MALISA PAULSON, Complainant
JENNIE-O TURKEY INC, Respondent
An administrative law judge (ALJ) for the Equal Rights Division of the Department of Workforce Development issued a decision in this matter. A timely petition for review was filed.
The commission has considered the petition and the positions of the parties, and it has reviewed the evidence submitted to the ALJ. Based on its review, the commission agrees with the decision of the ALJ, and it adopts the findings and conclusion in that decision as its own.
The decision of the administrative law judge (copy attached) is affirmed.
Dated and mailed November 26, 2008
paulsma . rsd : 125 : 9
/s/ James T. Flynn, Chairperson
/s/ Robert Glaser, Commissioner
/s/ Ann L. Crump, Commissioner
Jennie-O Turkey, Inc. (Jennie-O) has a turkey hatchery in Barron, Wisconsin. The turkey eggs when hatched produce poults. Poults are born with the same general physical appearance, and poult sexors separate the male and female poults.
Apparently due to an inability to obtain enough employees to work as poult sexors, Jennie-O entered into a contract with Young Kil Joo, d/b/a Interchick, to provide sexor services at the Barron hatchery. Included in the contract's provisions was language that the sexors shall segregate by sex day-old poults at the hatchery at a production rate of no less than 800 poults per sexor per day and that these services were to be performed on Monday, Tuesday, Thursday and Friday for approximately 8.5 hours per day. The contract further provided that the hatchery would pay to Interchick a total of $2.15 for every 100 poults sexed by sexors no later than Friday of the week following that in which sexor services were performed. Interchick was responsible for paying its sexors.
The contract between Jennie-O and Interchick also included the following language:
7. INDEPENDENT CONTRACTOR. Interchick understands and agrees that [Interchick] is being retained as an independent contractor and not as an employee of Hatchery. Hatchery is interested in the results that Interchick can achieve, and the conduct and control of the work provided by Interchick Sexors is the sole responsibility of Interchick. Interchick and Interchick Sexors are not and cannot hold themselves out as agents or employees of Hatchery for any purpose. Interchick and Interchick Sexors are not entitled to any of the benefits that Hatchery provides for its employees, including but not limited to workers' compensation and unemployment compensation.
8. HATCHERY'S POLICIES. Interchick understands and agrees that Sexors must abide by the rules and regulations of the Hatchery, including but not limited to Hatchery's policies regarding discrimination and sexual harassment. If Sexors' actions violate these rules and regulations, Interchick agrees that it will impose the same or harsher discipline as would be required by Hatchery for the identical actions of Hatchery's own employees.
9. LABOR ISSUES. Notwithstanding the requirements of Section 7 above, Interchick has the sole right to terminate and/ or discipline Sexors. Interchick will keep Hatchery informed of any disciplinary actions taken against Sexors. In the event that a Sexor files a complaint with Interchick about a Hatchery employee, Interchick agrees to promptly advise Hatchery of the complaint and to cooperate fully with Hatchery to investigate and resolve said complaint.
10. QUALITY CONTROL. Sexors shall sex poults with an accuracy of not less than 98.5%, and without mortality. Hatchery personnel will sex check a minimum of 50 hens and 50 toms for each operator each full day. Sex-checked poults will be selected randomly throughout the day at a rate of 6 to 7 hens and toms per hour. At any time when Interchick has three or more contract Sexors at the Hatchery, Interchick will be responsible for all aspects of quality control of the contract Sexors' work.
Malisa Paulson filed a discrimination complaint with the ERD in which she named both Jennie-O and Interchick as respondents. Paulson alleged that her compensation was repeatedly paid late, that by February 2007 she and two other employees in the "same arrangement" with Interchick sought the assistance of an attorney who sent a letter to Interchick threatening to bring a claim for unpaid wages if the amounts due were not paid, that subsequently Ms. Joo threatened Paulson's job because she had gone to an attorney, and that on March 12, 2007, Ms. Joo terminated her employment purportedly for failing to report to work March 5-8 but this was a pretext as she already had these days approved as vacation.
As reason for naming not only Interchick but also Jennie-O as a respondent, Paulson alleged that Jennie-O was her de facto employer. Paulson alleged that the work she performed was the same as the direct employees of Jennie-O, that she was subject to the same hours, working conditions and supervision by Jennie-O personnel and that she had no other source of income other than her activities at the Barron hatchery.
Pursuant to an equal rights officer's (ERO's) advice that Paulson must file two separate complaints, one naming Interchick as the respondent and one naming Jennie-O as the respondent, Paulson did so. The ERO issued an initial determination finding probable cause to believe that Interchick violated the WFEA by discharging Paulson because it believed she had or would file a complaint regarding non-payment of wages.
