Key Takeaways
- Staffing firms can be held liable for discriminatory client demands—even when acting at a client’s direction.
- The EEOC is willing to pursue systemic staffing cases without an individual employee complaint.
- Failure to train, document, and audit referral practices increases legal exposure.
- Strong compliance policies—and the willingness to push back on clients—are critical risk-management tools.
Staffing firms across the country are facing increased scrutiny from the federal government over how they respond to client demands—and a new lawsuit can provide lessons for your organization. In September, the Equal Employment Opportunity Commission filed a lawsuit accusing a South Carolina-based agency of refusing to hire or refer women for laborer positions at a client’s plant. According to the agency, the case shows how staffing firms can be held liable for workplace law violations, even if they claim to just be “following orders” from clients. Even though the lawsuit merely consists of allegations at this point, staffing firms should take note of the legal theories at play—and consider compliance lessons this lawsuit can impart.
When Client Demands Cross the Line
The EEOC’s complaint, filed in federal court in Alabama on Sept. 29, alleges that a staffing firm systematically excluded women from laborer jobs they placed at a client company in Alabama between August 2020 and August 2023.
Key allegations include
- Client preference for men: Client company managers allegedly told the staffing firm’s branch staff that the company, which recycles oil-contaminated electrical equipment, would only accept male workers. The EEOC claims that the client company would sometimes make reference to their preference for male workers who were “heavy lifters.”
- Explicit instructions from management: The EEOC claims that the client company’s president directed that women not be assigned to plant-floor laborer roles.
- Female candidates blocked: Female applicants were allegedly told that jobs were “male-only” or that positions were no longer available, despite openings. The lawsuit claims that the staffing firm told a woman that she might be a good fit for placement at the client based on her work history, but she was later told the position was no longer available.
- Failure to train staff: The EEOC says the staffing firm failed to train its employees to resist unlawful client preferences.
The lawsuit stems from a Commissioner’s charge—not an individual worker complaint. This means that the agency itself took interest in this investigation and launched the claim, demonstrating the EEOC’s willingness to pursue staffing claims even absent an employee-initiated charge.
Why Staffing Firms Are Uniquely Exposed
Unlike direct employers, the staffing industry faces unique challenges when it comes to legal exposure:
- Act as both employer and employment agency. The EEOC complaint pleads both theories of liability, covering the staffing firm’s role as a direct employer and as a referral source. Staffing firms face potential double exposure to such claims.
- Sit at the intersection of client demands and federal law. Staffing firms often face business pressure to meet client requests, but Title VII prohibits compliance with discriminatory preferences.
- Have systemic impact. Because staffing firms often serve as the primary hiring channel, their actions can shape entire workplaces and draw heightened scrutiny.
In a press release announcing the litigation, the EEOC said the lawsuit was necessary to ensure women had equal access to employment opportunities, stressing that “staffing agencies cannot act as gatekeepers for discrimination.”
The staffing firm responded to media reports by noting it has never faced a similar claim in its history and is actually woman-owned and -operated. It’s important to note that these claims are merely allegations at this point, and that the staffing firm has not yet had the chance to respond to the complaint in court.
Even if the allegations turn out to be disproven, however, the lawsuit itself outlines key lessons staffing companies can glean.
Managing Client Risk: Five-Step Plan
For staffing firms, there are five key steps to take to minimize liability:
- Train your team. Recruiters and branch managers should be trained to reject discriminatory client instructions and immediately escalate those issues to internal decision-makers.
- Document refusals. Keep written records when you decline to follow unlawful requests.
- Review contracts. Ensure client service agreements explicitly prohibit unlawful hiring preferences.
- Audit referral patterns. Regularly check whether certain groups are being excluded from particular assignments.
- Have a response protocol. Develop a plan for what happens when a client insists on discriminatory criteria—up to and including ending the relationship.
Staffing firms face stiff competition for clients and constant pressure to keep the client happy and satisfied. However, this lawsuit demonstrates that the “client is always right” notion has limits. Staffing firms need to constantly balance client demands against legal risk and liability.
