Many employers use temporary staffing agencies and recruiting agencies for hiring workers, in part, in order to insulate themselves from liability for potential discrimination, retaliation, and wrongful termination claims. They believe and are often advised that if their workers are hired through and are paid by an outside agency, then they will be off the hook for any such claims. However, this is not necessarily the case, as California law often finds “dual employment” relationship in these types of situations.
California FEHA (Fair Employment and Housing Act) that governs state discrimination and retaliation claims does not define “employee,” but the administrative agency charged with interpreting FEHA—the Fair Employment and Housing Council (FEHC)—does define the term in Gov. Code section 12935. The FEHC defines “employee” as “any individual under the
direction and control of an employer under any appointment or contract of hire or apprenticeship, express or implied, oral or written.” FEHA thus requires an employment relationship, but that relationship need not be direct. Instead, the employment relationship must show the employer’s exercise of direction and control over the employee. Direction and control may be shown by, among other factors, whether the employee must obey instructions from the employer and whether “there was a right to terminate the service at any time.”