A Win for Staffing Agencies in California 

Topics: Court Decisions, Employee Hiring, Discipline & Termination

A key issue that staffing agencies often face in litigation is whether the end of a temporary work assignment constitutes a “discharge” of the employee’s employment with the staffing agency. In a favorable ruling for staffing agencies, the California Court of Appeal in Young v. RemX Specialty Staffing et al. held that the answer to this question is a resounding “No.”  

Basic Facts 

Plaintiff Vanessa Young (Plaintiff) was hired by staffing agency RemX Specialty Staffing (RemX) and placed on a temporary work assignment at Bank of the West (BOW).  RemX ended Plaintiff’s assignment at BOW for allegedly being verbally abusive on the phone. Plaintiff testified that she was “fired” and that it was “implied” that the firing was from RemX, rather than just ending her assignment at BOW. Plaintiff was paid for her work performed on the assignment in accordance with RemX’s regular payroll schedule. She did not have any other work assignments with RemX but remained eligible for additional assignments.

Plaintiff sued RemX, and after a series of motions and appeals, her only remaining claim was for PAGA penalties based on RemX’s alleged failure to timely pay final wages to a discharged employee, in violation of Labor Code section 201.3(b)(4). That statute provides “if an employee of a temporary services employer is assigned to work for a client and is discharged by the temporary services employer or leasing employer, wages are due and payable” immediately. RemX moved for summary judgment, arguing that Plaintiff was not discharged from employment with RemX, but only her assignment at BOW, and therefore, it did not violate section 201.3(b)(4). The trial court granted summary judgment for RemX and the Court of Appeal affirmed.

Legal Reasoning

The Court of Appeal rejected Plaintiff’s argument that a “discharge” under the statute can either mean from the staffing employer or from the temporary assignment. Looking at the legislative history and statutory construction, the Court held that a “discharge” only occurs when the staffing employee is fired from the temporary services employer (i.e., staffing agency), and not when the staffing agency terminates an employee from a particular work assignment. Because the Plaintiff failed to demonstrate a dispute of fact as to whether she was discharged from RemX, summary judgment was proper. 

Takeaway

Young is a huge win for staffing agencies, which are often the subject of costly class and PAGA actions based on technical Labor Code violations. While this holding is arguably limited to cases involving Labor Code section 201.3, it may enable staffing agencies to argue that the end of an assignment does not constitute a discharge in other contexts, including Labor Code 202 (when wages are due at termination/resignation) as well as non-wage-based matters like wrongful termination or discrimination suits. 

Please contact the author or your favorite CDF attorney if you have questions about this case or about staffing agency law in California.