You May Be a Joint Employer of Workers from a Temp Agency

The concept of joint employers is not new in South Carolina where courts have considered it in a number of employment-related disputes.  However, in this case, the Fourth Circuit articulated a “hybrid test” that must be used when determining if an entity is a joint employer and, therefore, considered an employer for purposes of liability in Title VII employment discrimination cases.

In Butler, the employee wore a temp agency’s uniform, was paid by the temp agency, and the temp agency handled all discipline and termination of its employees.  However, the company where the temp agency worker was placed supervised and controlled her day-to-day activities and had the power to tell the temp agency who to discipline or replace.  In her lawsuit against the company, the plaintiff alleged she had been sexually harassed by her supervisor at the company and, after she was fired, sued the temp agency and the company for employment discrimination.  After the parties agreed to dismiss the temp agency from the lawsuit, the company obtained an order from the district court in its favor, finding that it was not her joint employer.  The Fourth Circuit reversed that finding, and in so doing, articulated important factors all companies should be mindful of when dealing with workers that come from outside staffing agencies.

In applying the “hybrid test,” the court reiterated a number of times throughout its opinion that the amount of control an entity exercised over an employee was still the “principal guidepost” in determining its relationship with the employee.  However, it went on to specify “a new set of factors” that courts must consider in assessing whether an individual is jointly employed by two or more entities that may be liable for employment discrimination.  Those factors are as follows:

1. authority to hire and fire the individual;
2. day-to-day supervision of the individual, including employee discipline;
3. whether the supposed employer furnishes equipment used and place of work;
4. 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 supposed employer;
6. whether the supposed 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 supposed employer; and
9. whether the individual and supposed employer intended to enter into an employment relationship.

A savvy employer will recognize similarities between these factors and those articulated by the courts and the Department of Labor to determine if workers are correctly classified as independent contractors.  The court’s decision is yet another reminder to employers in this state to be very careful of the potential liability they may have to workers in their company that come from outside third parties, like temp agencies.