Ethnic stereotypes influence frontline workers’ decision-making, which challenges the legitimacy of public organizations. In this article, we examine how ethnic stereotypes affect caseworkers’ sanctioning behaviour in a context where the client group consists of highly vulnerable clients. Using survey experimental vignettes and qualitative interviews, we find that social caseworkers use ethnic classification in their decision-making. However, contrary to our expectations, caseworkers are less likely to sanction clients with a non-western ethnicity compared to ethnic Danish clients. In addition, the article finds novel evidence indicating that employee traits mitigate the use of ethnic stereotypes.