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Fourth Circuit Adopts the Joint Employer Test for Title VII Claims

Employment Law Update

August 21, 2015

Who's The Boss?

In Butler v. Drive Auto. Indus. of Am., Inc., the Fourth Circuit Court of Appeals (which has jurisdiction over North and South Carolina) joined the majority of federal appellate courts in holding that multiple entities may simultaneously be considered the employers of an employee for purposes of Title VII of the Civil Rights Act of 1964.

Brenda Butler was hired by a temporary employment agency, ResourceMFG, to work at Drive Automotive Industries. Butler claimed that one of her Drive team leaders verbally and physically harassed her throughout her time at the company. She alleged that the team leader repeatedly made inappropriate comments to her and once touched her inappropriately. She also alleged that her team leader offered to save her job if she performed sexual favors for him. Butler said she complained to both ResourceMFG and Drive about her team leader’s behavior, but neither took action. Finally, Butler claimed that Drive orchestrated her termination from ResourceMFG as a result of her complaint.

Drive filed a motion asking the district court to dismiss the case and argued that it did not exercise sufficient control over Butler to be considered her employer. The district court agreed, finding that ResourceMFG paid Butler, required her to wear a ResourceMFG uniform, had an on-site office and supervisors at Drive, and had the exclusive right to fire Butler. Therefore, Drive should not be considered as Butler’s employer.

Butler appealed, and on July 15, 2015, the Fourth Circuit reversed. The appeals court ruled, as a matter of law, that Drive was Butler’s co-employer for purposes of Title VII. In reaching its decision, the court noted that both Drive and ResourceMFG controlled aspects of Butler’s employment. According to the court, Drive determined Butler’s work schedule, arranged portions of her work-related training, and was responsible for supervision.

The Court focused on four key facts in ruling that Drive was a joint employer. According to the court:

  • Drive directed the discipline and termination of Butler and merely delegated the formal task to ResourceMFG;
  • Drive had direct supervisory control of ResourceMFG employees, including Butler;
  • Drive and ResourceMFG employees worked side by side, performed the same tasks. and used the same equipment; and
  • The work that ResourceMFG employees performed was part of Drive’s core business, not merely tangential or peripheral to Drive.

The fact that ResourceMFG disbursed its own paychecks, provided a separate parking lot for its employees, officially handled employee termination and discipline, and provided uniforms did not shield Drive from Title VII liability.

In light of this decision, companies must reflect on whether they may be considered the “boss” of their subcontractors’ employees. If an entity exercises sufficient control over an individual who would otherwise not be considered its employee, that entity may not avoid liability by pointing to the individual’s technical or official employer.

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