Tuesday, November 24, 2015

Did You Know That a "Temp" Can Also Be An "Employee?"

For all you employers out there who regularly rely on "temp" agencies to supply individuals to fill gaps your day-to-day operations and cover for exigencies that arise, a recent decision from the Third Circuit Court of Appeals should give you pause and (perhaps) yet another thing to worry about (yay, law!)

In Faush v. Tuesday Morning, Inc. (available here), the Third Circuit held that a "temp" worker assigned by a temp agency to work at Tuesday Morning, Inc., could be considered an "employee" of Tuesday Morning for claims of race discrimination under Title VII and the Pennsylvania Human Relations Act (PaHRA).

The factual scenario was rather unremarkable and probably familiar to most employers. Tuesday Morning (a home-goods retailer) was in the process of opening a new store in Pennsylvania. But because it didn't yet have a full complement of employees at the new store, it needed to bring in some "temp" workers as a "stopgap measure." So, Tuesday Morning contracted with Labor Ready, a temp staffing firm, for help. One of the individuals Labor Ready sent to work at Tuesday Morning was Matthew Faush. Faush was an employee of Labor Ready, and only worked at the Tuesday Morning store for a few days. He claimed that while there, he and other African-American "temp" employees were subjected to racial slurs and abuse by white workers and the manager of Tuesday Morning. Faush filed suit against Tuesday Morning under Title VII and the PaHRA, claiming he was an "employee" of Tuesday Morning and had suffered from unlawful race discrimination.

Tuesday Morning sought (and won) a legal ruling from the trial court dismissing Faush's case on the basis that Faush was not its employee.

The Third Circuit disagreed.

After examining all the facts, the Court held that while Labor Ready set Faush's pay rate, paid his wages, taxes, and social security, and maintained his workers' compensation insurance, those factors did not foreclose Tuesday Morning's classification as Faush's "employer." Specifically, the Court noted that Faush worked exclusively at Tuesday Morning's store and Tuesday Morning assigned Faush all of his job tasks, which were the same or similar to those Tuesday Morning assigned its regular employees. Tuesday Morning supplied Faush with all of the tools and materials he needed to complete his assignments, verified his working hours, directly supervised his tasks, and provided him with site-specific training. The Court also found that by because Tuesday Morning paid Labor Ready an hourly rate that was dependent upon the number of hours Faush worked (including any potential overtime), Tuesday Morning was really "indirectly pa[ying] [Faush's] wages, plus a fee to Labor Ready for its administrative services." The services contract between Labor Ready and Tuesday Morning also provided that Tuesday Morning retained ultimate control over whether Faush was permitted to work at its store, and could request a replacement employee for Faush at any time. The agreement even referred to Faush (and all of the other "temp" employees supplied by Labor Ready) as "Temporary Employees,"of Tuesday Morning, and required Tuesday Morning to maintain a workplace that was "free from discrimination and unfair labor practices," in compliance with "all applicable federal, state and local laws and regulations concerning employment," including Title VII. The Court thus held that it was ultimately up to a jury to determine whether, on these facts, Tuesday Morning was Faush's "employer."

This case serves as a stark reminder for employers that sometimes, employees can have two "masters" (or as the law refers to it, "joint employers.") Just because an employer brings on a worker from a temp agency on a short-term assignment and the worker gets his/her paycheck and W-2 from the temp agency, does not automatically mean the employer is immune from claims under the federal and state anti-discrimination laws.

So, the take-away practice tip for employers here is: make sure to treat your "temp" workers the same way you treat your regular employees, because at the end of the day, the law may already be doing so.