Employment Law Daily Company that had contract worker removed after she claimed harassment may be liable as joint employer
Friday, July 22, 2016

Company that had contract worker removed after she claimed harassment may be liable as joint employer

By Kathleen Kapusta, J.D. Finding no evidence that a company’s "independent concerns" regarding a contract employee’s "gossipy" and "flirtatious" behavior—which resulted in her removal from her position—would have been raised absent her allegations of sexual harassment, a federal district court in Ohio could not find as a matter of law that the company’s stated reason for its removal request was nondiscriminatory. After finding that the company might be a joint employer, the court denied its motion for summary judgment on her Title VII retaliation claim. However, her claim against her employer, in which she alleged that it ratified the company’s retaliatory conduct, failed. Because the company was a separate and distinct legal entity unaffiliated with the employer, she was unable as a matter of law to prevail on a cat’s paw theory of liability (Burt v. Maple Knoll Communities, Inc., July 19, 2106, Black, T.). Removal. Employed by National Church, a property management and supportive social services company, the employee worked as a service coordinator for Maple Knoll (MK) pursuant to a contract between the companies. When an MK maintenance worker purportedly showed her a photo of his penis, she reported the incident to both companies. During MK’s investigation into the incident, it determined that the employee "engaged in gossipy behavior, likely to be detrimental" to its residents by telling others the alleged harasser was a sexual predator. The company also determined that the employee had fostered an inappropriate relationship with the maintenance worker. At MK’s request, National Church removed her from her service coordinator position. It terminated her employment that same day. The employee then sued both companies, asserting claims for retaliation in violation of Title VII and the Ohio Fair Employment Practices Act. She also sued MK’s HR director under Ohio common law. Joint employment? While MK argued that it was not her employer and therefore could not be held liable, the court pointed out that National Church hired her in accordance with a contract between the two companies governing the terms of her employment. In that contract, the parties negotiated the specific duties of the service coordinator position. They agreed to an hourly rate to be paid by MK to National Church for each hour worked by the service coordinator, which capped the amount paid by National Church to its employee. MK also retained the right to approve those hired by National Church and the right to, in its sole discretion, remove the service coordinator if deemed "unsatisfactory." Observing that MK hired and fired the employee and determined the amount she was compensated, the court found that a reasonable jury could conclude that both companies jointly controlled her position sufficient to characterize MK as her employer. Retaliation by MK. Turning to the employee’s retaliation claim against MK, the court noted evidence that after she reported the incident, she became frustrated at the investigation’s slow pace. The HR director, learning about her increasing agitation, determined that her continued employment would be disruptive as residents might ask a lot of questions, and she was uncomfortable with how the employee was portraying the situation. This "concern," which was admittedly a factor in the HR director’s removal decision, could be offered as direct evidence of retaliatory animus, said the court. And even if the employee could not establish her claim through direct evidence, the court found she established a prima facie case under the indirect method. The adverse action at issue was the employee’s removal from the service coordinator position, and not National Church’s failure to place her in another position, stressed the court, pointing out that MK had the sole discretion to remove her. Further, the parties’ contract provided that if an employee was removed due to dissatisfaction with her performance, National Church could terminate the agreement. Thus, MK knew its decision could result in the employee’s termination. Observing that MK’s HR director stated that her "main concern" in terminating the employee was that she might provide inappropriate information to residents regarding the alleged incident, the court suggested that had the employee not reported the harassment, she would not have been removed and ultimately terminated. Thus, she established a causal connection between her protected activity and the adverse action. Pretext. There was also evidence of pretext, said the court, noting that an allegation that the maintenance worker and the employee had regularly engaged in sexual banter was a disputed fact issue, which ignored her accusation that he had engaged in unwanted sexual harassment. And while the HR director claimed witnesses observed the employee snuggling up to the worker, one witness testified that what she told the director about the employee and the worker was very different from the director’s report of the incident. Further, there was evidence that the maintenance worker had engaged in inappropriate behavior with other MK employees and regularly engaged a coworker in discussions about sexually related matters. Since numerous disputed fact issues existed, summary judgment was inappropriate on this claim. Retaliation claim against National Church. Because the adverse employment action at issue was the employee’s removal from her position by MK, her retaliation claim against National Church turned on whether MK’s allegedly retaliatory animus could be attributed to National Church, despite her admission that it was not involved in, nor had reason to doubt the accuracy of, the investigation leading to her removal. Here, the court found that even if MK’s investigatory findings were pretext for illegal retaliation, the employee could not use a cat’s paw theory to impute a retaliatory animus to National Church. Notably, she did not allege that National Church possessed its own illegal retaliatory animus, but rather that it violated the law by adopting MK’s retaliatory conduct. Courts in the Sixth Circuit have not addressed whether the cat’s paw theory will, as a matter of law, impute liability to an employer in circumstances where a third party, who is neither an agent nor an employee of the employer, allegedly acts on an illegal animus. Because the employee only alleged that National Church "ratified" MK’s retaliatory conduct, and since MK was a separate and distinct legal entity unaffiliated with National Church, the court found she could not as a matter of law prevail on her cat’s paw theory of liability with respect to National Church. Common law claim. For the same reasons that the retaliation claim against MK survived summary judgment, the court found that the employee’s common law claim against the HR director, in which she alleged the director was personally liable for retaliating against her, also survived.

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