Articles - Compliance and Legal

Which is true?  -

1. Third-party recruiters can't be liable for discrimination in recruiting because discrimination laws apply only to employers.

2. Third-party recruiters can't be liable for discrimination in recruiting because they don't actually decide whom to hire.

3. Third-party recruiters can be liable for discrimination in recruiting, but not if they are merely carrying out their clients' discriminatory requests.

4. None of the above

If you chose number 4, you get an "A" for the day. Recruiters do, in fact, have significant legal exposure to employment discrimination claims. Developing a basic working knowledge of discrimination laws and how to reduce legal risk under these laws is vitally important to long-term success in recruiting.

The Implications of Title VII
For simplicity, this explanation is based on Title VII of the Civil Rights Act of 1964, the federal law prohibiting discrimination on the basis of race, color, religion, sex, or national origin. (Other laws prohibit other forms of discrimination, including that based on age, disability, and sexual orientation.)

Coverage of recruiters
There are different ways in which a recruiter may come within Title VII: as an employer, an agent of an employer, and an employment agency.

1. Employer Most obviously, a recruiting business is an "employer" under Title VII if it has enough of own employees -- "fifteen or more employees for each working day in each of twenty or more calendar weeks in the current or preceding calendar year." If recruiters are independent contractors, they don't count and are not protected by Title VII. However, as a later article in this series will explain, you should be very cautious about concluding that recruiters are independent contractors.
2. Agent of Employer Significantly, the Title VII definition of "employer" includes "any agent" of an employer. Title VII has no definition of "agent," so a general definition based on common law applies. The common-law definition can be surprisingly broad. Generally, an agent is "a person or entity . . . authorized to act on behalf of and under the control of another in dealing with third parties" Merriam-Webster's Dictionary of Law.
3. Employment Agency The third way a recruiter may be liable under Title VII is under specific prohibitions applicable to "employment agencies." "Employment agency" is "any person regularly undertaking with or without compensation to procure employees for an employer . . . ." Recruiters may not consider themselves to be employment agencies, but this definition seems to fit perfectly. If you aren't procuring employees for an employer for compensation, what are you doing?

Third-party Recruiters
Is a third-party recruiter an agent of an employer? Let's look at each part of the definition. First, the recruiter appears to be authorized to act on behalf of an employer, its client, in contacting individuals and making preliminary selections. In doing so, the recruiter is performing a part of the employee selection process that would otherwise be done in-house, so this is a classic agency relationship arising from delegation of a responsibility.

Second, there may appear to be some question as to whether the recruiter acts under the control of the client, as often the client's only control is defining the position and basic qualifications, leaving the recruiter to search for candidates independently. However, this may be sufficient control. The definition of "agency" in the Restatement (Third) Of Agency, an influential common-law reference, refers to "subject to" control, not "under control."

Subtle as it may be, this could be an important difference. As a recruiter, you may not be under the client's day-to-day control. But are you not subject to the client's control in that the client can tell you to alter your search in some way? Finally, the recruiter is obviously dealing with third parties, as candidates for employment are third parties with respect to the client-recruiter relationship. The inclusion of "agent" in the definition of "employer" clearly means the client can be liable for the recruiter's discrimination, whether or not the discrimination was the client's idea.

It is less clear that it means a recruiting business can be liable for discrimination if it does not otherwise meet the definition of "employer" (such as if it lacks a sufficient number of employees). But the law certainly can be read this way: as an agent of the client, the recruiter is also an "employer"; thus all prohibitions of discrimination by employers apply.

Prohibited Practices
In terms of the employment practices prohibited by Title VII, there are several significant points for recruiters.

1. Deprivation of Employment Opportunities
2. First, Title VII provides that it is unlawful discrimination for an employer "to limit, segregate, or classify . . . applicants for employment in any way which would deprive or tend to deprive any individual of employment opportunities . . . because of such individual's race, color, religion, sex, or national origin." This means, for example, that a recruiter's actions are unlawful if they discriminatorily deprive individuals of the opportunity to interview with employers, even though the recruiter makes no ultimate hiring decisions. (This is premised on the recruiter being an "employer," through having enough employees or being an agent of an employer.)
   Arguably, some people receiving preliminary consideration by a recruiter, such as through review of an online resume, are not actually "applicants." However, this is not a very strong position, particularly since there is also a broader reference to "any individual," and the "employment agency" prohibitions, discussed next, are not limited to "applicants."
3. Discrimination by Employment Agency
   Title VII also makes it "unlawful . . . for an employment agency to fail or refuse to refer for employment, or otherwise to discriminate against, any individual because of his race, color, religion, sex, or national origin . . . ." This provision appears directly applicable to recruiters, as the decision to refer or not refer individuals for employment is at the heart of the recruiter's function.
4. Blaming the Client for a Discriminatory Request
   A client cannot make a discriminatory request of a recruiter and then hide behind the recruiter. This is because the recruiter is acting as the client's agent, and people are generally liable for unlawful acts of their agents. Conversely, a recruiter cannot discriminate and use the client's discriminatory request as its defense. Client/customer discrimination has never been a defense to discrimination.

Recruiters play an important role in the employee selection and hiring process, and discrimination laws apply because they are not restricted to employers or to final hiring decisions.

About George Lenard

George Lenard, the originator of George’s Employment Blawg,has over twenty years of experience in all aspects of labor and employment law, including preventive law as well as litigation. His special interests include employment discrimination, sexual harassment, and noncompetition agreements. He is currently a managing partner with Harris, Harris, Dowell, Fisher & Harris, L.C.,., in St. Louis, Missouri, and lives in the suburb of University City with his wife, one daughter and two sons.