However, the ERO issued a Preliminary Determination and Order dismissing Paulson's complaint against Jennie-O on the ground that the Division lacked jurisdiction in the matter. Paulson filed an appeal and the matter was referred to the ALJ for review. On May 9, 2008, the ALJ issued a decision affirming the Preliminary Determination and Order, and dismissing Paulson's complaint.
After indicating that a named respondent need not be an employer to be subject to the WFEA because § 111.321 prohibits an "other person" in addition to an employer, labor organization, employment agency or licensing agency from engaging in any act of employment discrimination, the ALJ quoted the commission's decision in Omegbu v. Mequon-Thiensville School Dist, et al. (LIRC, 12/21/95), where the commission stated:
The determination of whether the complainant is an employee of the respondent school district and thus entitled to protection under the Wisconsin Fair Employment Act involves an analysis of the school district's right to control the means and manner of the work and the economic realities of the work relationship. Moore v. LIRC, 175 Wis. 2d 561, 569, 499 N.W.2d 289 (Ct. App. 1993). Further, while the right to control the means and manner of the work performed is the most important factor, additional factors for consideration include the following: (1) the kind of occupation, with reference to whether the work is usually done under the direction of a supervisor or is done by a specialist without supervision; (2) the skill required in the particular operation; (3) whether the "employer" or the individual in question furnishes the equipment used and the place of work; (4) the length of time during which the individual has worked; (5) the method of payment, whether by time or by the job; (6) the manner in which the work relationship is terminated; (7) whether annual leave is afforded; (8) whether the work is an integral part of the business of the "employer"; (9) whether the worker accumulates retirement benefits; (10) whether the "employer" pays social security taxes; and (11) the intention of the parties.
Applying the above factors to this case the ALJ then stated:
Some of the factors listed above clearly point against finding Jennie-O to be Paulson's employer. The method of payment was consistent with Jennie-O's being a contractor for services, not an employer. It did not pay social security taxes for Paulson. Paulson did not accumulate any retirement benefits. The parties' intentions were clearly to establish a contracting relationship, not an employment relationship. Tending to point toward an employment relationship is the fact that Jennie-O furnished the equipment and the place of work, and that the work done is similar, if not the same as, work being done by regular employees of Jennie-O, and therefore an integral part of Jennie-O's business. The other factors do not clearly point one way or the other. Jennie-O certainly had expectations about the numbers of sexors that should be working and what their hours of work should be, but there is no indication that it expected a particular schedule of work from any particular sexor, including Paulson. While the quality of each sexor's work was monitored by Jennie-O, Jennie-O did not take on any responsibility with respect to disciplining or terminating the sexors. Not only did Jennie-O agree in its contract with Interchick that Interchick would have the sole right to terminate or discipline sexors, it is apparent that it abided by the contract in this case. There is no indication that anyone at Jennie-O had anything to do with the termination of Paulson from Interchick.
With respect to those aspects of Paulson's working relationship that are significant to this case (how Paulson was paid, to whom she complained about payment, and her termination for an alleged no-call, no-show), Jennie-O did not have authority sufficient to be considered Paulson's employer. Furthermore, since there is not even an allegation that Jennie-O had anything to do with Paulson's termination, it is difficult to see how Paulson has stated a cause of action against Jennie-O. If there were some allegation that Jennie-O influenced the termination, then it might be properly named as a Respondent regardless of whether it should be considered an employer. ("The commission believes that even assuming no employment relationship existed between the Complainant and MATC it should not be permitted to do indirectly through Kelly what it cannot do directly and to avoid answering for its discriminatory conduct." Collins v. Madison Area Technical College and Kelly Services (LIRC, 12/19/86). There is nothing in the complaint in this case alleging that Jennie-O engaged in any discriminatory conduct.
On appeal, Paulson argues that given the degree of control exercised by Jennie-O over her (subjected to the same working hours and supervised by Jennie-O supervisors) and other factors (performing work side-by-side with direct employees of Jennie-O, that was unskilled and that Jennie-O provided all necessary equipment for, that could not be performed at any location other than the Jennie-O plant and that the daily operations and supervision of the owner of Interchick, Ms. Joo had absolutely noting to do with), that Jennie-O is clearly a de facto employer of her.
Paulson argues that if Jennie-O exercised significant control over Interchick sexors, Jennie-O is their employer despite any contractual provision between Interchick and Jennie-O to the contrary.
Further, Paulson argues that assuming Jennie-O was her de facto employer, Jennie-O acted at its peril in abdicating the authority for all employment decisions relative to her to Joo. Paulson argues that Jennie-O admits having actual knowledge that she had complained about wage payments, that because Joo failed to communicate when employees would be gone the sexors took it upon themselves to advise both Jennie-O supervisors and Interchick of upcoming absences, and that Jennie-O admits that it knew she was going to be gone in early March and has no explanation as to why Joo is stating that Jennie-O reported her as a no-call, no-show at the hatchery. Paulson argues that as her de facto employer, Jennie-O could not bury its head in the sand and assert it was not responsible for any adverse actions she experienced at the hands of Joo.
