Legal Blog

Automotive Manufacturer Feels Effects of Joint Employer Liability Doctrine

Last week, the Fourth Circuit made the not entirely surprising decision to extend the joint employer liability doctrine to cases involving violations of Title VII of the Civil Rights Act (including, for example, harassment and discrimination on the basis of sex, religion, and/or race).

Brenda Butler was hired by a temporary employment agency to work at an automotive parts manufacturer’s plant. Although she donned a uniform bearing the logo of the temporary employment agency, was paid by the agency, parked her car in a special lot reserved for agency employees, and could only be disciplined or terminated by the agency, her work at the factory was supervised both by the manufacturer and the agency.

According to Ms. Butler, one of her supervisors who worked for the manufacturer engaged in activities which she believed constituted sexual harassment. When Ms. Butler reported the same to the temporary employment agency and the manufacturer, the manufacturer allegedly directed the temporary employment agency to terminate Ms. Butler’s employment. Concomitantly, she filed suit under Title VII against both the manufacturer and the temporary employment agency. After the parties agreed to dismiss the temporary employment agency, the manufacturer asked for judgment in its favor claiming that it had not been Ms. Butler’s employer. The trial court agreed, holding that the manufacturer did not “exercise sufficient control over [Ms.] Butler’s employment such that it could be liable as her employer under Title VII.”

On appeal to the United States Court of Appeals for the Fourth Circuit, the court was first required to determine whether, as a matter of law, an employee may have more than one employer for purposes of Title VII. The court handily concluded that an employee may in fact have more than one employer under Title VII and that the so-called “joint employer” doctrine is applicable to such charges of harassment under federal law. The court was next tasked with determining the appropriate standard pursuant to which federal courts in Maryland, Virginia, West Virginia, North Carolina, and South Carolina should decide whether a particular entity is an individual’s “employer” under Title VII. Reiterating that the “element of control” is “the principal guidepost,” the court held that the appropriate test is one which considers both control and the economic realities of the relationship between an employer and purported employer. Per the court, the following factors merit consideration in discerning whether an individual is an employee of two or more entities:

(1) authority to hire and fire the individual;

(2) 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) 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

Although the first three factors, relating as they do to control, remain the most important, courts in the Fourth Circuit must consider all factors in reaching their decision as to whether an entity is a joint employer.

Applying the newly-established standard to the facts at bar, the court concluded that the trial court had not appropriately considered each of the factors enumerated above and, as a result, remanded the case to the trial court for further consideration.

The Fourth Circuit’s decision to extend the doctrine of joint employer liability to Title VII cases is not terribly surprising or unexpected; indeed, the court’s conclusion dovetails nicely with the trend toward preventing erstwhile employers from avoiding liability through the use of contract labor. As a result, employers desirous of utilizing contract labor are well served by consulting with competent legal counsel to ensure that they are adequately protected and cognizant of the issues affecting liability for the acts of their laborers.

[i] Butler v. Drive Automotive Indus. of Am., Inc., No 14-1348 (4th Cir. July 15, 20150)

[ii] Title VII prohibits an employer from discriminating against its employees. If in fact that manufacturer was not Ms. Butler’s employer, it could not be liable as such under Title VII.



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