender who performs the same job, both the
agency and the client may be liable under the EPA. Also, if both
have the required number of workers for legal coverage, they may
also be liable under Title VII for wage discrimination. However, if
there is a wage difference based on the classification of workers,
such as temporary and regular, this disparity generally is not a
violation under the EPA because it is based on a distinction other
Equals Joint Liability
The use of temporary employment
agencies answers the need of many employers for greater flexibility.
It allows them to maintain a core workforce and to add workers on a
temporary basis. However, some employers, in using temporary
employment agencies, do not realize that even though their
agreements expressly state they are not employers, they may be so in
the eyes of the law. They may be even less aware that they can have
joint liability with the agency for a temporary worker’s
If your organization uses temporary
agency workers, you can help protect yourself against possible
discrimination issues by using the following guidelines to monitor
your relationship with the agency:
-- Know whether the temporary
worker meets the statutory test to be considered an independent
-- Assume that you are probably a
joint employer if you control the working conditions of the
temporary worker, supervise the job, and control the length of the
-- Determine whether you are
covered under the antidiscrimination laws. Be sure that you count
all temporary workers with whom you have a legal employer/employee
-- Be aware that you may not avoid
discrimination charges by using temporary agency workers. Therefore,
do not ask an agency to provide workers who meet requirements that
may be viewed as discriminatory, such as requesting only “young”
workers. Both you and the agency, if it complies with your request,
can be liable.
-- Include coverage for temporary
workers under the administration of your antidiscrimination
The Guidance is used by the EEOC’s
personnel in their investigations and is given deference by the
courts. Therefore, you should not allow yourself to fall into the
trap of thinking you can avoid discrimination issues by using
temporary agency employees.