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Human Resources

SBS 25: HR Liability: Even When Outsourced

Hey Compliance Warriors!

Today we discuss an employer liability when outsourcing tasks using a case study!

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Enjoy and until next time, Be Audit Secure!

Transcription:

Lisa: Welcome to another episode of small business spoonful’s. I’m Lisa Smith

Mason: and I’m Mason Merrell.

Lisa: And today we are talking about the dangers of thinking just because you outsource an HR function, you’re off the hook.

Mason: Yup, that’s right. So, we have kind of a case study, but do you want to kind of preface this for us

Lisa: Yeah. So, if you’re, if you want to go look this app, it’s EEOC JBS carriers. So, if you want to go look it up, that’s where what you want to look up. And so, the deal is JBS carriers is a trucking company. Right? So, you know, they hire people and of course when they make the job offer, then they send them for a medical exam because you know, a trucking company is required to make sure people fall within parameters to drive the big trucks. Okay. So, this happened to Cindy. Her name was Cindy, had been a truck driver for 30 years. JBS offered her a job. Well as always, they were going to send Cindy out to the company who did the medical exam.

Lisa: Now the company didn’t just do the exam and then send the results back. They would also as part of their service, give a positive or a negative recommendation for how the screening went. So, then JBS would pretty much do whatever the company said. If it was a negative, you know, evaluation screening, then they would say, no, you can’t have the job because you’re not fit for duty. And so normally that worked out okay. That with Cindy’s situation, she went in that morning and she had a sore shoulder. She told the medical examiner that it was from carrying some heavy luggage earlier that day that the examiner just stopped the exam and didn’t even complete it with her and then sent her back to JBS with a negative recommendation.

Mason: Yeah. And that’s bad news for this company because JBS ended up withdrawing their offered to her.

Lisa: Yeah. So, when they withdrew the job offer, Cindy was mad because she’s like, I am fit for this. I told them about my luggage problem that morning. I mean, I can get both sides of it. I don’t know how detailed it was, but whatever it was, the EOC bought her story and said, okay, we believe you. And so, they went out and they sued JBS on behalf of Cindy and actually four other people.

Mason: Wow.

Lisa: Yeah. And so bottom line is, um, you know, the EOC got involved and JBS said, hey, it isn’t us, it’s Argo medical, which is who we contract with. They’re the ones that did this, not us. The EEOC said nope.

Mason: Because they withdrew that offer and went on their recommendation. You’re involved in this little chain of events.

Lisa: Yes. And they said under the ADA, that would have been considered discrimination, that they should have engaged her in a whole interactive process before they just went through the offer.

Mason: Yeah, that’s right. They should’ve saw it through, instead of just slamming the gavel down and shutting the door on the situation.

Lisa: Exactly. And so, you know, the case was just going to go to trial because JBS was being hardheaded, but then of course at the last minute they realize what was at stake here.

Mason: Yeah. They’d probably talk to a lawyer and the lawyer said, there’s no way you’re going to win this. And they ended up paying $250,000 to Cindy and the other four potential hires.

Lisa: Yeah. So, it’s 50 grand per person for a job interview gone bad.

Mason: Yeah. And that’s true. And these people probably could have been potential fits for the job and because they were just going off of what this company said.You know, these people could have made them money in the long run. Everybody could have been happy. Instead they withdrew the offer and ended up paying them anyway.

Lisa: Yeah. The 50 grand probably came from, that would’ve been about a year’s worth of pay or there was probably some calculation involved like that. And that’s why the number was what it was. But man, you think about it, even if Cindy would have failed the test, had they come completed it and everything, maybe she would have still failed the test and maybe there was no accommodation to be made. They didn’t even try. And apparently, they didn’t try with the other four people either. So maybe if they had just done their job, they would have saved the company $250,000. I mean it’s, that’s, that’s a bad deal.

Mason: Yeah, that’s really tough. That’s tough for a company to swallow for sure. Especially at a trucking company. So, basically the, the point of this matter is, is have a vendor agreement in place, read the vendor agreement and make sure all of it fits what’s going on. And then, um, in certain circumstances, just remember, like, no matter what you do, you’re liable here. So, with the, with the third party vendor, if you’re outsourcing these things, it could be medical exams, that can be anything. You know, it could be you have a parent company with at rents a truck from this vendor, kind of thing. And they wrecked it and people die and all that, that are your employees, just remember you’re liable in these situations.

Lisa: Yeah. There is always liability for the actual employer. So, you know, just don’t let yourself be lulled into a sense of false security.

Mason: Yep. And yeah, exactly, because they just, they were just over here like: “Oh, they said it. They’re the ones who are liable, if there’s discrimination, we’re not liable for that because the other people did it.”

Lisa: Okay. Well, I think we’re done for today then for this episode.

Mason: Until next time, I’m Lisa Smith and I’m Mason Merrell Be audit secure.

 

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