Out of Site, Not Out of Mind: Why Monitoring Offsite-Employee Behavior is Important

By Cheyanne K. Mahoney

The application of Title VII's prohibitions on discrimination and retaliation to non-employee third parties has significant implications for employers.  This is particularly true for employers who send employees offsite to work on long-term projects, where decreased supervision makes it easier for badly-behaving employees to engage in discriminatory behavior towards others.  A recent case, Leu v. Embraer Aircraft Maintenance Services, Inc., 2010 WL 1753616 (M.D.Tenn. Apr. 30, 2010) raises interesting questions about just how far non-employer liability under Title VII will extend in the Sixth Circuit.  This article explores the Embraer decision and what it might mean for employers in Tennessee.

I.    Liability under Title VII

Title VII of the Civil Rights Act of 1964 (42 U.S.C. § 2000e et seq.) protects individuals from discriminatory employment practices.  Specifically, the Act prohibits employers from "discriminat[ing] against any individual with respect to …compensation, terms, conditions, or privileges of employment” on the basis of …race, color, religion, sex, or national origin. 42 U.S.C. § 2000e-2(a)(1).

Although courts have developed different strategies for determining when an entity constitutes an employer for purposes of Title VII liability, all agree that the term "employer" should be construed liberally.  See Tipler  v. E.I. du Pont de Nemours and Co., 443 F.2d 125, 131 (6th Cir.1971).   To this end, several courts have held that Title VII does not require a formal employment relationship between the plaintiff and the defendant.  Some courts have even gone so far as to hold that Title VII claims do not even require an indirect employment relationship between the plaintiff and the defendant. That was the argument made by the plaintiff in Embraer.

II.    The Embraer Case

The plaintiff in Embraer, Stefan Leu, and his alleged harassers, Alex Martinez and John Stier, all worked for separate companies.  Leu worked for a painting company, Johnson Services Group, Inc., and Martinez worked for an aircraft services company, SMART.  Stier worked for Embraer, at its aircraft maintenance facility.   Leu and Martinez were sent by their respective employers to provide services at the Embraer aircraft facility.   It was at that facility where Leu claims he was subjected to numerous acts of sexual harassment by Martinez and Stier.  Leu alleged that Johnson, SMART, and Embraer knew of the conditions but permitted the abuse to continue, and that he suffered retaliation by Martinez after objecting to the harassment.  Leu sued all three companies under Title VII for discrimination based on hostile work environment and disparate treatment, and for retaliation.  SMART filed a motion to dismiss, arguing that it could not be liable under Title VII because it was not Leu's employer.

A.  Sibley and the "Significantly Affects Access" Theory

Leu cited Satterfield v. Tennessee, 295 F.3d 611 (6th Cir.2002), as well as cases from other jurisdictions, for the proposition that an employer may be liable under Title VII, despite not being the plaintiff's employer.   The reasoning in these cases had developed from a line of cases that started with Sibley Mem'l Hosp. v. Wilson, 488 F.2d 1338 (D.C.Cir.1973).  In Sibley, a male nurse brought suit under Title VII alleging that the defendant hospital discriminated on the basis of sex by refusing to refer male nurses to female patients.  The defendant hospital argued that, since no direct employment relationship between itself and the plaintiff was ever contemplated by either of them, it was not an employer under the Act.  Id. at 1340.  In rejecting that argument, the Court stated that it would contravene Congress' intent "[t]o permit a covered employer to exploit circumstances peculiarly affording it the capability of discriminatorily interfering with an individual's employment opportunities with another employer, while it could not do so with respect to employ[ees] in its own service."  Id. at 1341.  The Sibley Court went on to hold that, although there was no employment relationship between the plaintiff nurse and the defendant hospital “in the sense of the usual indicia of such employment,” the plaintiff had standing to pursue his Title VII claim.  Id. at 1342.

B.  The Expansion of Sibley

As the Sibley line of cases evolved, courts began to consider whether the same analysis applied under different circumstances, such as where the defendant has no employment relationship with the plaintiff, or where the plaintiff asserts a claim based on retaliation or hostile work environment.  One by one, these circumstances were tested under the Sibley line of reasoning, with sometimes inconsistent results.

For example, while some courts have held that at least an indirect employment relationship between the plaintiff and the defendant is required, others held that no such relationship was required under the Act.  See, e.g., King v. Chrysler Corp., 812 F.Supp. 151, 153 (E.D.Mo.1993) (the statute's prohibition on interference with plaintiff's “employment” means plaintiff must have an employment relationship with some entity, not necessarily defendant) (citing Broussard v. L.H. Bossier, Inc., 789 F.2d 1158, 1160 (5th Cir.1986)).  The difference between having an indirect employment relationship and no employment relationship can be significant.  If an indirect relationship exists, there are at least some agency principles at work (the defendant may not pay the plaintiff's salary, but it may control his work schedule or duties).   However, where no employment relationship exists, the defendant presumably has no control over the plaintiff, such as appeared to be the case in Embraer.

Next, courts confronted the issue of whether the Sibley line of authority applies with equal force to retaliation claims in violation of 42 U.S.C. § 2000e-3(a), given the difference in the language found in § 2000e-2(a)(1) and the language found in § 2000e-3(a).  Specifically, the statutory section on retaliation refers to discrimination “against any of [a defendant's] employees” while the statutory section prohibiting discrimination peaks about discriminatory actions against “any individual.”   Initially, this statutory distinction appeared to underpin the holding in Sibley.  However, in Christopher v. Stouder Mem'l Hosp., 936 F.2d 870 (6th Cir. 1991) cert. denied, 502 U.S. 1013 (1991), the Sixth Circuit held that, while Sibley did rely, to some extent, on the “any individual” language of § 2000e-2, this language was not the sole basis [for the] holding[]".  Stouder, at 875-76. Therefore, federal courts have jurisdiction to entertain retaliation claims where the defendant is in a position to interfere with the plaintiff's employment opportunities even though the plaintiff is not an employee of the defendant.  Id. at 876.

