Seventh Circuit Rejects Argument that Another Entity's Workers Were Defendant's Employees for ADEA Coverage Purposes | Practical Law

Seventh Circuit Rejects Argument that Another Entity's Workers Were Defendant's Employees for ADEA Coverage Purposes | Practical Law

In Bridge v. New Holland Logansport, Inc., the US Court of Appeals for the Seventh Circuit held that whether a worker is the defendant's employee for the Age Discrimination in Employment Act's (ADEA) coverage purposes depends on agency principles, including the extent to which the employer exercised control over the worker.

Seventh Circuit Rejects Argument that Another Entity's Workers Were Defendant's Employees for ADEA Coverage Purposes

by Practical Law Labor & Employment
Published on 15 Mar 2016 • USA (National/Federal)
In Bridge v. New Holland Logansport, Inc., the US Court of Appeals for the Seventh Circuit held that whether a worker is the defendant's employee for the Age Discrimination in Employment Act's (ADEA) coverage purposes depends on agency principles, including the extent to which the employer exercised control over the worker.
On March 9, 2016, in Bridge v. New Holland Logansport, Inc., the US Court of Appeals for the Seventh Circuit held that whether a worker is the defendant's employee for purposes of the ADEA's 20-employee coverage threshold depends on agency principles, including the extent to which the employer exercised control over the worker. The Seventh Circuit granted summary judgment to the defendant employer, finding that three workers who were employed by a related entity were not the defendant's employees for ADEA coverage purposes. ( (7th Cir. Mar. 9, 2016).)

Background

William Bridge was fired by New Holland Logansport in 2011. During 2010 and 2011, New Holland Logansport (Logansport) had between 16 and 19 employees.
Logansport shared common ownership with another company, New Holland Rochester (Rochester). Logansport and Rochester:
  • Operated separate stores and maintained separate bank accounts.
  • Generated their own invoices.
  • Filed their own tax returns.
  • Handled their own advertising.
  • Had the same personnel policies and provided their employees the same benefits.
Three employees of Rochester also performed certain functions for Logansport.
In 2012, Bridge sued Logansport for age discrimination under the ADEA, arguing that the three Rochester employees should be counted as Logansport employees for ADEA purposes. The district court granted summary judgment to Logansport because Logansport did not meet the 20-employee threshold for employer coverage under the ADEA. Bridge appealed.

Outcome

The Seventh Circuit affirmed the district court's grant of summary judgment to Logansport because it did not have the requisite number of employees to be covered by (and subject to being sued under) the ADEA. The court held that whether a worker is considered an employee for purposes of meeting the ADEA's 20-employee threshold depends on agency principles, including the extent to which the employer exercised control over the worker.
The Seventh Circuit noted that:
  • To be a covered employer under the ADEA, an employer must have 20 or more employees each working day for at least 20 calendar weeks in the calendar year of, or the year preceding, the alleged discrimination (29 U.S.C. § 630(b)).
  • Contrary to the district court's reasoning, part-time status does not preclude counting an employee toward the 20-employee coverage threshold. Whether an individual is "employed" by an entity on a particular day depends on whether there is an employment relationship at that time, not whether the individual actually worked that day (Walters v. Metropolitan Educ. Enter., Inc., 519 U.S. 202, 206-08 (1997).)
  • Employees may be counted toward the 20-employee coverage threshold if the separate entities are joint employers (Tamayo v. Blagojevich, 526 F.3d 1074, 1088 (7th Cir. 2008)).
  • Agency principles are useful in the joint employment analysis, including:
    • the extent the putative joint employer exercised control over the putative joint employee;
    • the type of work involved and the level of skill required for the job;
    • the putative employer's responsibility for operation costs related to the putative joint employee;
    • whether the putative joint employer provided benefits to the putative joint employee; and
    • the length of the putative joint employee's job commitment to the putative joint employer.
    (Knight v. United Farm Bureau Mut. Ins. Co., 950 F.2d 377, 378-79 (7th Cir. 1991).)
  • Using a worker's services does not necessarily mean that a company "employs" that worker.
  • Joint employment determinations require a totality of the circumstances analysis, emphasizing the degree of control the putative joint employer exercised over the putative joint employee (Moldenhauer v. Tazewell-Pekin Consolidated Commc'ns Ctr., 536 F.3d 640, 644 (7th Cir. 2008)).
  • In certain circumstances, all employees of separate but affiliated companies will be aggregated and counted for ADEA coverage purposes. Aggregation is appropriate when:
    • a large enterprise has purposely divided itself into smaller companies to avoid its obligations under the anti-discrimination laws;
    • a creditor of one company could sue the company's affiliate by piercing the corporate veil (an issue evaluated under state law); or
    • an affiliated company, not the plaintiff's employer, directed discriminatory actions or practices that are the basis for the plaintiff employee's lawsuit.
  • The four-factor integrated enterprise test used to treat separate entities as a single employer under the NLRA was rejected as a test applicable to the ADEA (Papa v. Katy Indus., Inc., 166 F.3d 937, 939-43 (7th Cir. 1999)).
The Seventh Circuit determined that Logansport did not meet the 20-employee threshold for coverage under the ADEA, finding that:
  • Bridge failed to show that Logansport exercised enough control over the three Rochester employees for Logansport to be a joint employer with Rochester. Logansport's manager did not:
    • direct the three Rochester employees' work;
    • set their schedules; or
    • supervise their work.
  • Other agency factors did not suggest that Logansport had an employment relationship with the three Rochester employees. Logansport did not provide the three Rochester employees with:
    • training;
    • special equipment or materials; or
    • pay or benefits.
  • There was no basis to aggregate the employees of both Logansport and Rochester for ADEA coverage purposes because:
    • Bridge did not allege that Logansport and Rochester were split up in order to avoid being covered by the anti-discrimination laws;
    • the identities of Logansport and Rochester were separate enough that piercing the corporate veil between each affiliated company would be inappropriate; and
    • the owner who fired Bridge owned both Logansport and Rochester, but he fired Bridge while wearing his "Logansport hat" and was not acting on Rochester's behalf.

Practical Implications

The Seventh Circuit's decision in Bridge v. New Holland Logansport, Inc. illustrates the difficulty for employees, when trying to make a joint employment argument, to satisfy the ADEA's 20-employee coverage threshold. Employees of a related company performing some functions for the defendant employer alone may not be enough to have those workers counted as the defendant's employees. The defendant employer must exercise sufficient control over those workers to have them counted toward the 20-employee coverage threshold.