Staffing Agencies Accused of Biased Hiring Grab EEOC’s Attention

The Equal Employment Opportunity Commission has filed at least 10 actions against staffing agencies for hiring discrimination in its just-closed fiscal year, following through on a broader promise to crack down on “non-traditional” employment arrangements that may carry into its next enforcement plan.

The EEOC’s enforcement surge comes as staffing and temp agencies are called on to fill gaps in a tight labor market. Staffing agency sales jumped by 20% in 2021 after a dip during the initial Covid-19 lockdowns, according to the American Staffing Association.

The presence of a “middleman” in the form of a staffing agency can make bringing a discriminatory hiring case under state or federal law challenging, in part because workers placed through agencies are often unaccounted for on EEO-1 disclosures and have little visibility into the jobs for which they’ve been considered.

But both the EEOC and private plaintiffs are still finding ways to target staffing firms, at times even bringing their clients into the fray.

“Using a temporary agency to hire workers isn’t a get out of jail free card for employers,” said Christina Wabiszewski, an attorney at Foley & Lardner LLP.

Commission Goals

The EEOC’s current strategic enforcement plan prioritizes “issues related to complex employment relationships and structures,” while “focusing specifically on temporary workers, staffing agencies, independent contractor relationships, and the on-demand economy.”

Staffing and temp arrangements have come up again as a recommended enforcement objective during the EEOC’s listening sessions for its next SEP, which the commission is expected to vote on by the end of this year.

The EEOC first made it clear through 1997 guidance that it holds staffing agencies responsible for hiring discrimination when they’re placing workers with a client, even if the discriminatory request comes from the client directly.

The commission has held to this view as this type of employment arrangement has become increasingly common. The number of people in the US employed through staffing agencies jumped from 2.5 million in 2012 to over 3 million in 2022, according to the Bureau of Labor Statistics.

In one of a spate of staffing company lawsuits filed near the close of its 2022 fiscal year, the EEOC sued Smart Talent, a Gig Harbor, Wash.-based agency, alleging it complied with multiple client companies’ requests to provide only male workers for open jobs.

The August discrimination complaint only named the staffing agency, but that’s not always the case.

The second an employer makes requests to a staffing agency for candidate characteristics that aren’t work-related, that could trigger the “right to control” aspect necessary to establish a joint employer relationship under Title VII of the Civil Rights Act of 1964, Wabiszewski said.

“Each will be responsible for its own conduct,” said Stephen Dwyer, chief legal officer of the American Staffing Association. “But where there is an added wrinkle is if one party knows or should know that the other is violating the law, then it could be liable.”

Discriminatory Requests

Chris Williams, litigation director for the National Legal Advocacy Network, has worked on cases where employers used terms like “heavies” and “lights” as proxies to make requests for more male or female workers. Some have requested “bilingual” workers to imply they want Hispanic workers over Black workers, among other coded terms used to indicate racial preferences.

Euphemisms like those allegedly were used by California staffing agency BaronHR’s client Radiant Services Corp., a commercial laundry facility, according to a suit filed by the EEOC in September. The complaint states the companies are joint employers because they “shared and exercised control over the terms and conditions of employment” including hiring, discipline, and termination.

Companies seeking workers should carefully review their contract with the staffing agency to understand where liability is shared, and when appropriate, negotiate those terms, according to Wabiszewski. The more discretion that is given to the client company through the contract, the easier it will be to establish joint employer status.

“Generally, during the course of your staffing agency relationship make sure you are working closely with that agency so that if there’s any funny business you can smell that early and either ensure compliance or walk away,” Wabiszewski said.

NLAN conducted a study last year that found 63% of staffing agencies—mostly serving manufacturers—in the Chicago area discriminated against candidates based on their race. The study used matched-pair testing, a method that compares outcomes between people of similar qualifications but different races or gender identities.

But those instances of discrimination can be hard to spot for potential plaintiffs because the worker seeking employment through a staffing agency doesn’t always know what positions they weren’t considered for, according to Williams.

A disabled worker, for example, wouldn’t know if their disability could have been accommodated in a position they were not offered.

Staffing agencies are exempt from filing EEO-1 forms, which contain demographic data that companies with 50 or more workers must report to the EEOC. Their client companies are also not required to account for workers hired through a staffing agency in their EEO-1s.

That makes it difficult for the EEOC or private plaintiffs to prove claims of discrimination, because it leaves no proper record of who was assigned to which positions.

Plaintiffs must rely on costly experts during discovery to use geocoding and census data to determine where the staffing agency fell short in hiring or placing certain demographics, which may deter them from bringing the case at all, Williams said.

“To uncover the discrimination it’s not just about knowing who gets an assignment, it’s about knowing who sought an assignment and never got one,” he said.