Use of Staffing Agencies: Things Companies Should Know
By Julia Méndez, CAAP, PHR, CELS Principal Business Consultant, Peoplefluent Research Institute
On June 29, 2012, the Equal Employment Opportunity Commission (EEOC) announced that BP Exploration and Production, Inc. entered into a voluntary resolution regarding an EEOC investigation in connection with alleged unlawful hiring practices by a staffing agency. In this case, employees were being hired to assist with clean up following an oil spill in 2010. An investigation came about after women complained that they were not considered for selection to work on the cleanup effort based solely on their gender. This resolution involves female applicants in the states of Texas, Louisiana, Mississippi, Alabama and Florida. BP maintains that it has done nothing wrong and is working closely alongside the EEOC to ensure measures are put into place to reduce the likelihood of future non-compliance with EEO laws by contractors.
Terms of Agreement:
Under this agreement, BP and its contractors will pay up to $5.4 million to a class of women in the states covered by the resolution. If there are any undistributed monies left over after disbursement of payments to eligible applicants seeking compensation, they will be donated to a Gulf-area charity which benefits women in the workplace.
The EEOC also applauds “BP’s willingness to aggressively combat sex discrimination in the workplace by sharing its experience and best practices with its peers” and “requiring its contractors to comply with federal employment laws.”
Best Practices for Companies:
This case brings to light several issues that contractors must face when utilizing staffing agencies to meet temporary or long-term needs. First of all, the employer is responsible for EEO compliance by the staffing agency. The organization cannot claim that it was unaware of the staffing agency violating any EEO laws as a defense for discriminatory behaviors.
Which EEO Laws Apply to Staffing Agencies?
The EEOC has published various resources which outline coverage under federal laws for staffing agencies. According to the EEOC, “an employment agency, such as a temporary staffing agency or a recruitment company, is covered by the laws we enforce if the agency regularly refers employees to employers. This is true even if the employment agency doesn’t receive payment for this service, and the agency is covered no matter how many employees it has.”
Not only is an employment (or staffing) agency prohibited from discrimination in its practices of hiring employees to work at their agency, they are also prohibited from adopting any unlawful referrals based on their customers’ requests. For example, if a company hires the staffing agency to refer people to work as Tellers, they cannot ask the agency to screen out Females, or persons over 40, or anyone that falls into a protected class. In this type of situation, both the staffing agency and the company utilizing the staffing agency would be violating laws protected under EEOC’s jurisdictions, and possibly would also be violating local and/or state laws. To see more information regarding employment agency coverage, visit http://www.eeoc.gov/employees/coverage_employment_agencies.cfm
Under the Uniform Guidelines on Employee Selection Procedures (UGESP), employment activity is covered under Title VII of the Civil Rights Act and applies to employers who have 15 or more employees working for 20 weeks or more within a calendar year. This coverage applies to most employment agencies as well. The guidelines require that an analysis be conducted to determine if there is adverse impact in selection decisions. The analysis would demonstrate whether or not the selection process disproportionately ruled out members of a protected class. If so, unlawful discrimination could potentially exist. The employer would then be required to conduct an analysis of each step of the selection process to determine which step caused the adverse impact. Once that is determined, the question becomes “was the step validated?” If so, the employer would then need to ask an additional question, “is there another test that can be given in its place which would still be an excellent indicator of future success on the job, BUT would reduce or eliminate adverse impact?” If there is such an alternate test available, the employer would be required to discontinue using the current test and switch to a test which would produce more favorable results. If no such test is available, the employer may continue using the current test. If the test was not validated, the employer can decide whether to discontinue using the test or to have the test go through a validation study.
In order to conduct adverse impact analysis, it is critical that the employer keep accurate and complete records on applicants to include the final disposition classification, as well as information on race/ethnicity and gender. It is a requirement that applicants be given the opportunity to self-identify this information. Both self-identification forms, as well as job applications and any other documents submitted for consideration for a job, must be retained for the federally required recordkeeping period. For most contractors, the timeframe would be two years.
How Does this Case Impact Federal Contractors?
Whenever a company decides to enter into a contract with the federal government, it agrees that by doing so, it will abide by equal employment laws and affirmatively hire females, minorities, persons with disabilities, and veterans. More and more we are seeing instances where a company is contracting with a staffing agency, and the staffing agency is not abiding by these laws. Not only are federal contractors required to abide by laws governed by the EEOC, they are also required to abide by Executive Order 11246, which requires that the contractor proactively put forth good-faith efforts to attract, hire, and promote females and minorities. Contractors also are required to abide by Section of the Rehabilitation Act and Vietnam Era Veterans’ Readjustment Act (VEVRAA), both of which require affirmative action in attracting and selecting persons with disabilities and veterans, respectively.
Under VEVRAA, federal contractors also have the added obligation of posting all job openings (outside the three regulatory exceptions) with their local/state employment office. Therefore, if a staffing agency is utilized as a means to “try out” potential future regular employees, the contractor needs to ensure that the agency is posting positions with the state employment office OR the contractor should be posting positions with the state employment office in conjunction with utilizing the staffing agency.
Federal contractors also are required to perform statistical analysis to determine whether or not the incumbency in each of their job group classifications reflects what is available to them at the time of the annual affirmative action plan. This availability is derived by analyzing both externally available labor pools as well as reviewing the availability of employees internally eligible for promotions. Other factors such as college recruiting and other custom employment sources can be weighed into deriving total weighted availability. Whenever the difference between incumbency and weighted availability is statistically significant, the contractor is required to set a Placement Goal which is equal to calculated weighted availability for the job group(s).
The contractor is then required to take good faith efforts and come up with specific, action-oriented programs to increase the likelihood of attracting and selecting candidates in the underutilized job group.
If a contractor utilizes a staffing agency, it is important that the agency is referring a group of candidates diverse enough to allow them the opportunity to meet or exceed the Placement Goals.
In conclusion, all companies should be mindful that not only are they required to abide by equal employment opportunity laws, but also are responsible for compliance by staffing agencies that they utilize in getting contingent workers. In order to ensure compliance, it is worth the extra effort to put verbiage in the contracts with these agencies ensuring that they are abiding by Title VII of the Civil Right Act as well as all other EEO laws, utilizing the state employment office as required, utilizing self-identification forms for gathering race/ethnicity and gender, and maintaining proper applicant flow and other support records for the required period.