Wake Forest Law Review

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By Eric Benedict

On August 10, 2015, the Fourth Circuit Court of Appeals issued its published opinion in the civil case DeMasters v. Carilion Clinic. In DeMasters, the Fourth Circuit had to decide how to properly frame an employee’s conduct to determine whether it constituted ‘protected activity’ under Title VII of the Civil Rights Act of 1964 (“Title VII”). Additionally the Court had to decide if the “manager rule” from the Fair Labor Standards Act (“FLSA”) barred relief in the context of Title VII. The Fourth Circuit reversed the District Courts rulings that DeMasters did not engage in protected activity and that the “manager rule” precluded the suit.

DeMasters Conduct in the  Employee Assistance Program

Carilion, a large healthcare organization, employed Neil DeMasters (“DeMasters”) through its “Employee Assistance Program” (“EAP”). In his role as an EAP, DeMasters met with an employee (“Doe”) who believed he was the subject of workplace sexual harassment by his manager. While the manager was promptly terminated for the harassment, Doe began to face harassment from other employees sympathetic to the Manager. DeMasters approached the Human Resources department at Carilion and criticized its handling of the subsequent harassment. Ultimately, Carilion settled a Title VII suit filed by Doe.   

In the wake of the Title VII settlement, DeMasters was contacted by his employer to inquire into the role DeMasters had played in Doe’s path to litigation. DeMasters admitted that he thought Carilion handled the harassment poorly. Carilion ultimately terminated DeMasters, citing among other things, DeMasters’ failure to take a “pro-employer” position and “fail[ure] to perform or act in a manner that is consistent with the best interests of Carilion Clinic.”

DeMasters’ Title VII Opposition Clause Retaliation Claim

After his termination, DeMasters filed a Title VII Retaliation suit in federal court alleging that he was terminated in violation of Title VII’s opposition clause. To establish a prima facie case under Title VII’s opposition clause, the employee must show, “(1) that [he] engaged in a protected activity…(2) that [his] employer took an adverse employment action…(3) that there was a causal link between the two events.” While the defendant conceded that DeMasters was terminated, satisfying the second element, it argued that DeMasters did not engage in protected activity and that therefore there was no causal link. The District Court agreed with Carilion and dismissed DeMasters’ complaint. The District Court reasoned that, “no individual activity in which DeMasters engaged by itself constituted protected oppositional conduct and that the so-called ‘manager rule,’” precluded relief.

The Fourth Circuit Evaluates Demasters’ Conduct as a Whole

The Fourth Circuit concluded that the court must, “examine the course of a plaintiff’s conduct through a panoramic lens, viewing the individual scene in their broader context and judging the pictures as a whole.” After reviewing the record, the court found that the course of DeMasters’ conduct, from reaching out to the HR department to sharing his opinion with Carilion’s HR manager, was sufficient to satisfy the first prong of the prima facie case.  The court reasoned that, “Neither the text nor the purpose of Title VII is served by this method of parsing a continuous course of oppositional conduct into individual acts and assessing those acts in isolation.”

The “Manager Rule” does not Apply to Title VII Retaliation Claims

Carilion also argued that the “manager rule” would prevent DeMasters from seeking protection. The “manager rule” is derived from  Fair Labor Standards Act litigation. The rule requires an employee to “step outside his or her role of representing the company” before their activity can be protected. Here, DeMasters would have to step outside his role as an EAP before his conduct could be considered protected. The District Court decided that DeMasters’ conduct “could not qualify for protection under Title VII because, as an EAP consultant, he had a duty to counsel Doe and to relay his complaints to Carilion’s HR Department.” Citing the differences between the two statutes and the importance of encouraging employees to voice their concerns, the Fourth Circuit rejected this approach, holding that “[n]othing in the language of Title VII indicates that the statutory protection accorded an employee’s oppositional conduct turns on the employee’s job description….” The court also explained that a contrary rule would leave those most equipped to help employees with their concerns, in this case EAPs, without protection.  The court concluded that the manager rule does not apply to Title VII, and therefore did not preclude DeMasters’ suit.

The Fourth Circuit Reverses the District Court

Ultimately, the Fourth Circuit found that DeMasters could establish a prima facie case based on the entirety of his activity and that the manager rule does not apply to Title VII. The court, therefore, reversed the United States District Court for the Western District of Virginia and remanded the case to allow the suit to move forward.

 

By Whitney Pakalka

On July 15, 2015, the Fourth Circuit released its published opinion in the civil case of Butler v. Drive Automotive Industries, Inc. The Court reversed the lower court’s grant of summary judgment in favor of Defendant, Drive Automotive Industries (“Drive”), the company where Plaintiff was sent to work by a temporary employment agency. The Court found that although the staffing agency employed the Plaintiff, under the joint employment doctrine, Drive was also Plaintiff’s employer for purposes of this Title VII action.

