Seeing Double: Temp Agency Employees & the Joint Employer Doctrine

We recently reported on new Guidance from the Department of Labor regarding its effort to combat what it views as the misclassification of workers as independent contractors, instead of employees. A new court decision makes it clear that even if a worker is correctly designated as an “independent contractor,” the business where s/he is assigned to work may nevertheless have liability under federal anti-discrimination laws under the “joint employer” doctrine.

In a recent opinion,[1] the Fourth Circuit ruled that an employee assigned by a temporary employment agency to work at an automotive manufacturing plant could sue both the agency and the manufacturer. The employee alleged that she was sexually harassed by her supervisor at the plant, and had reported the harassing behavior to both the agency and the manufacturer, but neither took action. When she made a subsequent complaint to her supervisor’s manager at the plant, she alleged the plant manager requested that the agency remove her. A few days later, the agency terminated her employment.

The district court dismissed the claim, concluding the manufacturer was not the plaintiff’s “employer.” On appeal, the Fourth Circuit reversed, holding for the first time that the “joint employer” doctrine applied to this type of anti-discrimination claim. The Court announced it would use a “hybrid test” to determine whether a company using temporary workers would be deemed a “joint employer.” In doing so, the Court noted that the amount of control over the workers remains the principal guidepost, and the ability to hire and fire will be the most important factor in determining ultimate control. However, this “hybrid test” considers a number of factors, such as, who provides day-to-day supervision, who furnishes the equipment and place of employment, how long the worker has worked at this same location, whether the worker has been assigned by the agency only for this employer, who provided the training for the job, and whether the individual’s duties are substantially similar to regular employees doing the same type of work. In a footnote, the Court emphasized that the use of a form agreement that specifies that the worker is not an “employee” but is an “independent contractor” will not defeat a finding of a joint employer relationship.

Turning to the facts, the Court found as a matter of law that this manufacturer was the joint employer of this worker because the manufacturer exhibited a high degree of control over the terms of the worker’s employment. It pointed out that she worked side by side with regular plant employees, performed the same basic tasks with the same equipment as regular employees, and was supervised by the same managers as the other regular employees. It also noted the work performed was part of the company’s core business.

Each case will still have to be evaluated on its own facts, but the adoption of this new “hybrid test,” which gives courts a degree of flexibility in deciding the issue, means it will be easier for contract and temporary agency workers to successfully argue they are also “employees” of the business where they are assigned to work.

This decision is yet another reminder for businesses who utilize employees provided by temporary placement agencies to manage and monitor those third party relationships carefully. Front-line managers must be trained that they cannot act with impunity toward “temporary workers,” and HR personnel must be alert to workplace issues involving contract workers. If you have questions regarding your workforce or the laws that govern it, Gentry Locke’s Labor & Employment team is available for advice or to represent you when claims are made.

[1] Butler v. Drive Automotive Industries of America, Inc., No. 14-1348, 2015 U.S. App. LEXIS 12188 (4th Cir. 2015). Decisions from the Fourth Circuit Court of Appeals are binding on cases that  are decided in Virginia, West Virginia, North Carolina, South Carolina and Maryland federal courts.