In a Title VII race discrimination action, the U.S. Court of Appeals for the Third Circuit considered whether a temporary worker assigned by a staffing agency to a retail store was a joint employee of the agency and store. As Faush v. Tuesday Morning, Inc. shows, the control companies exercise over workers can make all the difference.

Temp accused of theft

The African-American plaintiff was assigned by a staffing company to work at the retail store for 10 days. The plaintiff alleged that, while he was working at the store, the store manager accused him and other temporary African-American workers of stealing. In addition, the store owner’s mother allegedly instructed the workers to “work in the back of the store with the garbage” until it was time for them to leave.

When the plaintiff and the other workers tried to complain, a white employee blocked their path and used racial slurs. In response to the workers’ complaints, the store manager stated that they weren’t permitted to work on the floor because of loss prevention concerns. The plaintiff also claimed that he and the other African-American workers were terminated because of their race.

The plaintiff brought suit against the store for race discrimination under Title VII. The trial court granted the store’s motion for summary judgment, finding that the retailer wasn’t the plaintiff’s employer pursuant to Title VII. Therefore, the plaintiff couldn’t sue the store for employment discrimination. The plaintiff appealed.

Court consults Darden

The appeals court partly affirmed and partly vacated the trial court’s decision, holding that a rational jury could find that the store was the plaintiff’s employer. The court applied an employment relationship test laid out by the U.S. Supreme Court in Nationwide Mutual Insurance Co. v. Darden, which considers “the hiring party’s right to control the manner and means by which the product is accomplished.”

Darden provides a list of nonexhaustive factors when determining whether a hired party is an employee, including:

• Skills required of the worker,
• Who provides work instruments and tools, n Who assigns projects,
• Location of the work,
• Duration of the relationship,
• Extent of the hired party’s discretion over work,
• Method of payment, and
• Whether the work is part of the hiring party’s regular business.

The court found that the store had ultimate control over whether the plaintiff worked at its store and it exercised control over the daily activities of the temporary workers. For example, the store gave the plaintiff assignments, supervised him and provided him with any tools. The store also managed him as it did its nontemporary workers and approved the number of hours he worked — factors that led to an employer-employee relationship.

The court held that, while the staffing agency set the plaintiff’s pay rates and withheld required taxes, the store indirectly paid the plaintiff when it paid the staffing agency for each hour worked at the agreed-upon rate. Furthermore, the agreement between the staffing agency and the store could lead a rational jury to find that the plaintiff was an employee of the store. The agreement provided, among other things, for the store’s approval of the worker’s time cards and characterized the worker as a temporary employee and not an independent contractor. Moreover, pursuant to the agreement, the store agreed to comply with all applicable laws concerning employment — including the hiring and discharge of employees.

Judicial trend

As Faush illustrates, companies that use a staffing agency may not be protected from liability for employment discrimination claims. The case reflects a recent trend in which courts and administrative agencies have been more willing to consider staffing agencies and clients to be joint employers. The same may hold true for contractors and subcontractors, and franchisors and franchisees. The extent to which companies control workers is critical to such findings.