Matthew Faush v. Tuesday Morning

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 14-1452
MATTHEW FAUSH,
Appellant
v.
TUESDAY MORNING, INC.
_____________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civ. No. 2-12-cv-07137)
District Judge: Honorable Luis Felipe Restrepo
_____________
Argued: December 9, 2014
Before: FUENTES, FISHER, and KRAUSE, Circuit Judges
(Opinion Filed: November 18, 2015)
Wayne A. Ely, Esq. ARGUED
Timothy M. Kolman, Esq.
W. Charles Sipio, Esq.
Kolman Ely PC
414 Hulmeville Avenue
Penndel, PA 19047
Attorneys for Appellant
Stephen C. Baker, Esq.
Alan M. Kidd, Esq.
Drinker Biddle & Reath LLP
One Logan Square, Suite 2000
Philadelphia, PA 19103
Attorneys for Appellees
Molly B. Cowan, Esq.
Robert E. Luxen, Esq. ARGUED
Hallett & Perrin, P.C.
1445 Ross Avenue, Suite 2400
Dallas, Texas 75202
OPINION OF THE COURT
FUENTES, Circuit Judge.
Appellant Matthew Faush is an African-American
employee of Labor Ready, a staffing firm that provides
temporary employees to several clients, including Appellee
Tuesday Morning, Inc. According to Faush, Labor Ready
assigned him to work at one of Tuesday Morning’s stores,
where he was subjected to racial slurs and racially motivated
accusations and was eventually terminated.
Faush filed suit against Tuesday Morning, claiming
violations of Title VII and the Pennsylvania Human Relations
Act, among other statutes. The District Court granted
2
summary judgment to Tuesday Morning on the ground that,
because Faush was not Tuesday Morning’s employee,
Tuesday Morning could not be liable for employment
discrimination. Because a rational jury applying the factors
announced by the Supreme Court in Nationwide Mutual
Insurance Co. v. Darden could find on these facts that Faush
was Tuesday Morning’s employee for purposes of Title VII
and the Human Relations Act, we vacate in part the grant of
summary judgment and remand for further proceedings.
I. Factual and Procedural Background
A. The Underlying Dispute
Matthew Faush was employed by Labor Ready, a
staffing firm that provides temporary employees to a number
of clients, including closeout home-goods retailer Tuesday
Morning, Inc. Over the course of a month, Labor Ready sent
temporary employees to a new Tuesday Morning store in
Pennsylvania overseen by store manager Keith Davis. The
temporary employees were asked to unload merchandise, set
up display shelves, and stock merchandise on the shelves in
preparation for the store’s opening the following month.
Faush was assigned to the store for ten days; each day, he
generally worked for eight hours with nine other temporary
employees.
Faush alleges in his complaint that when he and other
African-American temporary employees were working at the
Tuesday Morning store, Davis accused them of stealing two
eyeliner pens, insisting that “[his] people wouldn’t do that.”
(App. 30 ¶ 18.) A few days later, the store owner’s mother
told Faush and two other African-American temporary
employees to work in the back of the store with the garbage
3
until it was time to leave. When Faush and his coworkers
went to speak with Davis, a white employee blocked their
path and referred to them using a racial slur. Davis refused to
hear their complaints regarding the slur. Instead, he informed
them that he would not let them on the floor because an alarm
had been triggered and he was concerned about loss
prevention. Faush alleges that he and his African-American
coworkers were “terminated,” but his complaint provides no
further detail. (App. 31 ¶ 34.)
Faush filed suit against Tuesday Morning in federal
court for racial discrimination in violation of Title VII of the
Civil Rights Act of 1964, the Pennsylvania Human Relations
Act, and 42 U.S.C. § 1981. The parties conducted limited
discovery on the threshold issue of whether Faush could be
considered Tuesday Morning’s employee. Tuesday Morning
subsequently filed a motion for summary judgment on the
grounds that it had never employed Faush or entered into a
contract with him, as is a predicate for his various claims.
B. The Summary Judgment Evidence
Labor Ready assigned Faush to work at a Tuesday
Morning store under an “Agreement to Supply Temporary
Employees” (the “Agreement”) between Labor Ready and
Tuesday Morning. (App. 55.) There was no contract between
Faush and Tuesday Morning, and Faush never formally
applied for employment at the store.
Labor Ready provided the temporary employees with
time cards on which they recorded the amount of time they
spent working at Tuesday Morning. Under the Agreement,
Tuesday Morning was expected to “approve [the] time card
for each [temporary employee], or otherwise accurately report
4
the daily hours worked.” (App. 56 ¶ 2(a).) Accordingly, at the
end of each day, Davis signed a document indicating how
many hours each temporary employee had worked. Labor
Ready billed Tuesday Morning $13.52 per hour of work plus
tax.
