What’s Going on with the Ninth Circuit’s Title VII Joint Employer Test?
In February, the Ninth Circuit held that two Washington State fruit growers could face Title VII liability for their labor contractor’s discrimination against H-2A temporary workers. The court reasoned that because the growers and the contractor were joint employers, the EEOC could pursue claims against the growers based on the contractor’s alleged Title VII violations. In reaching its joint employer finding, the court adopted a common-law agency test for Title VII joint employer status as a matter of first impression. EEOC v. Global Horizons, Inc. is a victory for H-2A workers, who often experience discrimination at work and even labor trafficking. But the court’s analysis presents a puzzling application of its own test.
In 2003, Green Acre Farms and Valley Fruit Orchards (the “Growers”) sought to hire temporary workers. They contracted with labor contractor Global Horizons to recruit the workers from Thailand as part of the H-2A program, which allows foreign nationals to work temporarily in U.S. agricultural jobs. The Growers and Global Horizons each assumed responsibility to manage various aspects of the Thai workers’ employment. The Growers agreed to manage the workers at the orchards. Global Horizons agreed, in part, to provide the workers with housing, transportation, and meals or cooking facilities, as the H-2A regulations require.
Both the Growers and Global Horizons allegedly mistreated and discriminated against the Thai workers. First, at the orchards, the Growers and Global Horizons allegedly harassed and overworked the Thai workers and prioritized Mexican workers when faced with work shortages. Second, Global Horizons allegedly discriminated against the Thai workers with respect to housing, transportation, and food. Allegedly, Global Horizons provided the Thai workers with overcrowded, mice- and bug-infested housing with insufficient kitchens and bathrooms. It also failed to take the workers to the grocery store frequently enough and transported the workers on unsafe buses. Global Horizons threatened to send the Thai workers—many in debt because of the high recruitment fees Global Horizons had charged—back to Thailand if they complained, took their passports, and hired guards to prevent escape. The EEOC alleged that Global Horizons provided better conditions for Mexican workers. The EEOC sued the Growers and Global Horizons under Title VII, claiming discrimination based on race and national origin.
Because the district court entered a default judgment against Global Horizons—which had become insolvent and stopped pursuing a defense—the Ninth Circuit focused on the Growers’ liability at the motion to dismiss stage. No one disputed that the EEOC had sufficiently alleged that the Growers could be liable for discrimination at the orchards. Thus, the court had to decide only whether the Growers could face liability for Global Horizons’ housing, transportation, and food discrimination. It held that they could.
The court first asked whether the Growers were “employers” under Title VII—a prerequisite to liability. Seemingly accepting, without explanation, that Global Horizons was an “employer” with respect to housing, transportation, and food, the court asked whether the Growers were “joint employers” in that context.
As a matter of first impression, the court adopted a common-law agency test to determine whether entities are joint employers under Title VII. The court first looked to Title VII’s definition of “employer,” which it found “completely circular.” It then relied on Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318 (1992), which held that when a statutory definition is completely circular, courts should use common-law agency principles to determine whether an employer-employee relationship exists. The court rejected the economic-reality test, which considers whether workers economically depend on a purported joint employer. It reasoned that this test developed in the context of statutes, like the FLSA, with broader “definitions of ‘employ’ that expand the scope of employment relationships beyond the common-law understanding.”
Under a common-law test, control is “the principal guidepost.” The court listed twelve factors, from Darden, to consider when analyzing whether control exists:
the skill required; the source of the instrumentalities and tools; the location of the work; the duration of the relationship between the parties; whether the hiring party has the right to assign additional projects to the hired party; the extent of the hired party’s discretion over when and how long to work; the method of payment; the hired party’s role in hiring and paying assistants; whether the work is part of the regular business of the hiring party; whether the hiring party is in business; the provision of employee benefits; and the tax treatment of the hired party.
The court then purported to apply this test in concluding that the Growers were joint employers with respect to housing, transportation, and food. But it barely referenced the Darden factors and instead turned its attention to the H-2A regulations. Those regulations obligate an “employer” to provide housing, transportation, and meals or cooking facilities as “material terms and conditions of employment”—even though outside the H-2A context, an employer would have no responsibility over these matters. The Growers fell within the H-2A regulations’ definition of “employer.” Thus, the court reasoned, even though they delegated responsibility over housing, transportation, and food to Global Horizons, the Growers ultimately remained legally responsible for those matters. That legal responsibility meant that the Growers had “control” over housing, transportation, and food. And because control is the “principal guidepost” of a common-law agency test, the Growers were joint employers with respect to these matters and could face Title VII liability.
Oddly, the newly announced joint employer test almost completely dropped out of the court’s analysis. The court relied on the fact that the Growers were “employers” under the H-2A regulations—and therefore had a legal obligation to provide housing, transportation, and food—to find that the Growers had the requisite “control” to satisfy the joint employer test, without applying any of the Darden factors that are supposed to determine whether control exists. The court explained that most of the Darden factors did not apply because housing, transportation, and food do not typically fall within the employment relationship. But without fully applying its new test, the court provided little guidance to future litigants.
Global Horizons is significant for several reasons. First, a common-law agency test now governs whether entities are joint employers in the Ninth Circuit under Title VII. Second, the decision adds some needed protection for H-2A workers who suffer discrimination and abuse. Federal prosecutors dropped human trafficking charges against several Global Horizons executives in 2012. While the Washington district court found Global Horizons civilly liable for $7.6 million, holding employers in the Growers’ position liable may serve as an additional deterrent and prevent these abuses from happening in the first place.
Still, the Ninth Circuit’s heavy reliance on the H-2A regulations—and scant analysis of the Darden factors—may leave future litigants in a precarious position. It is difficult to predict how the court will apply its new test to future U.S. citizen litigants in typical Title VII cases. And linking the growers’ obligations to the “terms and conditions” of employment under the H-2A regulations raises questions about how the test would apply to undocumented workers. Despite the win for the H-2A workers in this case, the full legacy of Global Horizons remains to be seen.