Under current case law a Charging Party may have an employment relationship with more than one employer at the same time. This would be the case if the operations of two or more employers become so integrated that they can be considered to be a single employer (or an “Integrated Enterprise”) with respect to the Charging Party.
For example, in Baker v. Stuart Broadcasting Company, et al, the Federal 8th Circuit overruled the District Court’s dismissal of a Charging Party’s complaint for lack of subject matter jurisdiction and found that the broadcasting companies’ management and ownership operations were so closely interrelated that the companies could be consolidated as (Joint) “employers” for jurisdictional purposes under Title VII.
Similarly, in EEOC and Margaret Hasselman v Sage Realty, Monahan Commercial Cleaners and Monahan Building Maintenance, Inc. the court found that, although the companies involved were independently owned and operated under a contractual relationship, one of the companies, namely, Sage Realty, exercised almost complete control over the terms and conditions of employment of the employees of the other two entities. Accordingly the Court held that the companies had been operated as a joint employer.
Recently the EEOC obtained a $1.65 million settlement through four consent decrees against four independent contractors in EEOC v. Conectiv Energy, et al (E.D. Pa.; May, 2008). The EEOC considered the four contractor firms – Conectiv Energy, the general contractor, and Bogan Inc./Hake Group, A.C. Dellovade Inc., and Steel Suppliers Erectors Inc – to be a joint employer in maintaining a hostile work environment on the Bethlehem Project.
The four black workers, who will share in the settlement, allegedly had been subjected to various types of harassment, including racial slurs and nooses hanging from cross beams. The consent decrees include a provision that the defendants’ agreement to the settlement is not an admission of any violation of Title VII.
The important point is that if a charge of discrimination is filed under Title VII, the ADA or the ADEA a parent and its subsidiary, a contractor or subcontractor, or even a franchiser could be held to be a “Joint Employer” depending upon the interrelatedness of their actual operations.
In the past the EEOC and the courts have used four general factors (adopted from the NLRB) to measure the degree of interrelatedness that would make two or more entities a joint employer:
- The degree of interrelatedness with respect to operations. For example, the degree to which two entities share management services such as check writing, related payrolls, personnel policies, business licenses, the services of managers or supervisors, sharing the use of office space or operating the two entities as a single unit.
- The degree to which the businesses share common management. For example, where there’s strong evidence that the same persons make day-to-day decisions for both entities, or where the entities have common officers, or boards of directors which set policy and supervise the operations of both entities.
- The degree of centralized control over labor or personnel policies and practices. For example, where the entities have a centralized source of authority for developing and implementing personnel policies and practices, or where one entity maintains the personnel records, screens, tests and maintains job applications for both entities. Also the degree to which the same person (e.g. a CEO or president) makes the employment decisions for both entities.
- The degree of common ownership or financial control over the entities in question. For example, where the same person or persons own or control both entities, or where the same persons serve as officers or directors in both entities; or where one of the entities owns a majority or all of the shares in the other entity.
None of these general factors is absolutely compelling in deciding whether two given entities are necessarily a “joint employer.” That determination depends upon the facts in any given case. In some cases, separate entities have been found to be a joint employer where some of these factors are absent.
According to the EEOC’s Guidance, the critical factors in determining whether two entities should be considered to be a joint employer are whether there is:
- A close interrelationship of operations
- Common management
- Centralized control of labor relations
To avoid potential liability as a joint employer, we’d recommend that you pay careful attention to these factors in entering into any contractual relationship with another independent firm or with a subsidiary of your own firm.
This article was prepared by Jerome C. Rose, EEO Consultant for the Worklaw Network firm of LEHR, MIDDLEBROOKS, & VREELAND, P.C. Before his association with the firm, Mr. Rose served for more than 22 years as the Regional Attorney for the Birmingham District Office of the EEOC.