Staffing Firms and Payrolling Vendors Beware: You Can Be Held Liable for the Acts of Your Client Company under Title VII of the Civil Rights Act

by Jason D’Cruz, Partner at Morris, Manning & Martin, LLP and

Tali Hershkovitz, Associate at Morris Manning & Martin, LLP

Through application of the joint employer doctrine, payrolling vendors, staffing firms, and other human capital suppliers may be held liable for the actions of their client companies under Title VII of the Civil Rights Act of 1964 (“Title VII”).    This article summarizes the potential liability and provides guidance to minimize the risk.

Title VII and Joint Employment

Title VII prohibits employers from discrimination against “any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex, or national origin.”  The statute defines the term “employer” as “a person engaged in an industry affecting commerce who has fifteen or more employees for each working day in each of twenty or more calendar weeks in the current or preceding calendar year,” and the term “employee” as “an individual employed by an employer.”

While payrolling vendors and staffing firms are generally aware that Title VII applies to their own workers, these entities generally are not aware they also may face liability for claims brought by their workers who are assigned to perform services for client companies even if the alleged wrongdoing was committed by the client company.

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