Increasing Lawsuits Against Staffing Companies – What is Happening?

Serious lawyer standing with arms crossed in the court room

What is Happening? The short answer to this question is the 2013 OSHA “Temporary Worker Initiative” (TMI) that began holding staffing companies responsible for unsafe conditions at their client’s businesses.

Fair? Yes and No, but the principle was being established that the staffing company, and their clients, or “Host Employers” were actually “Joint Employers” and therefore jointly responsible for the safety of the temporary employee.

The logic was that if a staffing company sends one of its employees to a box factory where there are certain hazardous conditions, the staffing company should know of those circumstances, inform their employees and provide any indicated safety training before sending them to their client’s business.

Certainly, the Host employer is also responsible for the safety of their own permanent employees as well as the temporary workers they contract for. The point is that both the “Joint Employers”, staffing company and host company were to be held jointly responsible.

So, the OSHA TMI of 2013 was followed by an OSHA policy letter to all Regional Administrators in 2014 that began direct enforcement of the TMI (Temporary Worker Initiative).  Now both, or “Joint Employers” would be investigated together, fined, assessed compensatory damages, etc. And, private lawsuits could and would, eventually follow . . . and they did!

But what also followed was that other Federal agencies picked up on the principle of Joint Employers” and actions that happened at numerous “Host” employer’s businesses were also being investigated at the staffing companies.

The federal Equal Employment Opportunity Commission (EEOC) asked staffing companies questions like “Were you aware of certain hostile environments at a client’s business where sexual advances, both verbally and physically were known to be common? And, “Did any of their employees who were assigned to that company ever make a complaint to them regarding anything of a sexual nature going on there either verbally or physically.

And, more than likely, a potentially terrifying request like: “We (EEOC) would like the names of every employee they assigned to that company over the last five years?

Then there is the issue of race discrimination, ADA, wage and hour violations, etc. where “joint employers” are being investigated, fined, and, with inevitable lawsuits following.

Here are just a few examples:

  1. Chicago Tribune Dec 7 2016. “A group of African-American men filed a lawsuit Tuesday in Chicago federal court alleging systematic discrimination by a temporary staffing agency and several of its clients they say passed over black applicants in favor of Hispanic workers” https://www.chicagotribune.com/business/ct-discrimination-temporary-staffing-1207-biz-20161206-story.html
  2. 5/21/10 “EEOC sues Cardinal Health and AppleOne for Racial discrimination. Cardinal Health, a global health care services and products company, and staffing agency AppleOne violated federal law by subjecting employees to racial harassment and retaliation, the U.S. Equal Employment Opportunity Commission (EEOC) announced in a lawsuit filed today”. https://www.eeoc.gov/eeoc/newsroom/release/5-21-19.cfm
  3. May 15,2019 A $13 Million Settlement was Reached after a Worker is Injured at a Tesla Plant. In a case that began with an OSHA finding of negligence in providing adequate training by a staffing company and their “host” employer, a subsequent civil action was settled just before trial for $13 million.

https://laist.com/2019/05/15/13_million_settlement_tesla_fremont_factory. php

  1. 11, 2019 EEOC v. Global Horizons, Inc. decision, the 9th circuit Court of Appeals held that employers who use labor contractors to recruit H-2A workers can be held liable under Title VII as a joint employer for non-workplace matters – such as housing, meals, and transportation – even if such matters are contractually delegated to a labor contractor”

https://www.fisherphillips.com/resources-alerts-federal-appeals-court-expands-joint-employer-liability

  1. August 13, 2018 – In an ADA (Americans with Disabilities Act) alleged violation, EEOC filed a lawsuit against a staffing company, Remedy Intelligent Staffing LLC, and its client, Lornamead, Inc., under the theory of “Joint Employer” when both refused to provide reasonable accommodations to a long-term temporary employee that would have enabled him to continue to work after his kidney condition worsened.

https://www.sescomgt.com/news/view/eeoc-alleges-ada-violation-against-manufacturing-company-and-staffing-firm-as-joint-employers/201808130921366065

The point here is that the “Joint Employer” theory/principle is not only being used by federal and state agencies to enforce labor standards but is frequently being used in lawsuits against staffing companies and their clients.

Therefore, Staffing Companies must:

  • Be aware of conditions at their client’s businesses.
  • Review their contracts with clients to include specific notation of hazardous or other potentially harmful conditions on their jobsites.
  • Inform and train their workers.
  • Document, document, document