United States: Those Aren’t My Employees! Joint Employer Liability For Discrimination

Title VII prohibits employers from discriminating against "any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's race, color, religion, sex, or national origin." Employers are generally aware that Title VII's prohibition against discrimination applies to their own employees. However, it is also possible for an employer to face a charge of discrimination and a subsequent lawsuit brought by an individual who worked for an entirely different entity – even though the employer never hired the individual or understood the individual was an employee. A recent appellate court decision addresses this "joint employer" issue and provides an important lesson for employers that work with subcontractors.

In the case, a general contractor responsible for managing the construction of a hospital facility hired a subcontractor to provide operators for the site's temporary elevators. A group of African-American elevator operators who worked for the subcontractor claimed they had experienced harassment related to their race while working on the construction jobsite. The elevator operators also claimed they had complained about the harassment to their employer (the subcontractor) and to the general contractor, but that nothing was ever done to stop the harassment. The EEOC brought Title VII claims on behalf of the group of employees against the general contractor, alleging the company was a joint employer of the elevator operators and subjected them to a hostile work environment based on race and retaliation.

The trial court found that the elevator operators were not employees of the general contractor and entered judgment in favor of the general contractor. However, the appellate court determined that the general contractor was a joint employer and allowed the EEOC to pursue claims on behalf of the elevator operators for racial harassment and retaliation against the general contractor. It found the general contractor suggested the rate of pay for the elevator operators, set their hours, and collected timesheets. The general contractor also directed the elevator operators' daily responsibilities and assignments, provided some training, and could remove them from the jobsite for being incompetent, disorderly, or otherwise unsatisfactory. The appellate court thus found that while the elevator operators were not employed directly, the general contractor supervised and controlled the elevator operators' day-to-day activities without any oversight by the subcontractor, which satisfied the joint employer test.

Employers should closely evaluate and be aware of the degree of control they have over other entities' employees. As illustrated in the recent case, this is particularly important when an employer utilizes subcontractors. In order to determine whether an entity is a joint employer, courts will look to an entity's ability to hire, fire or discipline employees, affect their compensation and benefits, and direct and supervise their performance. The greater the degree of control an employer has over another entity's employees, the greater the likelihood that the employer could be held responsible for alleged discrimination as a joint employer. Employers should also ensure that their anti-discrimination policies and complaint procedures contemplate consideration and investigation of all complaints of discrimination, whether the complaint is made by a direct employee or an employee of an entity. This will go a long way toward cutting off potential discrimination claims from individuals that do not even involve actions taken by the employer.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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