Can a Staffing Agency be Found Liable for a Host Employer’s Mistreatment of its Employees?

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The US Court of Appeals for the Fifth Circuit (“5th Circuit Court”) has found a staffing agency not liable for alleged mistreatment of two of its female employees at the host employer where they were placed. In Arredondo v. Elwood Staffing Services, Inc. (“Arredondo”), the 5th Circuit Court affirmed summary judgment in favor of the staffing company, Elwood Staffing Services, and released them from the lawsuit.

Facts of Arredondo

Elwood Staffing Services (“Elwood”) placed two female employees, one African American (Sage Coleman) and one Latin American (Frances Arredondo), with Schlumberger, Ltd. (“Schlumberger”), an oil field services company. Both employees worked in the gun shop, a facility that created explosive charges for hydraulic fracturing. Ms. Arredondo was placed as a gun loader and Ms. Coleman was placed as a gun loader trainee. The gun shop’s manager and a senior employee, whom the manager labeled as a supervisor, were both lesbians of Latin American descent.

Allegations of Sexual Harassment and Rape

Ms. Coleman claimed that the senior employee started sexually harassing her by propositioning her, stating that she would “know what to do” with a woman with her body, and by asking her twice if she was bisexual. The senior employee allegedly touched Ms. Coleman consistently and informed Ms. Coleman that she went to strip clubs and slept with co-workers. Ms. Coleman was temporarily reassigned to the night shift pursuant to her request, however, she was then soon placed back on the same shift with the senior employee. Ms. Coleman made a complaint to Schlumberger’s HR department about the sexual harassment and alleged racial discrimination with the use of racial slurs in Spanish. An investigation was conducted. The senior employee, manager, and staffing company co-worker all claimed it was Ms. Coleman who was bigoted. Schlumberger found that Ms. Coleman’s claims could not be verified and fired her. Ms. Coleman submitted a report about the harassment to Elwood and requested a new work assignment. Elwood told Ms. Coleman to apply for roles on its website, but Ms. Coleman never did.

As to Ms. Arredondo, she alleged that the employee not only sexually harassed her, but also raped her after she blacked out during lunch, and then threatened her with pictures the senior employee allegedly took of Ms. Arredondo during the assault. The harassment continued, and Ms. Arredondo eventually resigned. Ms. Arredondo told Elwood about the sexual harassment and rape. After Elwood contacted Schlumberger, it initiated a second investigation. Although Schlumberger found that the relationship between the two employees was consensual, it also found that the senior employee’s behavior was inappropriate and ultimately fired her.

Lawsuit Proceedings

Ms. Coleman and Ms. Arredondo sued both Schlumberger and Elwood in federal court for multiple violations of Title VII of the Civil Rights Act, including sex- and race-based hostile work environment, sex discrimination, and retaliation. With respect to Elwood, the women claimed that the staffing agency knew or should have known about the harassment, discrimination, and retaliation they both experienced, yet failed to act. Upon its review of the allegations, the district court delivered a mixed decision on summary judgment. While the district court found that the employees had some viable claims against Schlumberger, it released Elwood from the lawsuit. Both appealed the district court’s order to the extent it granted summary judgment in favor of the staffing agency.

Regarding the argument that Elwood knew or should have known about the harassment and failed to take any action, the 5th Circuit Court agreed with the staffing agency: that there were no additional actions Elwood could take within its control. The Court specifically based its decision on the plaintiffs’ failure to present any evidence that Elwood participated in, knew or should have known of the hostile work environment, or failed to take corrective actions within its control.

Because of this, the 5th Circuit Court concluded that Ms. Coleman and Ms. Arredondo could not establish why Elwood should be held responsible for the actions of Schlumberger’s employees.

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This material is provided for informational purposes only. It is not intended to constitute legal advice, nor does it create a client-lawyer relationship between MNK Law and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material.