If a temporary employee was unable to report to work
at the store, he or she was expected to inform Labor Ready
rather than Tuesday Morning. Once a temporary employee
was at the store, however, the Agreement provided that
Tuesday Morning was “responsible for supervising and
directing [his or her] activities.” (App. 55, 56 ¶ 4(a).) Tuesday
Morning acknowledged that Labor Ready was “not a licensed
general contractor or subcontractor,” was not responsible for
Tuesday Morning’s project, and would “not be providing
supervision services for its [temporary employees].” (App.
55, 56 ¶ 4(a)-(b).) Indeed, Tuesday Morning was required to
provide any necessary “site specific safety orientation and
training,” as well as any “Personal Protective Equipment,
clothing, or devices necessary for any work to be performed.”
(App. 56 ¶ 3(a).)
Tuesday Morning was expected to determine whether
the temporary employees met its “skill, competency, license,
experience, or other requirements, and only assign [them]
duties consistent with their skills and abilities.” (App. 56 ¶
2(d).) The Agreement did not permit Tuesday Morning to
“entrust [temporary employees] with the care of unattended
premises, custody or control of cash, credit cards, valuables
or other similar property,” or to “allow [temporary
employees] to operate machinery, equipment or motor
vehicles without [Labor Ready’s] prior written permission.”
(App. 56 ¶ 4(c).)
5
Davis, the Tuesday Morning store manager, testified at
his deposition that he had “supervisory control over the
temporary employees,” trained them to assemble shelves, and
“assigned them tasks to perform on a daily basis.” (App. 101,
104.) Significantly, the work they were assigned was no
different from the work Davis assigned to his own employees.
Davis further testified that the temporary employees were “a
stop[gap] measure” because his store was “brand new” and
did not yet have “a full compl[e]ment of Tuesday Morning
employees.” (App. 104.)
A Labor Ready supervisor did visit the store on two
occasions. On her first visit, she ensured that the temporary
employees were moving at an acceptable pace, but the tasks
were assigned by Davis, and the Labor Ready supervisor
passed Davis’s instructions on to the temporary employees.
On the second visit, she simply verified that all of the
temporary employees were present.
None of the temporary employees was provided with a
key to the store. At his deposition, however, Davis referred to
the “assistant managers of the store” as his “key holders.”
(App. 101.) Presumably, then, not every permanent employee
at Tuesday Morning was provided with a key.
Pursuant to the Agreement, if Tuesday Morning was
“unhappy with any [temporary employee] for any reason,” it
could inform Labor Ready “within the first two (2) hours,”
and Labor Ready would “send out a replacement
immediately.” (App. 55.) Davis testified that Tuesday
Morning regional manager Kathy Beromeo had the authority
to request that a temporary employee not be allowed to return
to the store; however, to his knowledge, this never occurred.
Tuesday Morning had no authority to terminate a temporary
6
employee’s employment with Labor Ready, although the
record is silent as to what, if any, other temporary
employment would be made available to a temporary
employee by Labor Ready if that employee were rejected by
Tuesday Morning. And after Faush ended his work at the
store, Tuesday Morning never received any claim for
unemployment compensation benefits.
Labor Ready set the temporary employees’ pay rate;
paid their wages, taxes, and social security; maintained
workers’ compensation insurance on their behalf; and
completed their I-9 employment eligibility verification forms.
Tuesday Morning, on the other hand, never had Faush’s
social security number.
In certain respects, however, Tuesday Morning shared
responsibility for the wages paid to the temporary employees.
As explained above, Tuesday Morning paid Labor Ready for
each hour worked by each temporary employee. The
Agreement provided that Labor Ready could adjust the rates
charged to Tuesday Morning to reflect increases in its “actual
or government mandated cost for wages, withholding
amounts, governmental taxes, assessments, health care, [and]
Workers’ Compensation insurance.” (App. 55, 56 ¶ 2(f).)
Tuesday Morning could also be required to “pay overtime
charges as applicable to overtime paid according to law.”
(App. 56 ¶ 2(b).) Moreover, the Agreement required Tuesday
Morning to notify Labor Ready “if a prevailing wage, living
wage, or any other government mandated minimum statutory
wage should be paid to [temporary employees]” and did not
“relieve[] [Tuesday Morning] of its primary responsibility for
ensuring complete and accurate compliance with all local,
state, and federal laws relating to prevailing wages.” (App. 56
¶ 3(c).)
7
Finally, the Agreement required both Labor Ready and
Tuesday Morning to “comply with all applicable federal, state
and local laws and regulations concerning employment,
including but not limited to: wage and hour, breaks and meal
period regulations, the hiring and discharge of employees,
Title VII and the FLSA.” (App. 56 ¶ 3(b).) Moreover, both
companies pledged to “provide a workplace free from
discrimination and unfair labor practices.” (Id.)
