Worker Hired by Staffing Agency Can Bring Bias Suit Against Client Company



An employee hired by a temporary staffing agency and assigned to work at a manufacturing company could proceed with sexual-harassment and retaliation claims against the manufacturing company, a California appellate court ruled. Because the manufacturer exercised significant control over the terms and conditions of the plaintiff's employment—and ultimately made the decision to fire her—it was considered the plaintiff's employer for her bias claims under the California Fair Employment and Housing Act (FEHA), the court said.

The defendant, which makes shoe care products, contracts with a staffing agency and fills many of its positions with temporary workers. The plaintiff worked at the manufacturing company as a temporary employee for five years before her employment was terminated. Prior to being terminated, she was performing a supervisory role in the company's production department, overseeing as many as 30 workers, including both temporary and direct employees. The plaintiff's supervisor was a direct employee of the manufacturing company.

The plaintiff, like the manufacturer's other temporary employees, was placed by the staffing company, which paid the workers their wages and benefits. The manufacturer, however, had the ability to fire temporary employees.

The manufacturer investigated a bullying complaint made against the plaintiff, concluded that she had violated the company's anti-bullying policy and issued a warning under its progressive disciplinary process.

During the same period, the plaintiff claimed a co-worker was sexually harassing her. She complained to both the staffing agency and the manufacturer. Both companies investigated but found no supporting evidence for the allegations.

The manufacturer later fired the plaintiff.

She subsequently sued the manufacturer for sexual harassment and retaliatory discharge in violation of FEHA. A jury found that the manufacturing company was not the plaintiff's employer and therefore couldn't be liable under FEHA. It did not consider the merits of the plaintiff's harassment and retaliation claims.

Definition of Employee Under FEHA   

FEHA does not define the term "employee," but the administrative agency charged with interpreting FEHA, the Fair Employment and Housing Council (FEHC), does. The FEHC defines an employee as "any individual under the direction and control of an employer under any appointment or contract of hire," whether that control is expressly stated or implied in oral or written communication.

[SHRM members-only HR Q&A: What is FEHA and what does it cover?]

FEHA requires an employment relationship, the court said, but that relationship need not be direct. The employer's exercise of direction and control over the employee is key. Courts will consider whether the employee must obey instructions from the supposed employer and whether the employer could fire the worker.

The FEHC's regulations further provide that a worker who is paid by a temporary agency and works for a third party may be considered an employee of the third party "for such terms, conditions and privileges of employment under the control of that employer."

In this case, the manufacturer did not hire, pay or provide benefits to the plaintiff, nor did it track her time. However, the court said, none of that was relevant because the plaintiff's claims concerned the terms and conditions of her employment at the manufacturing company and her firing, not her hiring or compensation.

Considerable evidence showed that the manufacturing company exercised direction and control over the plaintiff's employment, the court said. She worked in a supervisory role with responsibility for 30 workers, including direct employees of the manufacturer, and she reported to a direct employee of the manufacturer.

She was subject to the manufacturer's employee handbook and disciplinary policies and was investigated and disciplined by the manufacturer after the bullying complaints were made against her. The manufacturing company also investigated the plaintiff's harassment claims.

Therefore, the court found insufficient evidence to support the jury's finding that the plaintiff was not an employee of the manufacturer for purposes of FEHA. The court ordered that the plaintiff be granted a new trial and the jury be instructed to treat the manufacturer as her employer.

Jimenez v. U.S. Continental Marketing Inc., Calif. Ct. App., No. D075532 (Oct. 17, 2019).

Professional Pointer: The court in this case stressed that whether a worker hired by a staffing agency and assigned to a client is considered the client's employee depends entirely on the facts of the case, and the determination is best made on a case-by-case basis.

Joanne Deschenaux, J.D., is a freelance writer in Annapolis, Md.