The Loyal Matchmaker Dilemma: When Staffing Firms Should Pay for the Sins of Their Client

Abstract

This Article recognizes the “loyal matchmaker” dilemma in employment discrimination law. This dilemma exists when a staffing firm complies with or otherwise acquiesces to its client’s unlawful discrimination against its temporary employee not because of that employee’s race, sex, national origin, disability, etc. Rather, it does so because it sees itself as a loyal matchmaker to the client or because of another lawful reason. In these situations, when should the staffing firm be liable? Employment discrimination law has failed to give a practical, consistent, and flexible liability standard in this context. Generally, courts hold the staffing firm liable only if it is a joint employer with the client and it had constructive knowledge of the discrimination and failed to take corrective action. Other potential liability standards include forms of strict liability or no liability whatsoever for its client’s unlawful discrimination. Drawing from Professor Jeremias Prassl’s work on a functional conception of the employer, this Article proposes a liability standard to apply here—the functional liability standard. This standard holds the staffing firm strictly liable for its client’s discrimination that directly implicates one of the staffing firm’s employer functions. A staffing firm’s employer functions may include paying wages, providing work, controlling the internal work processes, and beginning and ending the employment relationship. A staffing firm can escape liability if it shows that it reasonably accommodated the employee’s harm. This standard provides the flexibility, ease, consistency, and fairness lacking in other potential liability standards. With this proposal, the Article expands upon existing scholarship on employer responsibility, membership causation, and theories of the employment relationship in U.S. employment discrimination law.