In a case involving a hotel and its management company, the U.S. Court of Appeals identified the proper test for determining if two entities are joint employers for purposes of Title VII liability.
According to the U.S. Court of Appeals for the Seventh Circuit in Frey v. Hotel Coleman, the correct test for joint employer status is an “economic realities test,” previously articulated in Knight v. United Farm Bureau Mut. Ins. Co., that examines the following factors: (1) the extent of the employer’s control and supervision over the worker, including directions on scheduling and performance of work, (2) the kind of occupation and nature of skill required, including whether skills are obtained in the workplace, (3) responsibility for the costs of operation, such as equipment, supplies, fees, licenses, workplace, and maintenance of operations, (4) method and form of payment and benefits, and (5) length of job commitment and/or expectations. Although this is a balancing test, the court observed that the “right to control” is the most important factor and must be accorded the most weight.
This case warns companies that joint employer status may be found over another entity’s employees if the company exercises sufficient control over those individuals and workplace circumstances.