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Posted on Tuesday, August 18, 2015

Employee Can Sue More Than One Employer For Discrimination

For the first time, the U.S. Court of Appeals for the Fourth Circuit has expressly adopted the joint employment doctrine for Title VII cases.  Now, an employee can potentially go after more than just the company that pays her when bringing a claim for unlawful discrimination or harassment.  The Fourth Circuit joins the Second, Sixth, Seventh, Ninth, Tenth, and Eleventh Circuits in holding that more than one company can be held liable for an employee’s claim under Title VII.Brenda Butler was hired by ResourceMFG, a temporary staffing agency, to work at the Drive Automotive Industries (“Drive Automotive”) factory in South Carolina.  During her time at the Drive Automotive factory, Ms. Butler wore a ResourceMFG uniform, her paycheck came from ResourceMFG, she parked her car in a special ResourceMFG lot, and ResourceMFG had the power to discipline and fire her.  But Drive Automotive set Ms. Butler’s work schedule and arranged portions of her training, and Drive Automotive employees supervised Ms. Butler when she was on the factory floor.

Ms. Butler claimed that one of her Drive Automotive supervisors verbally and physically harassed her on the job.  She said that the supervisor commented on many occasions about her physical features, particularly her rear end, even giving her the nickname “big booty Judy.”  According to Ms. Butler, the supervisor also rubbed up against her in a sexually suggestive way.  She complained about the sexual harassment to management at ResourceMFG, but she says they did nothing.  After further complaints from Ms. Butler, Drive Automotive made a request to Resource MFG that she be terminated.  Shortly thereafter, Ms. Butler received a call from ResourceMFG terminating her employment at Drive Automotive.

In response, Ms. Butler brought Title VII claims against not only her official employer, ResourceMFG, but also against Drive Automotive, since it was a Drive Automotive supervisor who she claimed sexually harassed her.  A South Carolina district court dismissed Ms. Butler’s claims against Drive Automotive, after determining that ResourceMFG was her sole employer for purposes of liability under Title VII.  But on appeal, the Fourth Circuit reversed this dismissal of Ms. Butler’s Title VII case against Drive Automotive, after finding that Drive Automotive could be liable under the joint employer doctrine.

This decision is the first time that the Fourth Circuit has expressly adopted the joint employer doctrine for Title VII cases, joining several other federal appellate jurisdictions across the country.  The Court reasoned that, given the remedial purpose of Title VII in stamping out discrimination in the workplace, the joint employer doctrine prevents a company from evading liability by hiding behind another employer such as a staffing agency.

In order to determine whether a company is a joint employer for purposes of liability under Title VII, the Fourth Circuit adopted what it called the “hybrid test,” which is comprised of nine enumerated factors, to consider the level of control a company has over a particular worker.  The Court said that of those nine factors, the most important are the following three: 1) whether the entity has the power to hire and fire; 2) whether the entity has supervisory power over the employee; and 3) whether the entity controls the place and way in which the employee performs the work.  The Court made it clear that the degree of control that an entity exercises over a worker remains the principal guidepost for determining joint employment under Title VII.

While the impact of this case for staffing companies is obvious, this case could reverberate far beyond the staffing industry.  In the government contracting arena, it is common for prime contractors to use subcontractors whose employees are closely controlled by the prime.  Similarly, in the construction industry, the employees of prime contractors and subcontractors are often closely intertwined.  These types of companies will need to be extra careful not to exercise too much control over non-employees, or they may find themselves on the receiving end of a Title VII suit.

Declan Leonard is managing partner of the Washington, DC regional business law firm Berenzweig Leonard, LLP. He can be reached at DLeonard@BerenzweigLaw.com


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