Labor & Employment Law Daily Joint employer may be liable for co-employer’s age bias if knowledge, failure to act ‘within its control’ shown
Wednesday, May 9, 2018

Joint employer may be liable for co-employer’s age bias if knowledge, failure to act ‘within its control’ shown

By Marjorie Johnson, J.D.

Three General Motors employees who filed an age discrimination suit claiming that they were unlawfully removed from more desirable positions at the UAW-GM Center for Human Resources (CHR), which is a nonprofit corporation that GM and UAW jointly created through their collective bargaining agreement, plausibly alleged that the CHR was a joint employer. Denying its motion to dismiss, a federal court in Michigan followed EEOC guidance and other federal circuit court precedent to determine that while CHR could not be vicariously liable for the acts of its co-employers, it could still plausibly be liable as a joint employer since the employees sufficiently alleged that it “knew or should have known” about the discrimination and “failed to undertake prompt corrective measures within its control” (Bolin v. General Motors, LLC, May 4, 2018, Michelson, L.).

Union VP has dual role. GM and UAW jointly created CHR to provide for the “development, coordination, and administration of programs” designed for employee education and training. The three employees, who began working for GM in the 1970s, were all “special assigned” to the CHR by the UAW’s VP in the 1990s. In September 2014, UAW’s VP became a member of CHR’s executive committee, which entitled her to exercise power and authority of its board of trustees between board meetings. In either her UAW or CHR roles (or both), she had the authority to make personnel decisions regarding assignments to CHR.

Plaintiffs lose lucrative assignments. In February 2015, UAW’s VP decided to terminate the employees’ assignments to CHR. Through her administrative assistants, they were advised that their assignments would end and that they could either return to their home plant or retire. They returned to their plants, but their pay decreased by up to 50 percent and their hours and working conditions were negatively affected. At least five of the vacated positions at CHR were subsequently filled with younger, less-experienced individuals.

What is scope of “joint employer” liability? CHR argued that the employees’ claims against it should be dismissed because they failed to allege that it was involved in the decision to terminate their special assignments. In particular, it argued that because joint employers cannot be vicariously liable for the activity of their co-employers, it could only be liable if it participated in the alleged discrimination. In response, the employees argued that they sufficiently pled that CHR was their joint employer but did not address the vicarious liability argument.

No vicarious liability. Finding that neither party had it “quite right,” the court explained that the employees were incorrect in arguing that being a joint employer was enough to establish liability for all joint employers. On the other hand, CHR had it wrong in asserting that the only way it could be liable was if it engaged in the alleged discriminatory act. But the court did agree that joint employers are not vicariously liable for the discriminatory conduct of a co-employer.

Guidance from EEOC. While the Sixth Circuit has not yet addressed this precise issue, the court was persuaded by other circuits that had. Guided by the EEOC Compliance Manual on employment agencies and staffing firms, courts have found that a co-employer is liable only if it participated in the discrimination or “if it knew or should have known” about the discrimination and “failed to undertake prompt corrective measures within its control.” Following the EEOC Guidance laying out these two bases of co-employer liability, the court rejected CHR’s insistence that it focus solely on its actions.

“Knew or should have known.” Turning to who was involved in the decision to end the employees’ special assignments to CHR, the court found the plaintiffs’ pleadings made clear the decision was made solely by UAW’s VP, and solely in her capacity as union VP. However, she also was an executive committee member of the CHR and the plaintiffs alleged that she made decisions about who would or would not be special assigned to the CHR in her role as the UAW VP “and/or” executive committee member of the CHR. Based on this, in the court’s view, it was plausible CHR knew about her decision and had a role in that decision yet failed to act to prevent the alleged discriminatory removal.

Joint employer that could be liable. The employees also sufficiently alleged that CHR was in fact a joint employer. They asserted that CHR, along with UAW and GM, jointly exercised control over their work or working conditions. They also claimed that UAW or CHR “provided day-to-day instructions, supervision, evaluation,” set “day-to-day terms and conditions of employment,” and that UAW’s VP, in her role as union VP and/or as CHR executive committee member, made personnel decisions regarding who would or would not be special assigned to the CHR. Thus, they asserted that CHR at least may have had a role in “placement, supervision, terms and conditions, evaluation, and control over their work.”

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