C. The Decision of the District Court
The District Court granted Tuesday Morning’s motion
for summary judgment. Weighing the factors relevant to the
existence of an employment relationship, it held that Tuesday
Morning was not Faush’s employer and, consequently, could
not be liable under Title VII or the Pennsylvania Human
Relations Act.1 The District Court further held that Faush
could not pursue his § 1981 claim because he had not
attempted to enter into any contract with Tuesday Morning.
Faush filed a timely notice of appeal.2
1
The District Court, in the absence of precedential authority
within this Circuit, understandably relied on three non-
precedential opinions in reaching its conclusion. Aside from
their non-precedential status, however, those cases involved
pro se plaintiffs who presented virtually no evidence in
opposition to summary judgment and thus are readily
distinguishable.
2
The District Court had subject-matter jurisdiction under 28
U.S.C. § 1331. We have jurisdiction to review the District
Court’s final order granting summary judgment pursuant to
28 U.S.C. § 1291.
8
II. Discussion
We first address Faush’s claims under Title VII and
the Pennsylvania Human Relations Act, then his claim under
§ 1981.
A. Title VII and the Pennsylvania Human Relations
Act
1. The necessity of an employment relationship
Title VII forbids, among other things, “status-based
discrimination by employers, employment agencies, labor
organizations, and training programs.” Univ. of Tex. Sw. Med.
Ctr. v. Nassar, 133 S. Ct. 2517, 2530 (2013) (citing 42 U.S.C.
§ 2000e-2(a)-(d)). Faush alleges that Tuesday Morning was
his “employer” and discriminated against him on the basis of
race. Accordingly, in order to prevail on his Title VII claim,
he must demonstrate the existence of an “employment
relationship” with Tuesday Morning. Covington v. Int’l Ass’n
of Approved Basketball Officials, 710 F.3d 114, 119 (3d Cir.
2013).3
3
Certain Courts of Appeals have held that a defendant may
be liable for interfering with employment opportunities even
if that defendant is not the plaintiff’s employer, while others
reject this theory of liability. See Gulino v. N.Y. State Educ.
Dep’t, 460 F.3d 361, 373-76 (2d Cir. 2006) (discussing Sibley
Mem’l Hosp. v. Wilson, 488 F.2d 1338 (D.C. Cir. 1973) and
collecting cases from other circuits). As Faush does not argue
that Tuesday Morning is liable on this basis, we need not
consider this possibility.
9
Claims brought under the Pennsylvania Human
Relations Act, 43 Pa. Cons. Stat. § 951 et seq., are generally
“‘interpreted coextensively with Title VII claims.’” Brown v.
J. Kaz, Inc., 581 F.3d 175, 179 n.1 (3d Cir. 2009) (quoting
Atkinson v. LaFayette Coll., 460 F.3d 447, 454 n.6 (3d Cir.
2006)). Although the Act protects certain limited categories
of independent contractors that Title VII does not, see id. at
179 n.1, Faush does not invoke these protections or dispute
that he must demonstrate an employment relationship to
prevail on his state-law claim.
2. The Enterprise test versus the Darden test
The parties dispute the appropriate test for an
employment relationship. Faush argues that the test for “joint
employers” articulated in In re Enterprise Rent-A-Car Wage
& Hour Emp’t Practices Litig., 683 F.3d 462 (3d Cir. 2012),
should apply in this context. Tuesday Morning argues that the
test announced in Nationwide Mut. Ins. Co. v. Darden, 503
U.S. 318 (1992), applies instead. Both parties contend that
they win regardless of which multi-factor test applies, and the
two tests are indeed quite similar. As a doctrinal matter,
however, it is clear that the Darden test applies to Title VII
cases, while the Enterprise test does not.
In Darden, the Supreme Court was called upon to
construe the term “employee” in the Employee Retirement
Income Security Act (“ERISA”). Because the definition of
“employee” in ERISA “is completely circular and explains
nothing,” Darden, 503 U.S. at 323, the Court concluded, as it
had in similar situations, “‘that Congress intended to describe
the conventional master-servant relationship as understood by
common-law agency doctrine,’” id. at 322-23 (quoting Cmty.
10
for Creative Non-Violence v. Reid, 490 U.S. 730, 739-40
(1989)). Because Title VII’s definition of “employee” is
similarly devoid of content, the common-law test outlined in
Darden governs in the Title VII context as well. See Walters
v. Metro. Educ. Enters., Inc., 519 U.S. 202, 211-12 (1997);
Covington, 710 F.3d at 119; Brown, 581 F.3d at 180.4
4
One of our cases appears, at first glance, to complicate the
picture. In Graves v. Lowery, 117 F.3d 723 (3d Cir. 1997), we
considered whether clerks who were formally employed by
the judicial branch of Pennsylvania could also pursue Title
VII claims against the county in which their court sat. We
reasoned that although “the courts are considered the
employers of judicial personnel[,] . . . this fact does not
preclude the possibility that a county may share co-employer
or joint employer status with the courts[] . . . [if both] entities
exercise significant control over the same employees.” Id. at
727. Rather than expressly considering the Darden factors,
we drew guidance from cases assessing “joint-employer
status” in the context of the National Labor Relations Act,
and we concluded that the clerks had sufficiently alleged that
the judicial branch had “delegate[d] employer-type
responsibilities to [the] county.” Id. The factors considered
for purposes of the National Labor Relations Act are,
however, essentially the same as those listed in Darden. See
N.L.R.B. v. Browning-Ferris Indus. of Pa., Inc., 691 F.2d
1117, 1123 (3d Cir. 1982); G. Heileman Brewing Co. v.
