EEOC S NEW ENFORCMENT GUIDELINES FOR STAFFING FIRMS By Bob Style NAPS General Counsel

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1 NATIONAL ASSOCIATION OF PERSONNEL SERVICES Independent Study Course Number 25 This independent study course is offered to certificate holders and members of the National Association of Personnel Services (NAPS). By completing this course, individuals can earn Continuing Education Units (CEUs) that can be applied toward the maintenance requirement that NAPS has instituted for individuals receiving the Certified Personnel Consultant (CPC) and Certified Temporary Staffing Specialist (CTS) designations after January 1, All individuals will be required to complete the examination section of this independent study course to receive credit. Those achieving a passing score on the examination will receive the.2 CEUs associated with this particular course. In addition,.2 CEUs can be earned by completing the special assignment outlined on the last page of the course. Refer to the registration instructions on the last page of this study course for additional instructions. EEOC S NEW ENFORCMENT GUIDELINES FOR STAFFING FIRMS By Bob Style NAPS General Counsel On December 9, 1997, the Equal Employment Opportunity Commission (EEOC) issued an enforcement guidance regarding the application of the various federal laws against discrimination to contingent workers placed by temporary help firms, as well as other types of staffing firms. The guidance represents one of the most extensive governmental discussions to date of the legal relationship of a temporary worker to the staffing firm and its client, and the responsibility each of those firms has to comply with the laws against discrimination. While many of the EEOS s conclusions may seem self-evident to staffing industry professionals, the fact that the EEOC felt it necessary to issue a policy guidance specifically aimed at the staffing industry must be regarded as significant. In reviewing the results of the EEOC s efforts, one should keep in mind: 1. The EEOC s guidance does not represent the last word on co-employment as it applies to all aspects of the staffing industry. The EEOC policy guidance only pertains to those federal laws against discrimination which that agency enforces. Co-employment issues may also arise in connection with various state law issues, such as workers compensation and state anti-discrimination statues, as well as other areas of federal law, such as fringe benefit entitlements and collective bargaining rights. The EEOC s determination as to who is the employer of a temp may not be the same as the determination made by federal and state agencies charged with enforcement of these other laws. 2. The EEOC s policy guidance is the opinion of the agency charged with enforcing the Civil Rights Act and other anti-discrimination statutes, and typically, this opinion is given a great deal of deference by the courts. However, there is certainly no guarantee that the courts will accept the EEOC s position in its entirety. Here are some of the questions with which the EEOC dealt in its policy guidance:

2 Is a staffing firm worker an employee or independent contractor? As one might suspect, in the great majority of cases, the EEOC believes that staffing firm workers are employees rather than independent contractors. The EEOC listed a number of factors that bear on the question of whether a worker is an employee or independent contractor, but the guiding principal is if the right control the means and manner of the work performance rests with the firm and/or its client rather than with the worker herself. Is the temp an employee of the staffing firm, the client, or both? The answer to this question can become particularly important if either the staffing firm or the client might possibly not meet the 15-employee threshold necessary to cover that entity under Title Vll of the Civil Rights Act, or the Americans with Disabilities Act, or the 20-employee threshold necessary for the Age Discrimination Act coverage. In the typical temporary help scenario, the EEOC believes that both the staffing firm and its client are employers. The key factor is the right to exercise control over the worker s employment. The EEOC believes a staffing firm typically is an employer of the temp because it 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. Since clients typically supply the work space, equipment, and supplies, and have the right to control the details of the work to be performed, they are also considered 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. Importantly to those who engage in employee leasing or payrolling, the EEOC believes that a staffing firm is not an employer if a client puts its employees on the staffing firm s payroll solely in order to transfer the responsibility of administering wages and insurance benefits, and the staffing firm does not have the right to exercise control over the worker. Must a staffing firm or its client be an employer of a temp in order to be liable for discrimination under Title Vll of the Civil Rights Act? No. A company with at least 15 employees can be liable for discriminating against an individual who is not its employee, if it interferes with that individual s employment opportunities with another employer. Therefore, if a client unlawfully demands that a temp firm terminate the assignment of a temp because of the temp s race, the client may be liable to he temp as an employer under a co-employment theory. Even if the client is not an employer, however, it would be liable to the temp, according to the EEOC, for unlawfully interfering in the temp s employment opportunities with the temporary help service. Is a staffing firm liable to its employee if the client refuses to accept the employee for discriminatory reasons? The EEOC believes it can pursue staffing firms who make assignments on a discriminatory basis on any one of three theories:

