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Duane Morris Takeaways: On March 9, 2026, in EEOC v. TCI of Alabama, LLC, Case No. 25-CV-89, 2026 U.S. Dist. LEXIS 47895 (N.D. Ala. Mar. 9, 2026), Judge Corey L. Maze of the U.S. District Court for the Northern District of Alabama dismissed a third-party complaint seeking to enforce indemnity provisions between Defendant-TCI and third-party staffing firms with the aim of indemnifying TCI from liability under Title VII. The Court held that parties cannot contract away their responsibilities under Title VII in light of its comprehensive remedial scheme.
The Court's decision illustrates that corporate defendants cannot shift potential Title VII liability through contracted indemnity clauses entered into by staffing firms that refer employees.
Case Background
TCI of Alabama, LLC ("TCI") disposes and recycles PCB contaminated items at various plants and employs laborers to do so. Id. at *3. To hire laborers, since 2020, TCI has "relied exclusively on third-party temporary staffing agencies" who refer qualified applicants. Id.
The EEOC investigated TCI after the Commission learned that TCI allegedly refused to recruit and hire qualified women for laborer positions. Id. Following its investigation, the EEOC issued TCI a letter of determination, found reasonable cause to believe that TCI violated Title VII, and invited TCI to conciliate. Id. The Parties did not reach a conciliation agreement, and the EEOC filed the instant lawsuit. Id.
The EEOC's lawsuit brought one claim for sex discrimination under Title VII. Id. at *3-4. According to the EEOC, TCI "intentionally excluded from employment a class of qualified females seeking employment as laborers in favor of hiring equally or less qualified male applicants." Id. at *4. The EEOC maintained that TCI refused to hire women for numerous reasons including that TCI instructed third party staffing agencies, Orin Staffing, LLC, Personnel Staffing, Inc., and WorkSmart Staffing, Inc. (the "Staffing Firms") not to refer women for its laborer positions because "among other reasons, women would 'distract' male workers and increase the risk of sexual harassment in the workplace." Id.
TCI answered the complaint and then filed its own third-party complaint for breach of contract against the Staffing Firms. Id. TCI's third-party complaint alleged the Staffing Firms "agreed via contracts" to lawfully refer qualified laborers to TCI. Id. The contracts also contained indemnification provisions, which required the Staffing Firms, as joint employers of referred employees, to indemnify TCI "for all claims caused by the [Staffing Firms'] breach of contract, including a breach caused by failing to follow the law when referring applicants." Id. at *4-5.
Accordingly, TCI contended that even if the EEOC's allegations were true, the Staffing Firms' compliance with TCI's alleged unlawful instruction was itself "unlawful and violated Title VII." Id. at *5. Therefore, the Staffing Firms exposed TCI to legal claims which TCI was indemnified for under their agreed contracts. Id.
The EEOC and the Staffing Firms moved to dismiss TCI's third-party complaint. Id. Their arguments for dismissal varied. Id. The Court focused on one argument raised by the EEOC, whether Title VII preempts TCI's breach of contract claim and therefore requires dismissal of TCI's third-party complaint. Id. at *6-7.
The Court's Opinion
Judge Maze agreed with the EEOC that Title VII preempts TCI's breach of contract claim and dismissed the third-party complaint with prejudice, explaining that any amendment would be futile. Id. at *9.
Acknowledging Title VII's "comprehensive remedial scheme," the Court adopted the holding in EEOC v. Blockbuster, Case No. 07-CV-2612, 2010 U.S. Dist. LEXIS 2889 (D. Md. Jan. 14, 2010), which held that parties accused of violating Title VII may not bring claims for indemnification against third parties "to skirt their own liability." TCI of Alabama, LLC,2026 U.S. Dist. LEXIS47895, at *7. In Blockbuster, the EEOC brought a Title VII action against the home video rental chain for failing to prevent and correct known sexual harassment at one of its warehouse facilities. Blockbuster, 2010 U.S. Dist. LEXIS 2889, at *1. Blockbuster, like TCI here, filed a third-party complaint against a staffing firm that agreed to indemnify Blockbuster against any losses arising from any employment claim brought by its employees. Id. The Court in Blockbuster granted judgment on the pleadings against Blockbuster and held that "[t]he primary goal of Title VII to eradicate discriminatory conduct would be thwarted if Blockbuster were permitted to contract around its obligations and shift its entire responsibility for complying with Title VII" to a third party. Id.
The Court here agreed that the policy rationale in Blockbuster applied in greater force to TCI's third-party indemnification claims given those claims rested on the EEOC's allegation that TCI instructed staffing firms not to refer qualified women. TCI of Alabama, LLC,2026 U.S. Dist. LEXIS47895, at *8. "Federal public policy would be undermined," the Court explained, "if TCI had the ability to tell others to help TCI violate federal law and then pay TCI if TCI got caught." Id. Therefore, a contractual indemnity provision could not shield TCI from liability under Title VII.
Even though the EEOC's lawsuit continues against TCI, the Staffing Firms involved in hiring are not off the hook. In a footnote, the Opinion clarifies that if the Staffing Firms violated Title VII by complying with TCI's unlawful request to not refer qualified women for laborer jobs, they too can face liability in another case. Id. at *9, n. 2.
Accordingly, the Court dismissed TCI's third-party complaint with prejudice.
Implications For Businesses
EEOC v. TCI of Alabama, LLC demonstrates that corporate defendants cannot turn a blind eye to potential Title VII harms and attempt to contract away Title VII liability. While indemnity clauses may appear all-encompassing, courts continue to decline coverage where Title VII violations are alleged.
This Court agreed that public policy concerns control and remain critical in analyzing the scope of an indemnity provision in alleged gender-bias hiring under Title VII. After TCI of Alabama, LLC, Companies contracting with outside staffing firms cannot rely on "shifting the blame" through indemnity provisions in contracts when faced with Title VII claims brought by the EEOC.
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