N.L.R.B., 879 F.2d 1526, 1531 (7th Cir. 1989). This is
because the word “employee” in the National Labor Relations
Act, as in ERISA and Title VII, is intended to convey the
common-law meaning of the term. See N.L.R.B. v. Town &
Country Elec., Inc. 516 U.S. 85, 94 (1995); Darden, 503 U.S.
at 324-35.
11
The Enterprise test, by contrast, applies “[w]hen
determining whether someone is an employee under the [Fair
Labor Standards Act (“FLSA”)].” Enterprise, 683 F.3d at
467. The definition of “employee” in the FLSA is of “striking
breadth” and “cover[s] some parties who might not qualify as
such under a strict application of traditional agency law
principles.” Darden, 503 U.S. at 326. Accordingly, the
“textual asymmetry” between Title VII and the FLSA
“precludes reliance on FLSA cases.” Id. Instead, the sole
question before us is whether the common law of agency
would recognize a master-servant relationship.5
3. The inquiry under Darden
“‘In determining whether a hired party is an employee
under the general common law of agency, we consider the
hiring party’s right to control the manner and means by which
the product is accomplished.’” Darden, 503 U.S. at 323(quoting Reid, 490 U.S. at 751). Darden provides a non-
exhaustive list of relevant factors, including
“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
5
The Fourth Circuit recently adopted a “hybrid test” for joint
employment in the Title VII context that incorporates both the
common law of agency and the “economic realities test” used
in FLSA cases. See Butler v. Drive Auto. Indus. of Am., Inc.,
793 F.3d 404, 413-14 (4th Cir. 2015). This test is very similar
to the Darden test, however, and we see no reason to apply it
instead of Darden.
12
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.”
Id. at 323-24 (quoting Reid, 490 U.S. at 751-52).
Our Court has generally focused on “‘which entity
paid [the employees’] salaries, hired and fired them, and had
control over their daily employment activities.’” Covington,
710 F.3d at 119 (alteration in original) (quoting Covington v.
Int’l Ass’n of Approved Basketball Officials, No. 08-3639,
2010 WL 3404977, at *2 (D.N.J. Aug. 26, 2010)). However,
“[s]ince the common-law test contains ‘no shorthand formula
or magic phrase that can be applied to find the answer, . . . all
of the incidents of the relationship must be assessed and
weighed with no one factor being decisive.’” Darden, 503
U.S. at 324 (second alteration in original) (quoting N.L.R.B. v.
United Ins. Co. of Am., 390 U.S. 254, 258 (1968)).6
6
As mentioned above, the Enterprise test is extremely similar
to the Darden test. It considers
1) the alleged employer’s authority to hire and
fire the relevant employees; 2) the alleged
employer’s authority to promulgate work rules
and assignments and to set the employees’
conditions of employment: compensation,
benefits, and work schedules, including the rate
and method of payment; 3) the alleged
13
The Darden factors assist in “drawing a line between
independent contractors and employees” hired by a given
entity. Clackamas Gastroenterology Assocs., P.C. v. Wells,
538 U.S. 440, 445 n.5 (2003). Significantly, the inquiry under
Darden is not which of two entities should be considered the
employer of the person in question. Two entities may be “co-
employers” or “joint employers” of one employee for
purposes of Title VII. Graves v. Lowery, 117 F.3d 723, 727
(3d Cir. 1997). Indeed, at common law, one could be a “dual
servant acting for two masters simultaneously” or a
“borrowed servant” who by virtue of being “‘directed or
permitted by his master to perform services for another may
become the servant of such other.’” Williamson v. Consol.
Rail Corp., 926 F.2d 1344, 1349 (3d Cir. 1991) (quoting
Restatement (Second) of Agency § 227 (1958)).
4. Standard of review
We review the grant of summary judgment de novo,
applying the same standard as the District Court. Renchenski
v. Williams, 622 F.3d 315, 324 (3d Cir. 2010). “Summary
judgment is appropriate if there are no genuine issues of
material fact and the moving party is entitled to judgment as a
employer’s involvement in day-to-day
employee supervision, including employee
discipline; and 4) the alleged employer’s actual
control of employee records, such as payroll,
insurance, or taxes.
