Third Circuit Court of Appeals Addresses Legal Definition of “Employer” in Sexual Harassment Case

A plaintiff could not maintain a sexual harassment complaint because the defendant was not her employer under state or federal law, according to a recent appellate court ruling. Plaso v. IJKG, LLC, No. 13-2565, slip op. (3rd Cir., Jan. 21, 2014). The plaintiff worked at the defendant’s business location, and the sexual harassment forming the basis of her complaint allegedly took place there. Her salary and the authority to hire or fire her, however, originated with another company. Although the court ruled against the plaintiff, she was able to settle claims with the alleged harasser and the company that employed both of them. The case offers useful guidance for New Jersey workers considering a claim sexual harassment or other forms of employment discrimination
The U.S. Supreme Court developed a three-part test to determine whether a party is an “employer” in Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318 (1992), and the Third Circuit has adopted the test for Title VII and other laws. It identifies the party that has “the right to control the manner and means” of the plaintiff’s employment, id. at 323-24, through three “indicia of control”: (1) who pays the worker’s salary, (2) who has the right to hire and fire the worker, and (3) who controls the worker’s “daily employment activity.” Plaso, slip op. at 9, quoting Covington v. Intern. Ass’n of Approved Basketball, 710 F.3d 114, 119 (3rd Cir. 2013).

The plaintiff began working for a consulting firm based in Ohio, Healthcare MCR, in early 2008. Her direct supervisor, R. Brent Martin, assigned her to work at the office of a client, Bayonne Medical Center (BMC) in Bayonne, New Jersey. Martin also worked there as Chief Restructuring Officer. The plaintiff worked at BMC five days a week; had her own office, along with telephone and email account; and interacted with BMC staff on a daily basis. Martin was usually working at BMC, and the plaintiff went through him for most employment concerns, such as work hours and leave. Her paycheck came from Healthcare.

The plaintiff went to BMC’s Vice President of Human Resources in June 2010 to report sexual harassment by Martin allegedly occurring since 2008. She told the CEO of BMC that she did not want to work close to Martin. The CEO reportedly told her to pack up her things and leave. She continued to receive a paycheck from Healthcare until October 2010.

She filed state employment discrimination complaints against Martin and Healthcare. Both claims settled in October 2010. In 2011, she filed suit against BMC, claiming gender and quid pro quo discrimination, hostile work environment, and retaliation under Title VII and the New Jersey Law Against Discrimination. The district court granted BMC’s motion for summary judgment, holding that she was not an employee as definied by law.

On appeal, the plaintiff offered three ways she might have an employment relationship with BMC: (1) BMC employed her; (2) BMC jointly employed her with Healthcare; or (3) the contract between BMC and Healthcare created an “integrated entity” that employed her. Plaso at 4-5. She asked the court to look beyond her employment contract with Healthcare to the employment relationship that had developed during her more than two years at BMC. The court disagreed, finding the the Darden test made Healthcare the only “employer” under the law.

If you need to speak to an employment discrimination attorney in New Jersey or New York, contact the Resnick Law Group at 973-781-1204 or (646) 867-7997.

More Blog Posts:

Settlement Shows Workplace Sexual Harassment Can Happen Anywhere in New Jersey and Elsewhere, The New Jersey Employment Law Firm Blog, January 29, 2014
Jury Award Reminds Employers in New Jersey and Across the U.S. that Race Discrimination is Illegal, The New Jersey Employment Law Firm Blog, January 16, 2014
Federal Law Protects Workers in New Jersey, New York, and Elsewhere from Unlawful Age Discrimination, The New Jersey Employment Law Firm Blog, January 14, 2014

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