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Staffing agency lacked standing to sue client company for discrimination

By Kathleen Kennedy-Luczak, J.D.

A staffing agency that was engaged in contract negotiations to provide food service workers to a hospital lacked standing to bring employment discrimination and retaliation claims against the hospital, a federal district court in Texas held. In dismissing the staffing agency’s claims, the court concluded that, as an independent contractor, the agency did not have the requisite employment relationship with the hospital to bring discrimination claims under Title VII or Texas state law (White Glove Staffing, Inc. v. Methodist Hospitals of Dallas, September 7, 2017).

Failed contract negotiations. White Glove Staffing, Inc. was engaged in contract negotiations with Methodist Hospitals of Dallas to provide food service workers. While the negotiations were ongoing, White Glove sent an African-American prep cook to work at the hospital. After working only a few days, the cook was asked to leave. The hospital contacted White Glove and allegedly stated that the head chef only wanted to work with Hispanic employees. Later the same day, the hospital ended contract negotiations with White Glove.

The prep cook and White Glove brought class action employment discrimination and retaliation claims under Title VII and the Texas Commission on Human Rights Act (TCHRA) and a discrimination claim under 42 U.S.C. §1981. Moving to dismiss the staffing agency’s claims, the hospital contended that White Glove lacked standing.

Employment relationship. A plaintiff has standing to bring a discrimination action under Title VII when the injured person falls within the “zone of interests” sought to be protected by the statute. For purposes of the “zone of interests,” the courts look to the employment relationship between the parties. Such a relationship is discernable by a hybrid economic realities/common law control test. However, independent contractors lack the necessary employment relationship required for Title VII claims.

Here, the court explained, White Glove was a corporation acting as an independent contractor. White Glove was not an employee of the hospital but, rather, was negotiating a staffing contract to place workers at the hospital. In providing the prep cook to the hospital, White Glove acted as an independent contractor. Therefore, because there was no employment relationship between White Glove and the hospital, White Glove lacked standing to bring Title VII discrimination and retaliation claims.

State law claim. Similarly, the TCHRA requires that a plaintiff have an employment relationship with the defendant. Further, the courts have established that federal statutes and cases covering Title VII should guide the interpretation of TCHRA claims. Because an independent contractor is not an employee under Title VII, the same is true under the TCHRA.

Consequently, the court determined that by negotiating to provide services as an independent contractor, White Glove did not have an employment relationship with the hospital. Thus, White Glove did not have standing to bring discrimination and retaliation claims under the TCHRA.

Corporation has no racial identity. Finally, the court examined White Glove’s Section 1981 discrimination claim. In order to plead a claim under Section 1981, a plaintiff must show that he or she is member of a racial minority. In the instant case, White Glove as a corporation was pursuing a Section 1981 claim. Supreme Court precedent has stated that a corporation has no racial identity and cannot be the target of alleged discrimination. Moreover, even assuming the Fifth Circuit could allow a corporation to acquire an imputed racial identity as some circuits have, White Glove failed to provide any facts that would indicate it acquired a racial identity.

No derivative standing. Also, the court concluded, White Glove’s Section 1981 derivative standing argument was without merit. White Glove asserted that if it did not have standing as a direct target of discrimination, alternatively, it would have standing derived from its non-Hispanic employees. Yet, White Glove failed to cite any cases in which an employer brought a Section 1981 discrimination case based on its employment relationship with a minority employee. Accordingly, as a corporation, White Glove was not a member of a racial minority and did not have standing to bring a Section 1981 discrimination claim.