Enterprise, 683 F.3d at 469. As with the Darden test, this list
of factors is “not exhaustive,” and “other indicia of
‘significant control’” may “suggest that a given employer was
a joint employer of an employee.” Id. at 469-70.
14
matter of law.” Massie v. U.S. Dep’t of Hous. & Urban Dev.,
620 F.3d 340, 347 (3d Cir. 2010) (citing Fed. R. Civ. P.
56(c)).
“When a legal standard requires the balancing of
multiple factors, as it does in this case, summary judgment
may still be appropriate even if not all of the factors favor one
party,” so long as the evidence “so favors” the movant that
“no reasonable juror” could render a verdict against it.
Enterprise, 683 F.3d at 471; see also Brown, 581 F.3d at 180-
81; In re APA Transp. Corp. Consol. Litig., 541 F.3d 233,
245 n.10 (3d Cir. 2008). The question of whether Tuesday
Morning was Faush’s employer must be left to the jury if, on
the other hand, reasonable minds could come to different
conclusions on the issue. See Graves, 117 F.3d at 729;
Williamson, 926 F.2d at 1348.
5. Faush’s relationship with Tuesday Morning
The evidence marshaled by Faush is more than
sufficient to preclude summary judgment. A rational jury
applying the Darden factors could find that Faush and
Tuesday Morning had a common-law employment
relationship and, therefore, that Faush was Tuesday
Morning’s employee for purposes of Title VII and the Human
Relations Act.
First, the District Court overstated the extent to which
the factors pertaining to compensation cut against Faush.
While Labor Ready did set the temporary employees’ pay
rate; paid their wages, taxes, and social security; and
maintained workers’ compensation insurance on their behalf,
Tuesday Morning also bore certain responsibilities with
respect to the temporary employees’ wages. It was obligated
under the Agreement to notify Labor Ready if any
15
“government mandated minimum statutory wage” should be
paid to temporary employees, and it retained its “primary
responsibility” for ensuring compliance with prevailing-wage
laws. (App. 56 ¶ 3(c).) And Tuesday Morning was in the best
position to evaluate compliance with labor laws because the
temporary employees were similarly situated to Tuesday
Morning’s permanent employees.
Moreover, although Tuesday Morning made its
payments to Labor Ready, rather than to the temporary
employees, those payments were functionally
indistinguishable from direct employee compensation. That
is, rather than paying Labor Ready a fixed rate for the
completion of a discrete project, “‘a method by which
independent contractors are often compensated’” Reid, 490
U.S. at 752 (quoting Holt v. Winpisinger, 811 F.2d 1532,
1540 (D.C. Cir. 1987)), Tuesday Morning paid Labor Ready
for each hour worked by each individual temporary employee
at an agreed-upon hourly rate and was even obligated under
the Agreement to pay any overtime charges required by law.
Tuesday Morning was also required to pay any changes in the
rates stemming from increases in Labor Ready’s costs from
wages, taxes, and insurance. Essentially, Tuesday Morning
indirectly paid the temporary employees’ wages, plus a fee to
Labor Ready for its administrative services.
Similarly, the factors pertaining to hiring and firing
provide only weak support for Tuesday Morning’s position.
To be sure, Labor Ready was the entity that hired Faush and
dispatched him to the Tuesday Morning store. Tuesday
Morning obviously did not have the power to terminate
Faush’s employment with Labor Ready or any obligation to
pay him unemployment benefits. Tuesday Morning did,
however, have ultimate control over whether Faush was
16
permitted to work at its store. If Tuesday Morning was
unhappy with any temporary employee for any reason, it had
the power to demand a replacement from Labor Ready and to
prevent the ejected employee from returning to the store.
Nothing in the record suggests that Labor Ready had any
policy or practice, much less obligation, to continue to pay a
temporary employee who was not then on a temporary
assignment or to provide an immediate alternative assignment
for an employee turned away from a job. See Ruehl v.
Viacom, Inc., 500 F.3d 372, 380 n.6 (3d Cir. 2007) (when
determining whether there is any genuine issue of material
fact, we are required to “draw[] all reasonable inferences in
favor of the nonmoving party”).
Finally, Tuesday Morning’s control over the temporary
employees’ daily activities overwhelmingly favors Faush.7
Faush worked at a Tuesday Morning store, rather than at a
remote site controlled by Labor Ready. Admittedly, it was of
no concern to Tuesday Morning whether Faush reported to
the store or whether another temporary employee showed up
in his place. Once he was there, however, Tuesday Morning
personnel gave Faush assignments, directly supervised him,
provided site-specific training, furnished any equipment and
materials necessary, and verified the number of hours he
worked on a daily basis. In fact, the only time a Labor Ready
7
The relevant factors mentioned in Darden include “‘the skill
required; the source of the instrumentalities and tools; the
location of the work; . . . whether the hiring party has the
right to assign additional projects to the hired party; [and] the
extent of the hired party’s discretion over when and how long
to work.’” Darden, 503 U.S. at 323-24 (quoting Reid, 490
U.S. at 751).
