Circuit clarifies "joint employer" test in Title VII, ruling against plaintiff prevented from working the U.S. Open

The Court of Appeals has issued its most definitive ruling on joint employers under Title VII. It holds the plaintiff in this case cannot sue the United States Tennis Association because the USTA was not a joint employer with the security company that hired him and assigned him to work tennis matches in New York.

The case is Felder v. United States Tennis Association, issued on March 7. After AJ Squared Security hired plaintiff as a security guard, it sent him to work the 2016 U.S. Open in Queens. But the USTA, which manages the U.S. Open, denied plaintiff his credentials for that event, making it impossible to work the U.S. Open. Plaintiff was told the credentials were denied in retaliation for plaintiff's having sued a different security firm years earlier for racial discrimination (that case settled). Plaintiff does not sue AJ Security in this case. Instead, he sues the USTA for discrimination and retaliation under Title VII. The court ruling does not tell us why plaintiff only sued the USTA; maybe that entity is the "deep pockets" and plaintiff did not see the point in suing a smaller entity, the security firm.

To proceed with the case, plaintiff has to show the USTA and AJ Security were joint employers. While the Second Circuit has addressed joint employment in Fair Labor Standards Act cases, it starts from scratch under Title VII, though the Court largely applies the test under FLSA cases: asking whether the proposed joint employer has enough control over the plaintiff's employment. Drawing from rulings from other Circuits, the Court of Appeals (Livingston, Cabranes, and Lynch in dissent) says "[w]e  will . . . find a joint employer relationship when two or more entities, according to common law principles, share significant control of the same employee." The Court adds, "This means that an entity other than the employee’s  formal employer has power to pay an employee’s salary, hire, fire, or otherwise control the employee’s daily employment activities, such that we may properly conclude that a constructive employer-employee relationship exists." 

What complicates the analysis is that plaintiff never actually worked for the USTA, which turned him away allegedly because plaintiff has previously filed a lawsuit against a different contractor. On the other hand, USTA is the reason plaintiff could not work the U.S. Open, so plaintiff argued that USTA had sufficient control over plaintiff's employment and is therefore a joint employer with the deep pockets to pay out a handsome judgment. The Second Circuit writes, "'[A]  plaintiff who has never  been employed by the defendant'  must therefore 'prove that he or she was an ‘applicant[] for employment,’' and not an applicant for an independent contractor position." To do so, the plaintiff must allege that "if she had been hired, her relationship with that entity would have been more like a traditional employee than like a traditional independent contractor." Again, since there is little Title VII guidance from the Second Circuit on this, the Court draws from a nonbinding source for this proposition, a 2016 district court ruling from Connecticut. "To determine whether she would be 'more like a traditional employee' than an independent contractor, she must plead, under common law agency principles, that her alleged employer would have exerted control over the terms and conditions of her anticipated employment by, for example, training, supervising, and disciplining her." In other words, "Would the USTA have been Felder's joint employer had Felder worked the U.S. Open? If not, the USTA cannot be held liable under Title VII."

The Complaint does not state a joint employment claim because plaintiff does not allege that USTA instructed the security firm to fire him upon refusing his credentials, and he did not allege that AJ Security hired him for the sole purpose of working at the USTA and that USTA knew it was effectively terminating plaintiff's employment in denying him the credentials. And he does not allege that USTA had any control over the AJ Security's hiring process, or that USTA would have been involved in training plaintiff, issuing his paychecks, covering his insurance or other benefits, or controlling other aspects of his employment, such as providing his uniform or any tools. USTA's refusal to issue credentials is not enough to create a joint employer relationship with AJ Security.

The Court does remand this case so plaintiff (now represented by counsel for the first time) can amend his complaint to plausibly assert that USTA retaliated against him for that prior lawsuit. New counsel can also amend the complaint to further allege that USTA was a joint employer, based on the standards set forth in this opinion. The Court thinks plaintiff may succeed in this amendment based on what his lawyers wrote in the reply brief on appeal.

Judge Lynch dissents, writing that the majority decision "makes little sense in the context of a failure-to-hire claim such as Felder's" because "The very nature of a refusal-to-hire claim implies that the  plaintiff  does not have an 'employer-employee relationship' with the defendant. Such a plaintiff is not complaining that his employer has mistreated him; he is complaining, rather, that he has been denied any chance at employment, because the company controlling the workplace discriminates against applicants for work on a prohibited ground."