3 a. As an employer of the temp; b. As a third party interfere in the temp s employment opportunities with the client; c. As an employment agency for discriminating in making a job referral. As one might expect, a staffing firm cannot defend against a charge of discrimination by complaining that my client made me do it. The EEOC notes: The fact that a staffing firm s discriminatory assignment practice is based on its client s requirement is no defense. Thus, the staffing firm is liable it if honors a client s discriminatory assignment request or if it knows that it s client has rejected workers in a protected class for discriminatory reasons and for that reasons refuses to assign individuals in that protected class to that client. Furthermore, the staffing firm is liable if it administers on behalf or 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. Of course, a client is also liable to the temp, in this situation, either as an employer or as one who has interfered with the temp s employment opportunities. What is the possible liability of the staffing firm if its employee is being sexually harassed by an employee of the client? One of the most difficult situations for a staffing firm can arise when it learns that a temp is being harassed by an employee or employees of the client persons over whom the staffing firm has very little, if any, direct control. Notwithstanding this lack of control, the EEOC has made it clear that it will view the staffing firm as liable for sexual harassment if it fails to meet the standards set forth by the EEOC. The EEOC defines the general standard of conduct as follows: A client of staffing firm is obligated to treat the workers assigned to it in a nondiscriminatory manner. Where the client fails to fulfill this obligation, and a staffing firm knows or should know of the client s discrimination, the firm must take corrective action within its control. What corrective measures are within the control of a typical staffing firm? The EEOC suggests: 1. Insuring that the client is made aware of the misconduct. 2. Asserting the staffing firm s commitment to protect its workers from unlawful harassment. 3. Insisting that prompt investigative and corrective measures be undertaken. 4. Affording the worker an opportunity, if he or she so desires, to take a different job assignment at the same rate of pay.

4 Significantly, the EEOC adds that The staffing firm should not assign other workers to that work site unless the client has undertaken the necessary corrective and preventive measures to insure 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. In a hypothetical posed by the EEOC, a temporary receptionist was the victim of hostile environment sexual harassment. The receptionist complained to the temporary help firm, which informed its client of the allegation. The client would not investigate, and asked the temporary help firm to replace the worker with one who was not a troublemaker. The temporary help firm did so, and, telling the receptionist that it could not force its client to correct the problem, found a new assignment for her. According to the EEOC, the temporary help firm is liable for both sexual harassment and retaliatory discharge (for terminating the assignment of an employee in response to her making a claim of sexual harassment). The temporary help firm should have refused to replace its receptionist until the client undertook the necessary corrective and preventive measures. In preparing to deal with sexual harassment issues, staffing firms should keep in mind that it is impossible to effectively deal with a problem about which you do not know. You may, however, still be held liable for failure to deal with that problem if you have not promulgated a written sexual harassment policy which sets forth your company s determination to effectively deal with this kind of problem of how and to whom to complain.

5 CONTINUING EDUCATION UNIT (CEU) REGISTRATION Comp lete the registration information below and forward this page, containing the independent study examination and your answers, plus payment to: NAPS, 3133 Mount Vernon Avenue, Alexandria, VA The processing fee for the continuing education units for each NAPS independent study course is $10 for members and $20 for non-members. Feel free to reproduce the registration and examination page to allow additional individuals to apply for CEUs. Name: Phone: ( ) Firm Name: Address: City: State: Zip: Current NAPS member $10 Non-member $20 EXAMINATION QUESTIONS Multiple-choice and true/false questions. Circle the response you believe to be correct. Be certain to answer all of the questions. 1. In its enforcement guidelines, EEOC offers the view that staffing firm workers are: a. employees b. independent contractors c. consultants d. none of the above 2. According to the EEOC, which of the following could serve as a basis for filing a complaint against staffing firms that make discrimination assignments? a. the staffing firm is the employer of the temp b. the staffing firm is a third party interferer in the temp s employment opportunities with the client c. the staffing firm is an employment agency discriminating in making a job referral d. all of the above 3. How are the opinions offered by EEOC typically viewed by the courts? a. typically they will not be considered by the courts b. the courts are required to use EEOC guidelines in rendering any decision c. typically such opinions are given a great deal of deference by the court d. none of the above 4. If a staffing firm continues to assign workers to a client deemed to have engaged in discriminatory practices, it becomes liable along with the client if those workers are subjected to similar misconduct: a. T 5. The EEOC enforcement guidance is the opinion of the agency charged with enforcing the Civil Right Act, and, as such, represents the last word on co-employment as it applies to all aspects of the staffing industry:

6 a. T 6. Under Title VII of the Civil Rights Act, a company with at least 15 employees can be liable for discrimination against an individual who is not its employee if it interferes with that individual' employment opportunities with another employer: a. T 7. It is the belief of the EEOC that both the staffing firm and its clients can be viewed as employers with the key factor being the right to exercise control over the worker s employment. a. T

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