17
supervisor visited the store and participated in the work, she
merely relayed instructions from the Tuesday Morning
manager to the Labor Ready employees, and did not, herself,
exercise any supervisory functions over the Labor Ready
employees. Thus, unlike a contractor relationship, in which an
agency is hired to perform a discrete task and oversees its
employees’ work in the completion of that project, the Labor
Ready employees were hired on an hourly basis to perform
services under the supervision of Tuesday Morning
management, which exercised control over the temporary
employees’ daily work activities. And although the Labor
Ready temporary employees worked at the store for a more
limited period, Tuesday Morning managed them in the same
way it managed its permanent employees.
Also unlike a contractor relationship, the Labor Ready
employees were not hired for any specialized skillset: They
were merely “a stop[gap] measure” because the store was
“brand new” and did not yet have “a full compl[e]ment of
Tuesday Morning employees.” (App. 104.) The Labor Ready
employees, under the direct supervision of Tuesday Morning
management, performed only unskilled tasks, such as
unloading and stocking merchandise, setting up display
shelves, and removing garbage. While it is true that the
Agreement precluded Tuesday Morning from entrusting any
temporary employee with unattended premises, valuables,
machinery, or vehicles, the tasks assigned to the Labor Ready
employees, according to the testimony of a Tuesday Morning
manager, were no different than those assigned to Tuesday
Morning employees.
Although not dispositive, the fact that Labor Ready
and Tuesday Morning characterized Faush, and the other
workers supplied, as “Temporary Employees,” rather than
18
independent contractors also bolsters Faush’s position. See
Brown, 581 F.3d at 181 (considering the fact that the parties’
agreement labeled the plaintiff an “independent contractor”);
(App. 55 (emphasis added)). In the Agreement, Labor Ready
expressly disavowed the notion that it was a “licensed general
contractor or subcontractor.” (Id.) Most significantly,
Tuesday Morning pledged to “provide a workplace free from
discrimination and unfair labor practices” and to “comply
with all applicable federal, state and local laws and
regulations concerning employment, including but not limited
to: wage and hour, breaks and meal period regulations, the
hiring and discharge of employees, Title VII and the FLSA.”
(App. 56 ¶ 3(b).) Evidently, Tuesday Morning agreed that it
bore many of the legal responsibilities of a traditional
employer, including compliance with Title VII.
Even when confronted with stronger evidence against
the purported employee, we have held that a rational jury
could find the existence of a common-law employment
relationship. In Williamson v. Consolidated Rail Corp., 926
F.2d 1344, we considered whether a worker was ConRail’s
employee for purposes of the Federal Employers’ Liability
Act at the time he was injured in a workplace accident. As in
the Title VII context, we looked to “the common law bases
for creation of a master-servant relationship.” Id. at 1349.
Penn Trucks, a subsidiary of ConRail, had a contract with
ConRail to load and unload cargo at an intermodal freight
terminal owned by ConRail. The contract “expressly removed
from ConRail any authority to supervise or direct the manner
in which Penn Trucks performed any of its services.” Id. at
1352. And while ConRail clerks could “assign work to Penn
Trucks employees and change assignments previously given
them by Penn Trucks supervisors,” id. at 1350, “ConRail had
delegated general responsibility for the operation of the
19
intermodal terminal to Penn Trucks” and “ConRail employees
did not normally instruct Penn Trucks employees on the
details of the work they were doing,” id. at 1351-52. The
plaintiff, an employee of Penn Trucks working at the ConRail
terminal, also “received his paycheck from Penn Trucks and
took his orders from its employees,” and, on the day he was
injured, he had been called to work by a dispatcher from Penn
Trucks. Id. at 1346. Despite ConRail’s delegation of control
for the operation of the intermodal terminal and the fact that
the plaintiff was dispatched and paid by Penn Trucks, we
nevertheless upheld a jury verdict against ConRail, largely
because the plaintiff was acting under the direction of a
ConRail inspector at the time of the accident. See id. at 1346-
47, 1351-52.
By the same logic, a rational jury could find that Faush
was Tuesday Morning’s employee. Although he was paid and
dispatched by Labor Ready, he worked under the direct
supervision and control of Tuesday Morning managers who
instructed the Labor Ready employees on the “details of the
work they were doing.” See id. at 1352. Moreover, Labor
Ready disclaimed responsibility for supervising the
temporary employees’ work, and on the rare occasions that a
Labor Ready supervisor visited the Tuesday Morning store,
she acted as a mere conduit for instructions from the Tuesday
Morning manager.
