Not a joint employer, company didn’t have enough employees for ADEA coverage

A small employer did not have the requisite twenty or more employees for it to be a covered employer under the ADEA, the Seventh Circuit U.S. Court of Appeals held, in affirming summary judgment for the employer in a suit filed by a discharged 61-year old employee. While the employee argued that several employees of a commonly owned entity should count toward the defendant company’s minimum-employee threshold, these individuals did not have an employment relationship with the defendant under the economic realities test, and so it was not their joint employer. The appeals court also refused to aggregate the employees of both to satisfy the ADEA’s minimum-employee threshold.

Separate companies, commonly owned. New Holland Logansport was one of several corporations commonly owned by the same individuals; another one was New Holland Rochester. They operated as separate stores, maintained their own inventories, had separate bank accounts (although a Rochester employee would deposit the Logansport cash), generated their own invoices, filed their own tax returns (albeit using the same corporate address), and did their own advertising. Both stores were featured on the same website, though, and they shared trucks used for hauling and a computer system. There was also overlap in administrative personnel: one individual coordinated payroll for the two companies, another did their accounting, and yet another individual performed HR functions for both entities (and stored personnel files for employees of both corporations at his office in Rochester).

Employees at both companies worked under the same HR policies and were entitled to the same employee benefits; their holiday parties, monthly sales meetings, informational meetings about changes in health insurance, and computer-training sessions were all combined. The Logansport employees’ paychecks were sent to them from the Rochester location. But the respective store operations were otherwise managed separately, with different managers at the helm.

Minimum-employee threshold. Under the ADEA, an “employer” has twenty or more employees for each working day, in each of twenty or more calendar weeks, in the calendar year of (or in the year preceding) the discriminatory act. At all times during the year of the employee’s discharge (and in the preceding calendar year), Logansport had fewer than twenty employees on its payroll; thus, it was not a covered employee under the Act. Therefore, the district court had granted summary judgment in the company’s favor on the employee’s ADEA suit.

In attempting to satisfy the twenty-employee requirement, the employee argued that New Holland Logansport indirectly employed the three administrative employees who performed both stores’ accounting, payroll, and HR functions, so they should be counted too. But the district court had found these other individuals were not Logansport employees and, even if they were, they didn’t count, since they were only part-time workers, at most. This was incorrect, the Seventh Circuit said, noting that “part-time status does not preclude counting an employee toward the twenty-person minimum” for ADEA purposes. But the end result was the same. What mattered was whether these individuals—be they part-time or full-time—had an “employment relationship” with New Holland Logansport (in addition to New Holland Rochester), and they did not.

Not a joint employer. The employee argued the three employees must have had an employment relationship with New Holland Logansport, since they weren’t “independent businesspeople,” after all. This was faulty reasoning, since it was undisputed that they were employees of New Holland Rochester. But were they jointly employed by New Holland Logansport as well? Under the economic realities test, the answer was no. New Holland Logansport did not exercise control over these individuals, the primary factor in an economic realities analysis. They were not formally employed by Logansport, and the company’s manager had no hiring or firing authority over them or any right of control over their work. There was no evidence that Logansport was responsible for providing their pay or benefits, training or instruction, tools or equipment, or that it incurred overhead costs for their work.

The final factor in the economic realities test—the length of the job commitment, and the parties’ expectations as to that commitment—may have supported a finding of joint employer status. The expectations of the parties were unclear, and the evidence, viewed in the plaintiff’s favor, suggested that their work for Logansport was of ongoing duration. But this factor alone wasn’t enough to convince the appeals court that these individuals had an economic relationship with the defendant and, thus, employee status. Therefore, New Holland Logansport was not a joint employer, so these employees didn’t count.

Aggregation uncalled for. The employee argued in the alternative that all of New Holland Rochester’s employees should be aggregated with New Holland Logansport’s employees for employee-counting purposes in order to satisfy the statutory minimum—an “unusual step,” the appeals court observed—and one it was unwilling to take here. Employees of affiliated corporations may be counted in the aggregate if it was the affiliate company, and not the plaintiff’s employer, that directed the complained-of discriminatory act, practice, or policy. According to the employee, aggregation was proper here because the operations manager at New Holland Rochester directed the reluctant operations manager at Logansport to terminate him. But Rochester’s operations manager was also the owner and director of both companies. He wore two hats; representing Logansport sometimes and Rochester at others, and there were no facts from which it could be inferred that he was wearing his Rochester hat when he directed that the employee be fired.

The employee also contended that aggregation was proper under the “integrated enterprise” test favored by the NLRA for discerning when two entities should be treated as a single employer. “It has been many years since we dispensed with the integrated-enterprise analysis in ADEA cases,” the appeals court noted, refusing to reconsider that decision here.

SOURCE: Bridge v. New Holland Logansport, Inc., (CA-7), No. 15-1935, March 9, 2016.

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