Finally, the Sibley analysis was tested in the context of hostile work environment claims.  In EEOC v. Foster Wheeler Constructors, Inc., 1999 WL 515524, 1 (N.D.Ill. July 14, 1999), the plaintiffs were the employees of subcontractors who alleged they were subjected to a hostile environment at a construction site run by the defendant.  Relying on Sibley, the court found that "subcontractors' employees who were employed by Title VII employers may sue [defendant] for interfering with the conditions of their employment." Id. at *10 (citation omitted).  In a footnote, the court noted that the conduct that the plaintiffs alleged constituted an "interference" with their employment conditions was the defendant's maintenance of a hostile work environment itself.  Id. at *10 n. 11.

Similarly, in Garrett v. Information Systems & Networks Corp., 1997 U.S. Dist. LEXIS 20845 (E.D.N.C. Nov. 21, 1997), the plaintiff worked for a company called I-Net.  She alleged that she was sexually harassed by an employee of a company called ISN while she was a contract worker with the postal service.  She argued that I-Net was liable as her employer, that the postal service was liable because she worked on its premises and it directed her duties, and that ISN was liable because it knew that one of its employees was harassing her.  In response to ISN's argument that it could not be held liable, the court stated that, under Sibley, it could be. "To allow a defendant to evade liability for allegedly allowing an employee to create a hostile working environment simply because the victim of the alleged harassment was not its employee would undercut the remedial purpose of Title VII." Id. at *6.

The arguments in Foster Wheeler and Garrett parallel the argument Leu made in Embraer –that SMART "significantly affected" Leu's "access to employment opportunities" by creating the hostile environment that ultimately led to Leu's constructive discharge.   The application of the Sibley reasoning in hostile environment claims leads to an important conclusion - if a harasser is able to create a hostile work environment for the plaintiff, particularly if it results in the plaintiff's constructive discharge, then the harasser has necessarily significantly affected the plaintiff's access to employment.

Imagine, for a moment, that a company sends several workers to complete a large project at an office building.  Now imagine that the workers somehow create a hostile environment for the employees who work in the office building.   Under the Sibley analysis, as refined by Foster Wheeler, Garrett and similar cases, the company that sent the workers to the building is liable as an employer, under Title VII, to all of the harassed employees in the building.¹ The potential liability is virtually unlimited.

C.  What Satterfield Means for Employers in the Sixth Circuit

In Satterfield, the plaintiff was a State of Tennessee employee who was required to undergo a physical exam to confirm that he could continue to perform his job functions. Id. at 613.  The exam was performed by a private physician employed by a medical service company. Id.  The physician's report concluded that the plaintiff was not fit for duty, and the plaintiff sued the physician and the medical service company claiming violations under the ADA (among other things), under the theory that the physician and medical service company had discriminated against him and this "significantly affected access ... to employment opportunities." Id. at 618.  The Court acknowledged the theory, but found that the State of Tennessee, not the physician or the medical service company, actually controlled the plaintiff's employment opportunities, and, therefore, the plaintiff did not have a viable civil rights claim against the physician and the medical service company on the "significantly affects access" theory.  Id.

In Embraer the Court ultimately denied SMART's Motion to Dismiss.  The Court held that, "while Satterfield arguably narrows the 'significantly affects access' theory, it does not reject it, indicating that the Sixth Circuit might recognize a Title VII claim where the plaintiff showed that a non-employer, through the discriminatory conduct of its employee, 'significantly affected' the plaintiff's access to employment."  Embraer, at *4.  Interestingly, the Court also noted that under Satterfield, "[Leu] arguably faces an uphill climb in prevailing against SMART."  In support for that proposition, the Court pointed to the fact that SMART did not "control [Leu's] employment as that term is used in Satterfield ", because SMART only provided co-workers who worked alongside Leu, and Leu's "actual employment" was controlled by Johnson and Embraer.  Id., at *4.

As the Court in Embraer points out, the current status of the Sibley "significantly affects access" theory in Tennessee is unclear.  At a minimum, employers can be held liable to a person who, although not an employee in the conventional sense, is treated like an employee in some way, either because the employer control's the person's job duties, or because it controls some other aspect of the person's job.  At a maximum, depending on how the Sibley analysis unfolds, employers could be liable to any third party whose access to employment is significantly affected by the defendant (or its agents).  Obviously, under the latter scenario, employers who send employees out into the world to interact with others on a regular basis had better be careful.

IV.    Conclusion

Until the Sibley analysis can be fully fleshed out in the Sixth Circuit, employers in Tennessee should take care to enforce anti-discrimination cases both onsite and offsite.  Understandably, employers may be hesitant to interfere in disputes between employees and third parties.  Nevertheless, failing to do so could open the door to liability under Sibley and its progeny of cases.    In order to limit potential liability, employers should train and monitor offsite employees well.  Additionally, employers should make an effort to stay apprised of the offsite work environment, treat all complaints from third parties seriously and, if possible, investigate offsite locations often.

¹ This scenario assumes that the other requirements for a Title VII case are met (including knowledge of the harassment by the employer).