Third Circuit Addresses Joint Employment in Context of Title VII
By: Lisa M. Schonbeck, Esq.
As evidenced by a recent decision from the U.S. Court of Appeals for the Third Circuit (the “Third Circuit”), the issue of joint employment is not limited to considerations under the Fair Labor Standards (“FLSA”) Act and the Family and Medical Leave Act (“FMLA”). On November 18, 2015, the Third Circuit issued an opinion in Fausch v. Tuesday Morning, Inc., a case involving joint employment in the context of Title VII. The Third Circuit’s decision in Fausch highlights the analysis that is used to determine whether joint employment exists for purposes of employer liability for discrimination under Title VII.
At issue in Fausch was whether the plaintiff could maintain his claim of discrimination under Title VII and the Pennsylvania Human Relations Act against Tuesday Morning, Inc. (“Tuesday Morning”), where he was assigned to work as a temporary employee. Because both statutes prohibit discrimination by “employers,” to pursue such a claim, the plaintiff needed to establish the existence of an employment relationship. Tuesday Morning argued that the plaintiff could not do so because it had never employed him – rather, the plaintiff was employed by Labor Ready, a staffing firm that provided temporary employees to a number of clients. The District Court agreed with Tuesday Morning, and granted its motion for summary judgment. After reviewing the evidence, the Third Circuit reversed.
The relationship between Labor Ready and Tuesday Morning was outlined in an “Agreement to Supply Temporary Employees” (the “Agreement”). Under this Agreement, Labor Ready assigned temporary employees, including the plaintiff, to work at a Tuesday Morning store. Labor Ready provided the temporary employees with time cards on which they recorded the hours they worked, which were approved by a supervisor of Tuesday Morning. The Agreement also provided that Tuesday Morning was responsible for “supervising and directing” the activities of the temporary employees. Further, while Tuesday Morning could not terminate a temporary employee’s employment with Labor Ready, it could request a replacement if it was “unhappy” with any temporary employee assigned to its store.
Joint Employment Under Title VII
In determining whether an employment relationship existed between the plaintiff and Tuesday Morning, the Third Circuit reiterated the relevant test – whether the hiring party has the right to control the manner and means by which the product is accomplished. The Third Circuit noted that this test is different from the test employed in the context of the FLSA and the FMLA, which focuses on the “economic realities” of the employment situation.
Citing the U.S. Supreme Court’s decision in Nationwide Mut. Ins. Co. v. Darden, the Third Circuit listed various factors that should be considered in determining whether such control exists. The Court then noted that it has generally focused on which entity paid the employees’ salaries, hired and fired them, and controlled their daily employment activities.
Applying these factors, the Third Circuit found little support for Tuesday Morning’s argument that it was not also the plaintiff’s employer. The Third Circuit noted Tuesday Morning’s control over plaintiff and the other temporary employees, which it found “overwhelmingly” favored the plaintiff as he worked at a Tuesday Morning store, rather than at a remote site controlled by Labor Ready, Tuesday Morning personnel gave plaintiff assignments and directly supervised him, furnished any necessary equipment and materials, and verified the number of hours he worked on a daily basis. The Third Circuit also noted that while “not dispositive, the fact that Labor Ready and Tuesday Morning characterized [plaintiff], and the other workers supplied as ‘Temporary Employees,’ rather than independent contractors also bolsters [plaintiff’s] position.”
Takeaway for Employers
As evidenced in Fausch v. Tuesday Morning, Inc., the issue of joint employment is not limited to payment of employee wages under the FLSA or employee leave under the FMLA. An organization can also be liable to an employee for discrimination if a joint employment relationship exists. Employers should review their staffing arrangements, as well as the language governing such arrangements to determine what effect it may have on a joint employment analysis. Employers should also consider including provisions in their agreements with staffing companies to address each entity’s obligation to comply with applicable anti-discrimination laws.
Leech Tishman’s Employment Practice Group has extensive experience defending clients in discrimination actions filed with the U.S. Equal Employment Opportunity Commission and various state fair employment agencies, as well as counseling clients on joint employment exposure under federal and state anti-discrimination laws.
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