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EEOC v Skanska – “Joint Employer” Ruling a Game Changer

There is an Equal Employment Opportunity Commission (EEOC) court case moving through the legal system that potentially could have major impact on every building site, general contractor and subcontractor in the country.  It concerns the “Joint Employer” concept and Discrimination under Title VII.  It is a case that you should have your legal teams and insurers watch closely over the next few months until it is fully resolved.

The case has been filed, decided, reversed and appealed, so you know that it is definitely serious business – especially for the defendant, Skanska USA, and perhaps you as well.  The case, filed by the EEOC in September of 2010, pertains to the construction of a hospital that Skanska USA built for Methodist Le Bonheur Healthcare in Memphis.

In the original suit, the EEOC argued that the general contractor (Skanska USA) allowed the plaintiffs (workers supplied by a small subcontractor, C-1), to be subjected to racial slurs and discrimination on the jobsite and that when the workers complained, Skanska took no action to rectify the conditions other than to retaliate and fire them.  A key point was that the EEOC and the intervening plaintiff argued that since Skanska directed the workers on the jobsite and that C-1 had no presence on the site, Skanska was then a “joint employer” of the workers and therefore liable for violations of Title VII.  The original court ruled in favor of the EEOC and the plaintiffs.

The Tennessee District Court, in August of 2013, reversed the lower court decision and granted Skanska a motion for summary judgment.

The plaintiffs and the EEOC then appealed to the United States Court of Appeals for the Sixth Circuit and in December 2013, according to the New York Employment Attorneys Blog, “The Appellate Court determined that Skanska and C-1 were joint employers because Skanska ‘supervised and controlled the operators' day-to-day activities without any oversight from Neely [the owner of C-1]’ and ‘Skanska routinely exercised its ability to direct and supervise the operators' performance.’”  The Court also highlighted that Skanska was the one who should have handled the employees' complaints about racial slurs.  “The Court went on to state that, ‘The reality is that C-1 was a nonentity on the construction site’ and that ‘viewed in the light most favorable to the plaintiffs, the record here is enough to support a determination [that] Skanska jointly employed the operators.’”

In short, the ruling handed down in the Sixth Circuit Court of Appeals on December 10 states that “C-1 had minimal oversight over the operators.  Skanska set their hours, collected their time sheets, taught them how to use (equipment) and required them to attend safety training.”

Bloomberg BNA reported that on December 10, 2013, the US Court of Appeals for the Sixth Circuit held that “the Equal Employment Opportunity Commission can pursue claims that the general contractor on a hospital construction site in Memphis, TN is liable for racial harassment and retaliation against a group of black workers hired by a subcontractor.”

The importance of this latest ruling is that it creates precedent for the use of the “joint employer” concept in Title VII cases on construction sites where temporary or subcontractor labor is employed.  The next judicial step for this case is that it would go to the US Supreme Court, and they take on very few cases of this nature.  The other possibility is a settlement between the parties.

Either direction the case takes, the courts have determined that the Defendant General Contractor was a “joint employer” and that the “joint employer” concept can be applied to EEOC Title VII cases.

You can read a summary of the ruling on Law360.com (subscription required), read more about the Joint Employer Doctrine in a blog posted by the American Conference Institute, or read the text of the ruling in the attachment below.

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