Butler v. Drive Automotive Industries of America, Inc.
2015 U.S. App. LEXIS 12188, 793 F.3d 404, 127 Fair Empl. Prac. Cas. (BNA) 1049 (2015)
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Rule of Law:
Under Title VII, a company that utilizes temporary workers from a staffing agency may be considered a 'joint employer' if it exercises sufficient control over the worker's employment. The determination of joint employer status is made by applying a multi-factor 'hybrid test' that combines the common law of agency and the economic realities of the employment relationship, with control being the principal guidepost.
Facts:
- Brenda Butler was hired by ResourceMFG, a temporary employment agency, to work at a factory owned by Drive Automotive Industries (Drive).
- ResourceMFG paid Butler, provided her uniform, and was formally responsible for discipline and termination.
- Drive determined Butler's work schedule, provided some of her training, and its employees supervised her work on the factory floor.
- Butler was informed by ResourceMFG that she was considered to be working for both companies.
- A Drive supervisor, John Green, allegedly subjected Butler to repeated verbal and physical sexual harassment.
- Butler reported the harassment to representatives at both ResourceMFG and Drive, but she alleges no action was taken.
- Following a dispute with Green, a Drive supervisor requested that ResourceMFG terminate Butler's assignment.
- ResourceMFG subsequently informed Butler that she had been terminated from her position at Drive.
Procedural Posture:
- Brenda Butler filed suit against both Drive and ResourceMFG in a South Carolina state court.
- Drive removed the case to the U.S. District Court for the District of South Carolina.
- The parties agreed to dismiss ResourceMFG from the lawsuit, leaving Drive as the sole defendant.
- The district court granted summary judgment for Drive, ruling that Drive was not Butler's 'employer' for Title VII purposes.
- Butler, the appellant, appealed the district court's grant of summary judgment to the U.S. Court of Appeals for the Fourth Circuit, with Drive as the appellee.
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Issue:
Does a company that uses temporary workers from a staffing agency qualify as a 'joint employer' under Title VII, making it potentially liable for discrimination, if it exercises significant control over the terms and conditions of the temporary worker's employment?
Opinions:
Majority - Judge Floyd
Yes, a company using temporary workers can be a 'joint employer' under Title VII if it exercises sufficient control over the worker's employment. The court formally adopts the joint employment doctrine for Title VII cases in the Fourth Circuit, holding that multiple entities may simultaneously be considered an individual's employer. To make this determination, the court establishes a new nine-factor 'hybrid test' which combines the common law 'control' test with the 'economic realities' test. This test is designed to 'pierce the legal formalities' and identify the entity with effective control. Applying this new test, the court found that Drive was Butler's joint employer because it exercised substantial control over her employment by supervising her day-to-day work, providing the workplace and equipment, and, most importantly, having the effective power to terminate her employment, even if the formal act was carried out by ResourceMFG.
Analysis:
This decision formally establishes the 'joint employment doctrine' for Title VII claims within the Fourth Circuit, providing a clear precedent for future cases. By creating a new nine-factor 'hybrid test' specifically for the joint employment context, the court provides a structured framework for analyzing the complex relationships between companies, staffing agencies, and temporary workers. This ruling significantly impacts businesses that rely on contingent labor, making it more difficult for them to avoid Title VII liability by claiming the staffing agency is the sole employer. The decision reflects the modern economic reality of temporary work and broadens the scope of protection for contingent workers against workplace discrimination and harassment.
