Apr
02

Seventh Circuit Reconciles Tests For Determining General Contractor Liability For Title VII Claims By Indirect Employees

The Seventh Circuit recently reconciled the “right to control” and “economic realities” tests in holding that a construction foreman hired by a second tier subcontractor failed to show that the general contractor was an indirect employer under Title VII since the general contractor exercised insufficient control under a combined version of these tests. Love v. JP Cullen & Sons, 2015 US App LEXIS 3673 (7th Cir. March 2015).

Defendant JP Cullen & Sons, the general contractor hired EMI to select subcontractors for a City Hall project. One of EMI’s subcontractor’s was Union Contracting, which hired plaintiff as foreman. Plaintiff, Walter V. Love, an African-American, was dismissed by the defendant general contractor from the construction site (over the objection of his direct supervisor from Union Contracting) after a physical altercation with another subcontractor’s worker. Mr. Love claimed racial discrimination and retaliation on the basis of race in his removal in violation of Title VII of the Civil Rights Act. 42 USC § 2000(e) et seq. Both parties moved for summary judgment and the district court granted summary judgment in favor of defendant JP Cullen, which was affirmed on appeal by the Seventh Circuit. The analysis focuses on whether JP Cullen exercised sufficient control over Mr. Love to be held as Love’s indirect employer under Title VII.

Plaintiff must prove the existence of an employer-employee relationship to bring a Title VII claim. While JP Cullen is not Love’s direct employer, it may be found that it is Love’s indirect employer. Two different standards were previously used in the Seventh Circuit to determine whether one is an indirect employer. The first is a five-factor “right to control” test articulated in Knight v. United Farm Bureau Mutual Ins. Co., 95- F. 2d 377, 378-79 (7th Cir. 1991), which balances: (1) the extent of the employer’s control and supervision over the employee; (2) the kind of occupation and nature and skill required, including whether skills were acquired on the job; (3) the employer’s responsibility for the costs of operation; (4) the method and form of payment and benefits; and (5) the length of the job commitment. The second test articulated in EEOC v. Illinois, 69 F.3d 167, 169 (7th Cir. 1995) considers the amount of control exerted by the alleged indirect employer with an emphasis on the “economic realities” of the employment relationship. While the parties treated these as two independent, mutually exclusive inquiries, the Seventh Circuit found that the Knight test is a more structured analysis that can be combined with the “economic realities” test.

The Court examined each of the five factors to determine how much control JP Cullen exerted over Love and also what the economic realities were in order to determine liability under Title VII and found all five weigh in favor of defendant general contractor: (1) while the JP Cullen had the ability to unilaterally remove Love from the job site without the consent of his employer, JP Cullen did not directly hire Love, set his hours, or supervise his work; (2) Love obtained minimal training from JP Cullen (in the form of safety meetings); (3) the EMI contract required that EMI (not Cullen) furnish all labor, materials, equipment and services; (4) Love received all paychecks and W-2s directly from his employer Union Contracting (not JP Cullen). The fact that JP Cullen required EMI to hire only union workers does not weigh against it; and (5) Love worked on this project for about eight months and he intended to remain with his employer Union Contracting (not JP Cullen) after the City Hall project concluded. Therefore, none of the factors weighed in Love’s favor.

Prior to the Love holding, the standard for determining whether an entity is an indirect employer was unsettled in the Seventh Circuit. This decision reconciles the two tests previously used by the Seventh Circuit in determining whether one is an indirect employer under Title VII. While this holding was easily decided in favor of the defendant, general contractors need to be aware of their level of control over subcontractors (and sub-subcontractors) beyond a mere tort liability setting; they should also be aware that the same control over indirect employees can give rise to employment discrimination actions under Title VII.

Trisha K. Tesmer

Trisha K. Tesmer

Trisha Tesmer is an Appellate and Litigation partner in the firm's Chicago office.

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