Serving Two Masters- Fourth Circuit Recognizes the Joint Employment Doctrine

Much to the delight of employees and their counsel, the Fourth Circuit Court of Appeals has expanded the number of potentially liable defendants in Title VII employment discrimination actions. In the July 15, 2015 published decision of Butler v. Drive Auto. Indus. of Am, the Court has joined several other circuits in holding that the joint employment doctrine is now the law of the Fourth Circuit. This means that multiple entities may simultaneously be considered “employers” for the purposes of Title VII employment discrimination.

The guiding principle of the Circuit’s decision was the remedial nature of and the underlying concept that an employer should not be permitted to “avoid Title VII by affixing a label to a person that does not capture the substance of the employment relationship.”

In addition to following the trend of judicial approval of the joint employment doctrine, the Court noted that it was (i) recognizing the current reality in which increasing numbers of workers are employed by temporary staffing companies that exercise little control over their day-to-day activities; (ii) focusing on those entities that actually exercise control over the employee; and (iii) directly serving Title VII’s purpose of eliminating “discrimination in employment based on race, color, religion, sex, or national origin.”

In order to make a determination of joint employer liability under Title VII, the Fourth Circuit has adopted, and the federal district courts in this Circuit must now apply, a “hybrid” test, which in the mind of the Court appropriately embraces both the common law of agency and the economic realities of employment.  The test consists of the following factors:

(1) the authority to hire and fire the individual;
(2) the day-to-day supervision of the individual, including employee discipline;
(3) whether the putative employer furnishes the equipment used and the place of work;
(4) the possession of and responsibility over the individual’s employment records, including payroll, insurance, and taxes;
(5) the length of time during which the individual has worked for the putative employer;
(6) whether the putative employer provides the individual with formal or informal training;
(7) whether the individual’s duties are akin to a regular employee’s duties;
(8) whether the individual is assigned solely to the putative employer; and
(9) whether the individual and putative employer intended to enter into an employment relationship.

The Fourth Circuit noted that none of these nine factors are dispositive, but highlighted three factors are the most important:

Factor No. 1: The first factor, which entity or entities have the power to hire and fire the putative employee, is important to determining ultimate control ().

Factor No. 2: The second factor, to what extent the employee is supervised, is useful for determining the day-to-day, practical control of the employee.

Factor No. 3: The third factor, where and how the work takes place, is valuable for determining how similar the work functions are compared to those of an ordinary employee.

According to the Court, control remains the principal guidepost for determining whether multiple entities can be a plaintiff’s joint employers.

If you are an employer that has questions about the application of the joint employment doctrine to your business, attorneys with the Sands Anderson Employment Practice Group are available to answer your questions and assist you with issues concerning this important issue.