6th Circuit: General contractors liable as ‘joint employers’ with subcontractors’ discrimination

subcontractorsThe U.S. Court of Appeals for the Sixth Circuit held Dec. 10 (EEOC v. Skanska USA Bldg., Inc., 2013 BL 341867, 6th Cir., No. 12-5967, unpublished opinion 12/10/13) that a contractor can be held liable as a ‘joint employer’ for discriminatory acts of a subcontractor if certain facts exist.  The Sixth Circuit heard this as a matter of first impression in that it has not applied the ‘joint employer’ theory in a Title VII Civil Rights Act of 1964 discrimination case though it has expressed “in dicta” that it could.  It has now joined the the Third, Ninth, and Eleventh Circuits in applying the theory to discrimination claims.  

The EEOC filed a cause of action against Skanska USA building on behalf of Maurice Knox and several other black male employees who were buck hoist operators for subcontractor  C-1.   These gentleman were subject to egregious racial slurs as well as racist graffiti in portable toilets at the job site. Someone also threw liquid from a porta-potty onto Knox’s arms and into his eyes, causing them to swell.  Despite complaints to C-1 and Skanska, nothing was done to quell the harassment according to the EEOC.  Mr. Knox intervened with his own cause of action citing Title VII and Section 1981 of the federal code.  

Skanska was the general contractor in charge of the construction of the new Le Bonheur Children’s Hospital in Memphis.  The buck hoist operators on the site had been hired directly by a sub-contractor, C-1, Inc.  C-1’s interaction with the buck hoist operators, however, was largely limited to serving as a staffing agency as the responsibilities and duties of day-to-day supervision were assumed by Skanska.  

The parties filed cross motions for summary judgment on the issue of whether Skanska met the definition of an “employer” as defined in Title VII of the Civil Rights Act of 1964 and U.S.C. 42 Section 1981.  Plaintiff employees argued that Skanska was an employer under the “joint employer” liability theory which states that entities that “share or co-determine those matters governing essential terms and conditions of employment” are considered “employers” and are thus subject to liability under Title VII and 42 U.S.C. § 1981.  The district court granted the defendant’s motion for summary judgment holding that Skanska was not an employer under Title VII.  The Plaintiffs appealed to the Sixth Circuit Court of Appeals who overturned citing and adopting the “joint employer” liability theory.  Interestingly enough Judge Kethledge held, “The reality is that C-1 was a nonentity on the construction site…. Viewed in the light most favorable to the plaintiffs, the record here is enough to support a determination Skanska jointly employed the operators.”  The Court found the following facts to support its holding:

  • Skanska could remove Knox and other C-1 employees from the jobsite if the employee was “incompetent, disorderly or otherwise unsatisfactory”
  • Skanska routinely exercised its ability to direct and supervise Knox’s performance.
  • Skanska set Knox’s hours and daily assignments.
  • Skanska assigned Knox’s supervisors.
  • Skanska responded to any complaints asserted by Knox.
  • Skanska was responsible for responding to any complaints asserted by Knox and did not consult with C-1 about those complaints.
  • Skanska had Knox sign a document on Skanska letterhead setting forth his job responsibilities.

This case shows that a general contractor or entities that utilize subcontractors cannot hide behind the corporate veil to avoid liability in discrimination matters when it sufficiently exercises some degree of control over subcontractor’s employees.  It is rather incredulous to actively manage such employees wherein it can materially alter the terms and conditions of employment and then disclaim such active authority when a claim arises.

About Roland

Roland was born in Nashville, Tennessee and raised in Mt. Juliet, Tennessee. The first few years he resided in Paris, France with his mother who was French. In Hendersonville, he attended Beech Senior High School where played soccer and studied in the honors curriculum. Subsequently, he pursued two majors in political science and economics while graduating in three years.

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