On April 7, 2020, the California Court of Appeals (the “Court”) upheld summary judgment for two professional employer organizations (referred to in the decision as a “staffing agencies”) accused of harassment and discrimination by one of its “leased” employees. In Ducksworth v. Tri-Modal Distribution Services, the Court found that joint employers—and more specifically staffing agencies—cannot be held liable for harassment and discrimination claims absent a showing that they participated in or were involved in the alleged wrongful conduct.

Plaintiffs Bonnie Ducksworth and Pamela Pollock worked for decades as customer service representatives at Tri-Modal without ever being promoted, although Tri-Modal had promoted others. The two sued Tri-Modal Distribution Services and the two staffing agencies, Scotts Labor Leasing Company, Inc., and Pacific Leasing, Inc., that were their technical employers, claiming that they were denied promotions on account of their race. They brought claims of harassment and discrimination against all three companies.

Scotts and Pacific moved for summary judgment on the grounds that they could not be held liable because they were completely uninvolved in Tri-Modal’s promotion process and decision-making and were similarly uninvolved in the alleged harassment. The trial court agreed and granted their motion. Plaintiffs appealed.

In affirming summary judgment for Scotts and Pacific, the Court relied on several undisputed facts, which established that Scotts and Pacific had no involvement in the alleged wrongful conduct. For example, plaintiffs admitted that the staffing agencies had no input, nor did they have any “authority or make any decision the regarding the promotion of any employees leased to Tri-Modal.” Further, the plaintiffs admitted that they never made any work-related complaint to either staffing agency and never requested a raise or promotion from either. Moreover, Scotts and Pacific did not engage with the Plaintiffs on a day-to-day basis.

The Court held that Scotts and Pacific were essentially “innocent bystanders” and because of their lack of involvement could not be held liable simply by virtue of being the entities that leased the plaintiffs to Tri-Modal. The Ducksworth decision offers guidance to employee leasing companies, staffing agencies and other joint employers, that to reduce the risk of potential liability for workplace claims, they avoid becoming involved in the day-to-day workplace activities and employment related decision-making regarding their assigned employees.