Butler’s Allegations of Harassment and the District Court’s Grant of Summary Judgment

Brenda Butler was hired by a temporary employment agency, ResourceMFG, to work at a Drive factory in Piedmont, South Carolina. Drive hired some of its employees through temporary employment agencies and some directly. Drive set Butler’s work schedule, arranged for part of her training, and supervised her on the factory floor. Butler was told by ResourceMFG that she worked for both Drive and Resource MFG. For its part, ResourceMFG required that Butler wear its uniform at work, paid Butler her earnings, controlled discipline and termination, and had a special parking lot for its employees.

According to Butler, one of the Drive supervisors, John Green, repeatedly harassed her verbally and physically by making comments about her buttocks and rubbing his crotch against her buttocks. Butler reported the conduct to a ResourceMFG representative and to Green’s supervisor at Drive, Lisa Gardner Thomas, but Butler claims that no action was taken.

In December 2010, Butler refused to work on a particular machine after she was instructed to by Green, who called her “big booty Judy” when she refused. Butler informed Thomas of the encounter. Thomas then asked another supervisor at Drive to terminate Butler’s employment. A few days later, Green called Butler and implied that if she performed sexual favors for him, he could save her job. She then received a call from a ResourceMFG supervisor informing her that her employment had been terminated.

Butler filed a Title VII employment discrimination action in the District Court for the District of South Carolina alleging sexual harassment. Drive filed a motion for summary judgment arguing that Butler worked for ResourceMFG, and therefore Drive was not her “employer.” The district court recognized that under the joint employment doctrine an employee can have multiple employers, but concluded that Drive was not an additional employer and granted it summary judgment.

The Joint Employment Doctrine and the Hybrid Test for Determining Who is an “Employer” Under Title VII

 The Fourth Circuit reviewed the district court’s grant of summary judgment and its interpretation of Title VII de novo. The Court addressed whether the joint employment doctrine applies to Title VII cases in the Fourth Circuit, and whether the District Court correctly applied the doctrine.

The Court affirmed the District Court’s finding that an employee can have more than one employer, stating that the joint employment doctrine applies when an employer contracts with an independent company for the use of its employees, but then retains control over the terms and conditions of employment. Rivas v. Feceración de Asociaciones Pecuarias de P.R., 929 F.2d 814, 820 n.17 (1st Cir. 1991). The Court formally adopted the doctrine in the Title VII context finding that it is consistent with both Fourth Circuit and Supreme Court precedent that focused on who exercises control over the employee. The Court further found that this interpretation was consistent with the remedial purpose of Title VII and recognizes the reality of modern employment, where many workers are employed by temporary staffing agencies that do not control their day-to-day employment.

The Fourth Circuit found that the district court conducted an inappropriate analysis under its newly-articulated joint employment doctrine. The Court noted that various circuits have applied different tests, all of which aim to determine, based on the facts of the case, whether an entity exercises such control over an employee that it should be liable under Title VII. See Clackamas Gastroenterology Assoc., P.C. v. Wells, 538 U.S. 440, 448 (2003).

The Fourth Circuit adopted a multi-factor hybrid test for determining when an employee is jointly employed in Title VII cases. The hybrid test balances the “control” test’s focus on agency with the “economic realities” test’s focus on the degree to which an employee is economically dependent on the entity in question. The hybrid test considers nine fact-specific factors, none of which are said to be dispositive. However, the Court placed the greatest emphasis on three factors: (1) which entity has the power to hire and fire the employee; (2) to what extent the employee is supervised by the entity; and (3) where and how the work takes place.

Drive Automotive was Butler’s Employer and May be Held Liable Under Title VII

Applying the newly-articulated hybrid test to the facts of the case, the Court held that ResourceMFG and Drive were Butler’s joint employers. The Court noted that Drive had a great deal of control over the terms of Butler’s employment and was able to successfully request that she be terminated. Indeed, Drive had never been refused when it requested that ResourceMFG fire an employee. Additionally Drive supervised its employees and ResourceMFG’s employees alike. Both types of employees did substantially the same work on the same equipment, and that work comprised the core of Drive’s business. 

Fourth Circuit Reversed and Remanded

The Fourth Circuit found that the district court had not paid sufficient attention to factors that militated in favor of finding that Drive was Butler’s joint employer. After establishing the joint employment doctrine and the hybrid test for the Fourth Circuit in Title VII cases, the Court reversed the district court’s grant of summary judgment in favor of Drive and remanded for consideration of Butler’s claims against Drive on the merits.