February 23, 2018

Clients of a nationwide staffing agency that allegedly honored company requests not to refer black workers for temporary gigs whiffed in their bid for an early exit from a proposed class action accusing them and the agency of racial bias.

No direct contractual relationship existed between the five workers who filed the lawsuit and the seven client companies, but that doesn’t mean the employees and other potential class members lack standing to sue the companies under 42 U.S.C. § 1981, the U.S. District Court for the Northern District of Illinois ruled Feb. 22. The contracts or potential contracts between some of the workers and the staffing agency, MVP Staffing, are good enough, the court said.

The lawsuit involves the emerging issue of “customer preference discrimination.” The Equal Employment Opportunity Commission, which enforces federal race discrimination laws against private-sector employers, signaled in its strategic enforcement priorities for fiscal years 2017 through 2021 an intent to increase scrutiny of this form of job bias in the temporary, on-demand, and similar “complex” employment relationships that have taken hold in the contemporary workplace. And Joseph M. Sellers, one of the lawyers representing the proposed class, made clear to Bloomberg Law that the private plaintiffs’ bar has also begun to mobilize to root out this type of discrimination.

Cases like this focus on “a fast-growing industry that’s critical” to the U.S. economy, Sellers said Feb. 23. Staffing agencies have become the “gatekeepers for many jobs,” especially those with lower-level skill and educational requirements, he said.

For applicants who seek these jobs, their relationship with a staffing agency is often “the difference between being employed and not being employed,” he said, adding that this is just one of seven similar cases his firm currently has pending. Sellers is a partner in Cohen Milstein Sellers & Toll PLLC in Washington.

And there are other similar lawsuits underway brought by Cohen Milstein’s co-counsel in the MVP Staffing case, he said.

All of the cases so far involve staffing agencies and client companies in the Chicago area, Sellers said. He said his firm is learning of similar staffing industry practices in other cities and may be bringing similar lawsuits elsewhere before the end of this year.

The client companies are included in these lawsuits so the problem can be addressed “globally,” Sellers said.

The companies’ attorneys didn’t respond Feb. 23 to Bloomberg Law’s request for comment.

Case Still in Early Stages

But Sellers stressed that the case against MVP Staffing and seven of its clients is still in the early stages. The seven client companies are Segerdahl Corp.; Mercury Plastics Inc.; MPS Chicago Inc., which does business as Jet Litho; Penray Cos.; Advertising Resources Inc., which does business as ARI Packaging; Lawrence Foods Inc.; and Blommer Chocolate Co.

In rejecting the client companies’ motion to dismiss them from the case, Judge John J. Tharp Jr. said Section 1981, a 1866 Reconstruction-era law, prohibits race discrimination in the making and enforcement of contracts. The employees’ complaint, he found, sufficiently alleges they had actual or proposed contractual relationships with the staffing agency, with which the client companies interfered, the judge said.

The complete article can be accessed here.