Handle With Care

When crunch time comes and your business is short-handed, a quick call to a temporary employment agency puts willing workers at your doorstep. So far, so good--but what if one of these temp workers turns out to be a poor match? Simply asking the agency to send a replacement might solve the problem. Then again, it might subject your business to liability for unlawful termination.

Temporary employees have the same rights as any other employee to sue over illegal discrimination, sexual harassment, ADA violations or labor disputes. "Employers mistakenly think temporary employees have fewer legal rights," says Brent Giddens, an employment attorney with the Los Angeles office of Sonnenschein, Nath & Rosenthal. Unfortunately, employers and co-workers often give temporary employees little consideration or respect, and supervisors often feel they can have these employees removed without consequence. That attitude can lead to costly lawsuits.

This may come as a surprise, because the employment agency is supposed to be the employer. After all, the agency handles the recruiting, screening, hiring, placement, payroll and benefits. But when a dispute at your workplace turns into a lawsuit, the worker is likely to sue both the employment agency and your business--plus individual supervisors at both companies. The question for the courts is: Who was the employer? Even if the temporary agency promises to take full responsibility, when both companies are named in the lawsuit, it's up to the court to decide. Typically, courts have determined that the companies are joint employers, with joint liability.

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The longer the temporary employee works at your company and the more supervisory control you exercise, the more likely a court will find you to be a joint employer with the agency. In one New York district court case, a temporary agency sent an African-American woman to work as an administrative assistant for a financial services firm. After two weeks, the firm discharged her, saying her work was unsatisfactory. The woman sued the firm, claiming she was dismissed because of her race, sex and national origin. Before dealing with the merits of the case, however, the court had to rule on whether the firm was a joint employer with the temporary employment agency. Because the firm exercised complete control over her work assignments, hours and means of performance, it was ruled to be an employer, subject to the temp worker's Title VII lawsuit.

In another case, a temporary employee assigned to an auto dealership in Virginia claimed she had been sexually harassed by the general manager, then dismissed by the temporary employment agency when she complained. She sued everyone involved: the temporary employment agency, the dealership, the general manager and the car company. All but the employment agency attempted to remove themselves from the lawsuit, arguing that they were not her employers. Both the district court and the U.S. Court of Appeals for the Fourth Circuit ruled that all defendants controlled some aspect of her employment, so all were subject to her Title VII claim. The general manager and the dealership later settled with the employee, while the temporary agency and the car company were held not liable because they knew nothing of the harassment.

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