Wednesday, July 28, 2010

A chocolate cupcake by any other name…

The EEOC has settled a race and sex discrimination case against a local temporary agency, Area Temps. The EEOC alleged that the agency used code words to identify the race, color, and sex of candidates it placed with employers. For example, hockey player = white male, small hands = females, basketball player = African American men, and chocolate cupcake = young African American women. The EEOC alleged that Area Temps would attach note cards containing the coded phrases to job applications submitted to employers. The settlement will pay $650,000 to a nationwide class of 11,000 people.

The easy lesson from this case is that businesses should never use code words as a proxy to identify protected characteristics such as race and sex. There is also a deeper lesson to take away from this story. Claims against two of the employers who are alleged to have used the coded phrases to make job decisions remain pending in federal court. Employers are often jointly responsible with temporary agencies for acts of discrimination. In dealing with temporary agencies, businesses should be careful not to perpetuate discrimination fostered by the agency. Also, to the extent that you are able, businesses should negotiate indemnification clauses in staffing agreements with temporary agencies, so that if your business is sued for the discriminatory act of the agency, it will defend you (pay your attorneys’ fees) and hold you harmless (pay your portion of any settlement of or judgment on the claims).