The Third Circuit recently ruled that a client of a temporary staffing agency could be considered an employer in race bias suit. In Faush v. Tuesday Morning, Inc., Labor Ready, a temporary staffing agency, assigned Faush to work at a home-goods retail store, Tuesday Morning. Faush’s duties included unloading merchandise, setting up display shelves and stocking merchandise. In his lawsuit, Faush claims that he and other African-American temporary employees were subjected to racial slurs, accused of stealing and was told by the store owner’s mother to work in back of the store with the garbage until it was time to leave. Faush was terminated. He sued Tuesday Morning under Title VII, the Pennsylvania Human Rights Act and other statutes alleging race discrimination.

The lower court granted Tuesday Morning’s motion for summary judgment, concluding that Tuesday Morning was not Faush’s employer and thus could not be held liable for discrimination under the statutes. Faush appealed the lower court’s decision, and the Third Circuit reversed. The Court found that the employment arrangement between Labor Ready and Tuesday Morning rendered the store liable for Faush’s discrimination claims. Although the Court found that the staffing agency paid Faush’s wages, payroll taxes, and maintained workers’ compensation insurance for him, the Court ruled that Tuesday Morning was, in fact, Faush’s employer under the Darden test because the store controlled his employment, pay and daily activities. The case was remanded and sent back to the lower court for further proceedings.

This decision is significant for both temporary employment firms and businesses that use temporary workers. The full decision can be read here.