Paymaster Is Not a Joint Employer Under Title VII or the Equal Pay Act

Companies with complex corporate structures or contractor relationships frequently face the threat of joint-employer liability under federal employment law. Just this year, the U.S. Department of Labor’s Wage and Hour Division issued guidance expansively interpreting the joint-employer doctrine under the Fair Labor Standards Act (“FLSA”) and the Migrant and Seasonal Agricultural Worker Protection Act, with the express purpose of expanding statutory coverage over small businesses to collect back wages from larger businesses. See https://www.dol.gov/whd/flsa/Joint_Employment_AI.pdf.  Although, as the guidance points out, the FLSA joint-employer doctrine differs from the doctrine under other labor and employment statutes, questions remain as to how persuasive this guidance might be in expanding the doctrine in other contexts.

In Peppers v. Cobb County, Georgia, Case No. 15-10866 (11th Cir. Aug. 25, 2016), the Eleventh Circuit seemed to answer that question with “not very.”  Peppers, employed as an investigator with the District Attorney’s Office in Cobb County, Georgia, brought claims under Title VII and the Equal Pay Act alleging discrimination on the basis of sex after learning that a less-experienced female investigator was earning a substantially higher salary.  Peppers sued Cobb County, which paid his salary and benefits, although the District Attorney’s Office, a separate legal entity, controlled all other aspects of his employment.  The district court rejected Peppers’s contention that the County and the District Attorney were “joint employers” and granted summary judgment in favor of the County, a decision affirmed by the Eleventh Circuit.

After concluding that the County and the District Attorney could not be considered a “single employer” or “integrated enterprise,” the court turned to the “joint employer” doctrine as developed under Title VII cases. The court first reiterated the “straightforward” test set out by the Third Circuit in NLRB v. Browning-Ferris Industries of Pennsylvania, Inc., 691 F.2d 1117, 1122 (3d Cir. 1982), and adopted by the court in Virgo v. Riviera Beach Associates, 30 F.3d 1350, 1360 (11th Cir. 1994), and further explained that the focus is on “the employee or class of employees, as opposed to particular aspects of employment,” citing Sandoval v. City of Boulder, Colorado, 388 F.3d 1312, 1324 (10th Cir. 2004).

Here, even though his paycheck was issued by the County, essentially all aspects of Peppers’s employment situation—recruiting and hiring him, creating his job title, establishing his job responsibilities and pay, regulating his work environment, and supervising him—were handled by the District Attorney, not by the County. The County’s role “was essentially to act as a paymaster,” with the District Attorney filling “nearly all of the roles traditionally filled by an employer,” which, the court concluded, was not enough to make it a joint employer.

The court rejected Peppers’s attempt to split off the part of the employment relationship that gave rise to his claims—in this case, his compensation. Not only did the County have no real authority over Peppers’s salary, but “the focal point of the inquiry is not which entity controlled the specific aspect of the relationship giving rise to a discrimination claim, but rather which entity or entities controlled the fundamental and essential aspects of the employment relationship when taken as a whole.”  The joint-employer doctrine, the court concluded, cannot support “such an analytically gerrymandered understanding.”

Notably, the court did reject the County’s argument that Pepper was precluded from bringing claims against it because he named the District Attorney’s Office, and not the County, in his EEOC charge. In that context, the court liberally applied the naming requirements, finding that the County received adequate notice of the charges and could show no prejudice from Peppers’s failure to name it in the EEOC charge.

Posted by Stacey Mohr.

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