Temporary Agencies and Third-Party Labor Providers

Temporary work agencies, third-party labor providers, and companies where the employee works, may be individually or jointly responsible for unlawful employment activities.

Temporary work agencies (“temp agency”) or temporary staffing companies provide workers for companies needing short-term labor. If a business needs workers for a short-term project, or to fill-in while another employee is absent, they may contract with a temp agency to meet their short-term labor needs. A third-party labor provider (“3PL”) is a labor broker or distributor that provides workers who devote most or all of their time to another company’s business. A 3PL may provide long-term or semi-permanent workers to another company.
Questions often arise with workers at a “temp agency” or “3PL” company when they suffer unlawful harassment, discrimination, or retaliation. Should the worker complain to Human Resources (“HR”) at the company where they work or to HR at their temp agency or 3PL, and which company is ultimately responsible?

Under the loaned-servant doctrine, a worker formally employed by a temp agency and assigned to work under the control and supervision of a client of the agency is an employee of both the agency and the client company. “If both the staffing firm and its client have the right to control the worker, and each has the statutory minimum number of employees, they are covered as ‘joint employers.’” 1 As such,
both companies are considered the “joint employers” of the worker and responsibility for maintaining a lawful working environment will rest with both companies.

On the other hand, if a 3PL retains total control over the worker, then responsibility for the working environment might remain solely with the 3PL. 1 See EEOC’s Enforcement Guidance: Application of EEO Laws to Contingent Workers Placed by Temporary Employment Agencies and Other Staffing Firms, December, 1997.

Ultimate responsibility becomes less clear when a 3PL worker is controlled by supervisors at the 3PL and also supervisors at the company where they work. If a 3PL worker is hired and assigned by their 3PL employer, but is supervised, disciplined, and controlled entirely by the third-party company where she works, then both companies may be responsible for an unlawful workplace.

Without proper legal analysis, the limits of liability and avenues for complaint among these entities may remain unclear. A worker at a “temp agency” or “3PL” should seek legal counsel promptly when experiencing unlawful harassment, discrimination, or retaliation at work.