Staffing Agency Employee May Sue Multiple Employers for Wrongful Discharge, Federal Court Rules

by BakerHostetler

Whose employee is it anyway?

The answer may be everyone’s.

Companies who use staffing agencies to supply workers may be considered joint employers of those workers, even if the staffing agency hires and pays the workers. Both companies may be held liable for retaliation and wrongful termination, a federal court in New York has just ruled. While this decision is consistent with previous rulings by federal and state courts, it should serve as a reminder that companies are not insulated from defending employment discrimination claims just because the worker is technically employed by a staffing agency.

In Hexemer v. General Electric Company, et al., Case No. 1:12-cv-1808 (N.D. N.Y), the plaintiff had been working as a project consultant for staffing agency GID Global, LLC, where she was assigned to a General Electric facility in Schenectady, New York. Her responsibilities included updating GE power plant manuals, providing Microsoft Office training, and designing a web page for GE. She was hired and paid by GID, not GE, and her employment contract with GID specified that she was an employee of GID, not GE.

In October 2012, Hexemer made a comment to two other workers that sitting at their desks promoted weight gain. One of the other workers, a GE employee, allegedly berated her for the comment, calling her uncivilized and saying that such talk might be acceptable in Hexemer’s home country of Iran, but not in the United States. Hexemer tried to complain to supervisors at GE but they were unavailable, so she complained to a GID supervisor instead. Six days later, GID terminated Hexemer’s employment.

GID told Hexemer that GEhad made the decision to terminate her from the project after learning of the confrontation. Since GID had no other work lined up for her, GID terminated her employment.

Hexemer sued both GID and GE. She alleged that she was retaliated against for having complained of a hostile work environment and discriminatory treatment. GE filed a motion to dismiss all claims against GE, arguing that Hexemer was not a GE employee and that GE therefore could not be held liable for retaliatory discharge.

The Court denied the motion to dismiss, allowing the claims against GE to proceed. The Court explained that Hexemer’s allegations were sufficient to consider GE her joint employer.

The Court explained that to determine whether a staffing agency employee is a joint employee of the company benefitting from the work, “the predominant focus is the control exercised by the putative joint employer over the plaintiff’s work.” Four factors are typically considered in making this determination:

  • Whether the proposed joint employer selected or hired the worker;
  • Whether the proposed joint employer pays the worker;
  • Whether the proposed joint employer had the ability to dismiss the worker; and
  • Whether the proposed joint employer had the power to control the worker’s conduct.

Even though GE neither hired nor paid Hexemer, and even though Hexemer’s contract specifically stated that she was not an employee of GE, the court ruled that the third and fourth factors leaned toward joint employment and that those two factors were sufficient to consider GE a joint employer, at least at this stage of the lawsuit.

Key Takeaways:

  • Companies who retain staffing agency employees for discrete tasks and projects may be considered joint employers in discrimination and retaliation claims, even if the staffing agency fires the worker.
  • Joint employment will depend on the facts in each case.
  • Contract language identifying the individual as an employee of only the staffing agency does not end the inquiry.
  • There are steps employers can take to try to reduce the chances of being considered a joint employer, but the risk is real:

Companies may be held liable for discriminating or retaliating against the employees of a staffing agency, based on the legal theory that these workers are joint employees of both companies.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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