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Flexible Staffing Arrangements

A Report on Temporary Help, On-Call, Direct-Hire Temporary, Leased, Contract Company, and Independent Contractor Employment in the United States

Susan N. Houseman
August 1999

9.7 Anti-discrimination Laws

Title VII of the Civil Rights Act of 1964 prohibits discrimination in employment on the basis of race, color, sex, or ethnic origin; the Age Discrimination in Employment Act (ADEA) prohibits discrimination against employees 40 years and older; and the Americans with Disabilities Act (ADA) prohibits discrimination in employment on the basis of disabilities and requires that employers reasonably accommodate individuals with disabilities who can otherwise perform a job. As with other labor standards, independent contractors generally would not be covered by anti-discrimination laws.

It is often alleged that companies can avoid liability for discriminatory behavior by using agency temporaries, leased employees, or contract company workers in lieu of their own staff. While the staffing firm clearly is liable for discriminatory behavior, the client firm may also bear some liability. For instance, the ADA specifically prohibits a business from participating in an arrangement that results in the discrimination against a disabled applicant or worker; thus, both the client and the staffing firm are legally liable for discrimination under ADA.22 The other anti- discrimination statutes do not specifically deal with joint liability, and the issue has been left for the courts to resolve. Title VII and ADEA may protect those who are not legally employees or applicants for a job in a client company if the client company controls access to employment or the conditions of employment (Pranschke 1996).

In sum, employment, labor, and related tax laws often set hours or earnings thresholds that exclude many part-time, on-call, and temporary workers from coverage. Such thresholds are usually justified on the grounds that the excluded workers demonstrate insufficient attachment to the workforce or that without such exclusions the law would impose undue costs on businesses. However, the widespread and growing use of workers in flexible staffing arrangements raises questions about whether current thresholds are set too high and whether protection of these workers is adequate.

Moreover, coverage of workers in flexible staffing arrangements is simply unclear in many areas of the law. Concern that some employers use independent contractors or staffing firms to circumvent labor standards has prompted Congress, the IRS, and a few states to clarify laws and curb such abuse. However many issues related to who is an employee and who is the employer-which get to the core of which workers are covered by these laws and which employers are liable for their coverage-are being decided by the courts and remained unresolved.

(22) Klein (1996) points out, however, that the law does not specify who—client or staffing firm—is liable to bear the cost of accommodating a worker's disability.

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