This particular constellation of Darden factors is not
uncommon—it was also present in Linstead v. Chesapeake &
Ohio Ry. Co., 276 U.S. 28 (1928). There, the Big Four
Company had an arrangement with the Chesapeake & Ohio
Railway Company (“C&O”) whereby Big Four lent C&O a
locomotive, caboose, and train crew to operate freight trains
along a stretch of C&O track in Kentucky and Ohio. This Big
20
Four crew was provided with C&O’s timetables and
rulebooks and worked under the supervision of the C&O
trainmaster. However, the crew was paid by Big Four and
was not subject to discharge by any C&O officer.
Linstead was part of this Big Four train crew when he
was killed in a railroad accident. His estate sued C&O under
the Federal Employers’ Liability Act. Applying common-law
principles, the Supreme Court held that Linstead was acting
as C&O’s servant at the time of the accident. It based its
conclusion on the fact that Linstead and his crew were
performing work for C&O on C&O tracks and under the
“immediate supervision and direction” of a C&O trainmaster.
Id. at 34. Notably, the Court “d[id] not think that the fact that
the Big Four [Rail]road paid the wages of Linstead and his
crew, or that they could only be discharged or suspended by
the Big Four, prevented their being the servants of [C&O] for
the performance of this particular job.” Id.Linstead underscores the error in granting summary
judgment against Faush. Faush worked on Tuesday
Morning’s premises under the immediate supervision and
direction of Tuesday Morning personnel. Tuesday Morning’s
extensive control over Faush’s activities could suffice to
make him a common-law servant even though Labor Ready
paid him and had the ultimate power to fire him.
We are mindful that many aspects of the Labor Ready-
Tuesday Morning employment arrangement that we have
identified in combination as sufficient to survive summary
judgment will pertain to a large number of temporary
employment arrangements, with attendant potential liability
under Title VII for the clients of those temporary employment
agencies. We do not anticipate, however, that our holding
today, which is limited to the Title VII context, will vastly
21
expand such liability, as entities with over fifteen employees
are already subject to Title VII. See 42 U.S.C. § 2000e(b). In
any event, given the broad remedial policies behind Title VII,
Congress’s decision to use the term “employee” in its
common law sense, and the Darden factors compel us to
conclude that, on the facts here, a reasonable jury could find
that Tuesday Morning was Faush’s joint employer and that
summary judgment was therefore improper.
The decisions of our sister circuits concerning the
status of temporary employees confirm this conclusion. In
Maynard v. Kenova Chem. Co., 626 F.2d 359 (4th Cir. 1980),
the Fourth Circuit held that a temporary worker supplied by a
staffing firm to a chemical company was the latter’s common-
law employee. Id. at 360-62.8 And in Butler v. Drive
Automotive Industries of America, Inc., No. 14-1348, 2015
WL 4269615 (4th Cir. July 15, 2015), the same Court held in
the Title VII context that both a staffing firm and its client
were joint employers of a temporary employee assigned to
work for the client. Id. at *9.9 Notably, in both cases, the
8
Maynard predates Darden, but it does not predate the
common law of agency. Although Maynard concerned the
West Virginia Workmen’s Compensation Act, the Fourth
Circuit applied the common law in finding that an
employment relationship existed (and, therefore, that certain
elements of the Act had been satisfied). See Maynard, 626
F.2d at 361-62.
9
As noted earlier, Butler applied a “hybrid” test for
employment that purported to be more expansive than the
common-law inquiry. The factors it discussed, however, are
relevant under the common law as well, and it appears the
outcome would have been the same under Darden, given that
22
Fourth Circuit found that an employment relationship existed
as a matter of law on summary judgment. Here, we hold only
that summary judgment should not have been granted.10
We find further support in the applicable guidance
from the Equal Employment Opportunity Commission
(“EEOC”). According to the EEOC, “[a] client of a temporary
employment agency typically qualifies as an employer of the
temporary worker during the job assignment [for purposes of
Title VII] . . . . because the client usually exercises significant
Darden was the primary basis for the hybrid test. See Butler,
2015 WL 4269615, at *5-9 & nn.11, 13.
10
The First Circuit’s decision in Rivas v. Federacion de
Asociaciones Pecuarias de Puerto Rico, 929 F.2d 814 (1st
Cir. 1991), is not to the contrary. There, a ships’ agent
provided work gangs of stevedores and foremen to the
operator of a grain mill for the purpose of unloading cargo
vessels. The ships’ agent was contractually obligated to
supervise the laborers, and the grain mill operator’s
“supervision of the gangs amounted to merely deciding which
materials were to be unloaded first.” Id. at 821. Under these
circumstances, it is unsurprising that the First Circuit held
that the grain mill operator was not the laborers’ employer.
