PHILADELPHIA – On Nov. 18, the U.S. Court of Appeals for the Third Circuit decided that employers that hire temporary employees from staffing agencies may be held liable for claims made by those employees.
In Faush v. Tuesday Morning Inc., plaintiff Matthew Faush was employed by Labor Ready, a staffing firm that provided temporary employees to defendant Tuesday Morning.
Faush alleged that while assigned to work at Tuesday Morning for 10 days, he faced racial discrimination by the store manager and eventually was terminated. Faush sued Tuesday Morning for discrimination under Title VII and the Pennsylvania Human Relations Act (PHRA).
Tuesday Morning filed a motion for summary judgment in district court, arguing that Faush was actually employed by Labor Ready, and therefore could not sue Tuesday Morning. The district court granted Tuesday Morning’s motion.
But the circuit court found that a reasonable jury might decide that Tuesday Morning and Labor Ready jointly employed Faush. Judge Julio Fuentes issued the ruling remanding the case to a jury to decide.
Susan Lessack, partner at Pepper Hamilton LLP, told the Pennsylvania Record that the appellate court applied criteria established in the U.S. Supreme Court decision Nationwide Mutual Insurance Co. v. Darden. The Darden test determines whether an employment relationship exists between an employer and employee.
The court decided, because Tuesday Morning indirectly paid Faush’s wages, controlled whether he worked at its store, exercised control over his daily activities, managed him as it did its own employees and gave him similar tasks as it did its own employees, a jury may reasonably find that Tuesday Morning acted as a joint employer and can be held liable.
According to Lessack, this type of relationship between employers, staffing agencies and employees frequently exists.
“It is not uncommon that the Darden factors will be met,” Lessack said. “However, if there were a temporary agency relationship that did not meet those factors, the conclusion could have been different.”
However, Lessack said that most relationships do meet the Darden factors for establishing joint employment, because most employers, not temporary staffing agencies, are the ones that supervise the temporary employees.
“That’s the caveat. The employer where the employees are assigned is going to want to assign and supervise the employees, and in that case, it is difficult to avoid joint employer liability entirely," she said.
The Third Circuit’s decision falls in line with other decisions made regarding temporary agencies and employer liability across the nation, Lessack said. The decision acts as a suggestion to employers to carefully structure their relationships with temporary agencies in order to avoid joint employer liability, when possible.
“There are ways that they can structure that relationship,” Lessack said.
Ultimately, the circuit court is leaving the decision as to whether or not Tuesday Morning is liable for the alleged discrimination up to a jury.
“There was not an ultimate legal finding that [Tuesday Morning] was a joint employer,” Lessack said.