Employment Law: Difficult Clients May Bring Liability to Staffing Firms

Given the proliferation of staffing firms in recent years, the thorny issue of how to handle discrimination complaints between contracting entities frequently arises. Specifically, when is a staffing firm liable for the discriminatory actions of its clients?

Clients of staffing firms are legally obligated to treat the workers assigned to them in a nondiscriminatory manner. The problem arises when clients fail to fulfill this obligation and the staffing firm knows or should know about the clients’ wrongdoing. Under these circumstances, the staffing firm is legally required to take corrective action. According to the Equal Employment Opportunity Commission (EEOC), a staffing firm is liable to a worker if the firm participates in a client’s discrimination. But what, exactly, does that mean?

According to the EEOC, if a staffing firm honors a client’s request to remove a worker from a job assignment for a discriminatory reason and replace that worker with an individual outside the removed worker’s protected class, the firm is liable for the discriminatory discharge.  The firm is also liable if it knew or should have known about the client’s discrimination and failed to take prompt corrective action.

The adequacy of corrective measures depends on the situation. According to the EEOC, 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 he or she so desires, to take a different job assignment at the same rate of pay.

In addition, according to the EEOC, the staffing firm should not assign other workers to the work site until the client has taken 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.

Example 1:  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.

Under these facts, 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. If the replacement worker is subjected to similar harassment, the agency and the client will be subject to additional liability.

Example 2:  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 Americans With Disabilities Act (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.

Bottom line: Staffing firms and their clients both have an obligation to work cooperatively to prevent and address discriminatory conduct arising during the staffing relationship.

For more information please contact Nicole Windsor at 410-583-2400 or


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