See id.We note, moreover, that the Seventh Circuit expressed
doubt that the client of a temporary staffing firm would be
able to avoid Title VII liability on the basis that it was not an
employer, although it did not decide the question. See Porter
v. Erie Foods Int’l, Inc., 576 F.3d 629, 634 n.5 (7th Cir.
2009).
23
supervisory control over the worker.” EEOC Notice 915.002,
Enforcement Guidance: Application of EEO Laws to
Contingent Workers Placed by Temporary Employment
Agencies and Other Staffing Firms, Dec. 3, 1997, 1997 WL
33159161, at *5-6. Although “the EEOC’s Compliance
Manual [and enforcement guidance] is not controlling[,] . . . it
may constitute a ‘body of experience and informed judgment’
to which we may resort for guidance.” Clackamas, 538 U.S.
at 449 n.9 (quoting Skidmore v. Swift & Co., 323 U.S. 134,
140 (1944)).11
In sum, the weight of authority, in conjunction with the
evidence presented to the District Court, compels the
conclusion that Faush survives summary judgment on his
Title VII and Human Relations Act claims.
11
For example, in evaluating whether a shareholder-director
was an “employee” for purposes of federal antidiscrimination
statutes, the Supreme Court adopted the factors identified by
the EEOC, as they were consistent with the “common-law
touchstone of control.” Clackamas, 538 U.S. at 449. The
EEOC’s guidance concerning temporary employees is
persuasive for the same reason—indeed, it mirrors the
Supreme Court’s analysis of the circumstances under which
servants who perform work for the benefit of a master other
than their own become that master’s servants. Compare
EEOC Notice 915.002, 1997 WL 33159161, at *5-6, with
Linstead, 276 U.S. at 33-34 (quoting Standard Oil Co. v.
Anderson, 212 U.S. 215, 221-22 (1909)).
24
B. Section 1981
Faush’s § 1981 claim, by contrast, was properly
dismissed. “Section 1981 offers relief when racial
discrimination blocks the creation of a contractual
relationship, as well as when racial discrimination impairs an
existing contractual relationship, so long as the plaintiff has
or would have rights under the existing or proposed
contractual relationship.” Domino’s Pizza, Inc. v. McDonald,
546 U.S. 470, 476 (2006).
While it is true that the substantive elements of a §
1981 claim mirror those of a Title VII claim in many respects,
see Anderson v. Wachovia Mortg. Corp., 621 F.3d 261, 267
(3d Cir. 2010), the types of individuals who can bring such
claims are not identical. Section 1981 “‘does not limit itself,
or even refer, to employment contracts.’” Brown, 581 F.3d at
181 (quoting Danco, Inc. v. Wal-Mart Stores, Inc., 178 F.3d
8, 14 (1st Cir. 1999)). As a result, “an independent contractor
may bring a cause of action under section 1981 for
discrimination occurring within the scope of the independent
contractor relationship.” Id.12
Faush cannot avoid summary judgment on his § 1981
claim, however, “unless he has (or would have) rights under
the existing (or proposed) contract that he wishes ‘to make
12
For this reason, it is incorrect to suggest that a § 1981 claim
necessarily “‘suffers the same fate’” as a Title VII claim
dismissed for lack of an employment relationship. Faush v.
Tuesday Morning, Inc., 995 F. Supp. 2d 350, 356 (E.D. Pa.
2014) (quoting Holtzman v. The World Book Co., 174 F.
Supp. 2d 251, 258 (E.D. Pa. 2001)).
25
and enforce.’” McDonald, 546 U.S. at 479-80 (quoting 42
U.S.C. § 1981). Faush does not argue that he meets this
standard. Moreover, as the District Court recognized, the
record does not indicate that Faush entered into a contract
with Tuesday Morning or ever attempted to do so.13 The grant
of summary judgment on Faush’s § 1981 claim was therefore
appropriate.
III. Conclusion
For the foregoing reasons, we will vacate the District
Court’s judgment with respect to Faush’s Title VII and
Pennsylvania Human Relations Act claims and remand for
13
Faush may be a third-party intended beneficiary of certain
portions of the Agreement between Labor Ready and Tuesday
Morning. The Supreme Court has not ruled out the possibility
that such a beneficiary may have rights under § 1981. See
McDonald, 546 U.S. at 476 n.3. As Faush does not make this
argument, however, this is not the appropriate case to explore
that possibility.
The fact that temporary employees may not have any
remedy for racial discrimination under § 1981—and that any
such remedy, if it exists, would be contingent on the terms of
a contract negotiated by the staffing firm and its client—
demonstrates the perversity of exempting the clients of
staffing firms from Title VII. Traditional employees are
covered by Title VII, and many independent contractors will
be able to avail themselves of § 1981. There is no reason to
believe Congress intended for temporary employees to fall
through the cracks and be subjected to limitless
discrimination at their places of work.
26
further proceedings. We will affirm the District Court’s
judgment with respect to Faush’s § 1981 claim.
27