United States: Executive Recruiter Not Liable For Hiring Bias, Court Says

Last Updated: December 19 2018
Article by Robin E. Shea

The decision could be a big help to recruiters, staffing companies, and employment agencies.

When might a recruiter be liable for a discriminatory hiring decision?

A federal judge decided this week that an executive recruiter was not responsible for the employer's decision to eliminate a female General Counsel candidate from consideration -- allegedly because of sex discrimination.

Thus, the court ended a lawsuit by Ileana Simplicean against executive recruiting firm SSI, Inc., and two of SSI's former employees.

According to Ms. Simplicean's proposed amended lawsuit, she was recruited by SSI to apply for a General Counsel position with Visteon, an automotive parts supplier that was spun off from Ford Motor Company.

In addition to asking Ms. Simplicean to apply for the position, the recruiter conducted an initial screening, which included an interview. After the interview, the recruiter put Ms. Simplicean on the "short list" for the Visteon position, and submitted her name along with the names of two male candidates.

Visteon, however, eliminated Ms. Simplicean from the list of finalists, allegedly after hearing that she was better as a second-in-command than as a leader.

Ms. Simplicean did not sue Visteon, but she sued SSI and the two ex-employees for sex discrimination under Michigan's Elliot Larsen Civil Rights Act, which is similar to the federal Title VII with a few extra protected categories (the ELCRA also prohibits discrimination based on age, height, weight, marital status, and familial status).

The judge rejected all of Ms. Simplicean's theories as to why SSI and its employees, rather than Visteon, should be liable for the alleged bias.

NOTE: Because Visteon was not sued, it has not had an opportunity to respond to the lawsuit. Ms. Simplicean may have been taken out of consideration for legitimate reasons having nothing to do with her sex.

First, Ms. Simplicean argued that SSI was an "agent" of Visteon. The court rejected this contention because the proposed amended lawsuit did not sufficiently claim that SSI "made personnel decisions, controlled a term of [Simplicean]'s employment, or exercised significant control over [Simplicean]'s hiring."

Second, Ms. Simplicean argued that SSI was liable as an "employment agency" within the meaning of the ELCRA. Similar to Title VII, the ELCRA prohibits employment agencies from failing or refusing to "procure, refer, recruit, place . . ., or otherwise discriminate" "based on sex." The problem here, the court said, was that Ms. Simplicean did not plausibly claim that SSI did this. To the contrary, she alleged that SSI sought her out for the position and put her on the short list of three finalists. Thus, she could not proceed on this theory.

Finally, Ms. Simplicean contended that SSI "aided and abetted" Visteon in discriminating against her because of her sex. The ELCRA prohibits two or more persons from conspiring to violate the law, but a "conspiracy" case requires, among other things, that the defendant "knowingly and substantially assisted the principal act of discrimination." The court found that Ms. Simplicean's proposed lawsuit did not plausibly allege that SSI "knowingly and substantially" assisted in Visteon's decision to remove Ms. Simplicean from the list of finalists.

(The court did refuse to sanction Ms. Simplicean for seeking to amend her lawsuit, finding that she had a good-faith basis for having done so.)

Fun with joint employment

An employer makes a decision that is allegedly discriminatory, and the employee or applicant files a claim not only against the employer but also against a recruiter, employment agency, or staffing agency. Or the agency makes the decision, and the employer gets sued. What's a good general strategy in these situations?

No. 1: Coordinate immediately. Not to "conspire," or to make up a "story" about why the decision was made, but to honestly determine who made the decision that is at issue in the case. Did a recruiter screen out a candidate without the employer's knowledge? Did the employer decide on its own to release a worker who came through a staffing agency? Was the decision made by the agency and the employer together? It's best to figure this out as early as possible and to proceed accordingly.

No. 2: Don't "scapegoat" the other entity. This is so tempting. But rather than point fingers at the other entity in an attempt to avoid liability, the responsible party is better off "owning" the decision and defending it. (Employers, this is true even if you have an indemnification agreement with your agency.)

No. 3: Assuming the decision was legal, defend as a united front. In every one of these cases that I have handled, the decision at issue was perfectly legitimate, even though it resulted in a charge or lawsuit. If you're in the right, you have nothing to gain by being adversarial with your co-entity. Coordinate with counsel for the other entity, and get rid of that case as a team!

No. 4: Assuming the decision was -- er -- problematic, resolve the case as a united front. If you and your co-entity are able to determine early in the litigation who will pay for what, and can do it without acrimony, that is ideal. If there is an indemnity agreement, it may be as simple as re-reading the agreement.

But maybe it's not so easy to resolve that issue at the beginning. If not, and if you have to pay all or part of a settlement because your staffing agency messed up, then continue to cooperate with the agency until the case is over. Then you can decide whether to pursue reimbursement from the agency, or whether to continue your relationship. If you're the agency, and you're having to settle because your client-employer messed up, do likewise. Even if you can't get compensation from the employer (who, after all, is your client), you can decide afterward whether this is a relatively minor cost of doing business with a great client, or whether the client-employer is more trouble than it's worth.

The worst thing that either of you can do is jeopardize your defenses and settlement leverage by playing the blame game.

A final disclaimer: The above tips apply in the normal situation, where both agency and employer are decent and trying to comply with the law. In the rare situation where either the agency or the employer is evil incarnate (for example, a staffing agency that engages in human trafficking), and the other entity isn't aware of it until after the charge or lawsuit is filed, the innocent entity will want to separate itself as quickly and thoroughly as it can.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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