March 19, 1998

WHEN TEMPS ARE HARASSED: WHO'S ON THE HOT SEAT?

Edited by Dennis Berman

The temporary-help industry doubled in size from 1991 to 1997. It now employs about 2.3 million Americans, some of whom complained about discrimination. This caused confusion about who is responsible: The temporary-help company or the company that brought the employee on premises?

The Equal Employment Opportunity Commission, or EEOC, last December issued "guidance" to explain when a company can be liable for discrimination against a temporary worker. You must spot fine lines if you have to deal with them. I recommend that you buy a large and powerful magnifying glass.

STAFFING AGENCIES AND CONTRACTORS: EEOC guidance affects two deals. The first kind involves workers furnished by a staffing agency. As a rule, the agency hires employees, pays them, remits taxes, and buys workers' compensation insurance. These people are outside the employer's "core" group. They work for a limited time or sporadically. While they are on the job, however, the company leasing these workers is responsible for supervision and control.

Contract firms are the second class of temporary-help agencies. Such businesses put employees out on others' business premises, but the contract firm sends its own managers along to supervise and control the work. Janitorial and security services are typical contract suppliers of temporary help.

The EEOC's guidance rules calls temp employees "contingent workers." New guidelines describe what happens when a contingent worker makes a discrimination claim. Such a claim may stem from Title VII of the Civil Rights Act of 1964, which prohibits discrimination because of race, color, creed, gender, and national origin. Other laws enforced by the EEOC and affected by the EEOC's guidance statement include the Equal Pay Act, age-discrimination statutes, and the Americans with Disabilities Act.

MANUAL FOR INVESTIGATIONS: Bear in mind that the EEOC guidelines are instructions to the agency's investigators. They tell agency staff how to operate when someone files a charge of harassment and discrimination. They first require investigators to decide whether the complainant is covered by a one of the statutes enforced by the EEOC. Holding a company responsible for Title VII discrimination, for example, requires that the business have15 employees, including temporary people. But companies with at least one employee are liable for discrimination under the Equal Pay Act.

TEST CASE, PART ONE: You run Jack's Janitorial Inc. The company employs about 300 people, most part-time, who work after hours cleaning buildings. You send managers and supervisors out with your crews, which your staff supervises. One of your customers is Fast Lane Inc., where you have a crew of 20 people.

Jack's assigns Agnes, a janitorial worker, to Fast Lane. She shortly complains to both Fast Lane and Jack's about dirty pictures and nasty jokes at work, and propositions from Fast Lane's staff. The work environment, says Agnes, is hostile. Agnes is still a full employee of Jack's, the janitorial service, so her work environment -- no matter the location -- is considered Jack's legal responsibility.

Fast Lane says Agnes is nothing but a troublemaker and wants Agnes reassigned. Fast Lane thinks that Jack's, as an independent contractor, can deal with it, right? Not entirely.

Independent contractor? The EEOC guidelines do indeed say that companies that hire independent contractors aren't responsible for the liabilities of businesses like Jack's. But first it must prove that the hired company is an independent contractor, which is determined by a 16-point test similar to that used by the IRS. If Jack's meets all those tests, Fast Lane may be off the hook on Agnes' harassment charge.

But it's not over yet. While Fast Lane may not be guilty of harassing Agnes, it did interfere with her contractual relationship with Jack's by calling Agnes a troublemaker, possibly jeopardizing her job. That looks like a lawsuit.

TEST CASE, PART TWO: Suppose Agnes went back to school and became a brain surgeon. She then went to a temporary-help agency, which leased her out to a local hospital.

Agnes is the only leased employee in neurosurgery. She reports to the hospital's medical staff chief and the head of brain surgery, not to the leasing agency. Sexual harassment again comes up, and the hospital asks that Agnes be reassigned.

Dual employers. In cases like this, the EEOC isn't going to treat Agnes or the temporary-help agency as an independent contractor. The guidelines say that Agnes has two employers, each liable for discriminatory conduct. This is true even though the employee-leasing agency can try to save itself by promptly persuading the hospital to back off and retract its request for Agnes' reassignment.

What's worse for small businesses, the EEOC rules impose joint and several liability in two-employer cases. That means Agnes can recover all her damages against the temp agency or the hospital, whichever is easiest to catch. Ordinarily, if one defendant pays and the other doesn't, the paying party seeks recovery on a right of contribution -- the right of a judgment-paying wrongdoer to recover from a fellow wrongdoer. The EEOC eliminated the right of contribution in this instance. This is a short summary of the latest EEOC rules, which are long, detailed, and complicated. If you're worried about this sort of thing, ask the local EEOC office for a copy of Notice No. 915.002, dated Dec. 3, 1997.

By Martin Paskind in Albuquerque, N.M.Paskind is an attorney who specializes in small-business matters. His column appears weekly in the Albuquerque Journal.