In a recent Fourth Circuit opinion, Butler v. Drive Automotive Industries of America, Inc., No. 14-1348, 2015 WL 4269615 (4th Cir. 2015), the Court found that two parties/companies can be considered joint employers under Title VII. In reaching its conclusion, the Fourth Circuit adopted a new employee-friendly “test” to determine whether a company qualifies as an employer. Businesses in the Fourth Circuit need to be aware of this ruling, especially those businesses that use temporary staffing companies. While there are many benefits to hiring temporary employees and using temporary staffing companies and placement services, under this new hybrid test, these arrangements will not allow an entity that exercises control over a worker, as defined by the new test, to avoid liability under employment discrimination laws.
In Butler, Resource MFG, a temporary employment agency, hired the plaintiff, Brenda Butler, to work at Drive Automotive in Piedmont, South Carolina. Butler filed suit against Resource MFG and Drive Automotive alleging sexual harassment under Title VII of the Civil Rights Act. She alleged that her supervisor made continuous inappropriate and unwanted comments about her body. She additionally alleged that after she reported an altercation with her supervisor, in which he called her an inappropriate name and told her to go home, her supervisor then referred her to Resource MFG for termination. Further, Butler alleged that her supervisor called her before Resource MFG terminated her and suggested that he could save her job if she performed sexual favors for him. Soon thereafter, she was terminated by Resource MFG.
The key issue in the case was not whether the staffing agency, Resource MFG, was Butler’s employer, but whether Drive Automotive was also considered her employer.
The South Carolina District Court dismissed Butler’s claims against Drive Automotive, finding that Drive Automotive was not Butler’s “employer” under Title VII because it did not “exercise sufficient control over Butler’s employment.”
On appeal, the Fourth Circuit formally adopted the joint employer doctrine for Title VII claims. The Fourth Circuit stated that two parties can be considered joint employers and therefore both be liable under Title VII if they “share or co-determine those matters governing the essential terms and conditions of employment” over the same employee. Additionally, the Fourth Circuit adopted a nine-factor “hybrid test” to determine who qualifies as an “employer” for Title VII. The nine factors are:
According to the Fourth Circuit, the first three factors are most important. However, the Court added that no one factor is determinative and courts can alter the test to fit specific industry contexts.
After setting out the new test, the Fourth Circuit concluded in Butler’s case that Drive Automotive was responsible for determining Butler’s work schedule, training Butler, and supervising Butler’s work. In a footnote, the Court stated that the use of a form which disclaims an employment relationship will not defeat a finding of a joint employer relationship.
If you have any questions about this case or would like to discuss your business’s use of a staffing agency, please do not hesitate to contact us.
"As with many small businesses, mine was presenting with a hurdle where I needed someone's expert opinion and assistance. I did my research and found Alex. I read through some of the other recommendations and reviews I found and had a good feeling that Alex could help me in my situation. I called Alex and from the very beginning he was extremely helpful.
Alex was able to explain to me, in depth, more about the hurdle I was facing and provided me with several options to assist me in getting over it. We made a plan of action and were able to get past it, allowing me to focus more on my business. What I admired about Alex was his tenacity as well as his communication. He kept me well informed through every step, as each step was happening.
Alex has my highest recommendation and we'd certainly call him again if in need.'