Employers making use of staffing agency workers to fill positions may not be on the hook to provide leave pursuant to the Family Medical Leave Act, the Fifth U.S. Circuit Court of Appeals determined, but some obligations still apply under the statute.

Texas-based Keppel Amfels builds and repairs offshore drilling platforms and marine vessels. The company turned to staffing agency Perma-Temp for about half of its positions, calling when it had an opening. The staffing agency would select three or four candidates for Keppel Amfels, which would then fill the job.

Jessica Cuellar filled a position at Keppel Amfels as a material information clerk for about 14 months until she went into preterm labor. Three days later, her job was taken by another employee not from the staffing agency; no position was held open for Cuellar.

When she was released to return to work, Cuellar was told Keppel Amfels was “doing fine without her” and that she was eligible for rehire if another position opened. Perma-Temp did not refer Cuellar back to Keppel Amfels or request that the company reinstate her.

Cuellar then sued Keppel Amfels for allegedly violating the FMLA by convincing Perma-Temp not to seek her reinstatement and retaliating against her based on her exercise of rights under the statute.

But the court granted summary judgment for Keppel Amfels, finding that the company was Cuellar’s secondary employer. Businesses may be joint employers under the FMLA. Because Cuellar obtained her employment through Perma-Temp, the staffing agency was her primary employer.

Responsibility for both FMLA leave and job restoration falls to the primary employer, the three-judge panel said. “A secondary employer bears only a conditional burden: it ‘is responsible for accepting an employee returning from FMLA leave . . . if [it] continues to utilize an employee from the temporary placement agency, and the agency chooses to place the employee with the secondary employer.”

Secondary employers do have some FMLA obligations, including “compliance with the prohibited acts provisions,” which include interference with FMLA rights by discouraging the use of statutory leave or discrimination based upon the use of FMLA leave.

Cuellar argued that by replacing her, telling Perma-Temp that her employment was terminated, and informing her that she no longer had a position at the company, Keppel Amfels prevented her from fully exercising her right to be reinstated.

“The regulations permit, even expect, a secondary employer to rely on a primary employer to provide FMLA leave: a temporary employee’s relationship with a secondary employer may end and never be restored without any violation of the FMLA,” the court concluded. “[W]e agree with Keppel Amfels that to hold it liable on these facts would be to place it in the position of a primary employer and, therefore, create an employment relationship that did not exist prior to Cuellar’s leave.”

To read the opinion in Cuellar v. Keppel Amfels, click here.

Why it matters: Employers that utilize staffing companies to fill employment positions, take note: the Fifth Circuit decision reiterates that a different burden exists when FMLA rights are triggered. If an employee is employed by a staffing agency, the secondary employer is not required to provide leave under the statute and bears only a conditional burden to accept a returning employee. The court emphasized that employees are not entitled to any position to which they would not have been entitled had leave not been taken. However, some duties do remain: secondary employers may not interfere with or retaliate on account of the employee’s exercise of FMLA rights. Secondary employers should be careful not to violate these provisions by not discouraging an employee from using his or her FMLA leave, for example, or retaliating against the employee by terminating him or her at or around the time a return from leave is scheduled.