Paulson argues that once an entity is determined to be a de facto employer, the independent contractor house of cards fall down, as do the attempted liability shields. Paulson argues that if not, an employer could engage the services of an independent contractor hiring agency which blatantly discriminated in its decisions to hire employees for the employer, but as long as the hiring agency was an independent contractor, the employer would escape liability.
Finally, Paulson argues that the ALJ did not even consider or mention the case of Szleszinski v. Transhield Leasing Company, Midwest Coast Transport and Transhield Trucking Company (LIRC, 02/24/04). Paulson asserts that in Szleszinski, the commission determined that both the direct employer who hired the complainant and issued his paychecks (Transhield Leasing) and the de facto employer who assigned and supervised the complainant's driving and assessed his ability to drive (Midwest Coast) were both proper respondents in the discrimination claim. Paulson further notes that the case was the subject of subsequent circuit court, appellate court and supreme court review; that the appellate court affirmed that the de facto employer was a proper party respondent, but this matter was not addressed on supreme court review.
Paulson argues that the ALJ seemed to assert that if Jennie-O was somehow involved in the acts giving rise to the discrimination claim, a different result would have occurred, i.e., that Jennie-O would have been considered to be a de facto employer. Paulson argues that a de facto employer classification is not, and cannot, be contingent on whether the de facto employer is involved in the discriminatory acts; that the classification of de facto employer is based on the facts regarding working conditions, control, supervision, etc., and has nothing to do with whether the de facto employer engaged in or even knew about the discriminatory acts. Paulson argues that engaging in the relationship it did with Interchick, Jennie-O did so at its peril.
Jennie-O argues that it was not Paulson's employer; that Paulson worked for Interchick. Jennie-O argues that it simply entered into a contract with Interchick for sexor services and that Paulson was merely one of several sexors that Interchick supplied. Jennie-O argues that it did not provide Paulson with wages, benefits, or any other form of compensation and that pursuant to the contract with Interchick, Jennie-O did not have the authority to discipline or terminate Paulson. Jennie-O argues that the contract between it and Interchick clearly established an independent contractor arrangement, not an employment relationship.
Jennie-O argues that it is undisputed that Interchick, not Jennie-O, paid Paulson; that Jennie-O never provided any compensation or benefits to Paulson. Jennie-O argues that similarly, it is undisputed that Jennie-O had no involvement with Paulson's termination; that consistent with the contract, which affords Interchick the "sole right to terminate and/or discipline Sexors", the decision to terminate, and the communications regarding the decision, were initiated by Interchick.
Finally, Jennie-O argues that Paulson's reliance on Szleszinski is misplaced. First, Jennie-O states that LIRC barely touched on the joint-employer issue, limiting the discussion to the following paragraph:
Much effort was expended by the parties in determining whether [Transhield Leasing Company] or [Midwest Coast Transport] was the employer here. However, given that [Transhield Leasing Company] hired the complainant and issued his paychecks, and [Midwest Coast Transport] assigned and supervised his driving and assessed his fitness to drive, both [Transhield Leasing Company] and [Midwest Coast Transport] are proper respondent parties to this matter. (Emphasis in original.)
Second, Jennie-O argues that Midwest Transport's power to assess an individual's "fitness to drive" was a critical factor on appeal, where the court determined that because Midwest Coast "had the power to reject drivers", its "qualification decisions are directly related to a [Transhield Leasing] driver's employment opportunities." Jennie-O argues that accordingly, the court of appeals concluded that "even if [Midwest Coast] is not an employer, we would hold that it is at the very least an 'other person' under the WFEA."
Jennie-O argues that therefore, the court did not decide whether Midwest Coast was a joint employer, but instead held that it engaged in discriminatory actions when it deemed Szleszinski unqualified to drive trucks. Jennie-O argues that in contrast to that scenario, Jennie-O never deemed Paulson unqualified to perform sexor duties; that Paulson lost her job with Interchick because of Interchick's lone decision to terminate her, and not because of any action by Jennie-O. Jennie-O argues that therefore, it is not an "employer" or "other person" and, accordingly, cannot be held liable for Paulson's claims.
In response, Paulson first argues that Jennie-O correctly cites the Spirides test, but then incorrectly and inexplicably concludes that she is not an employee under that test, again repeating the factors she cited above as evidence of the employment relationship between her and Jennie-O.
Second, Paulson argues that Szleszinski does not stand for the proposition that the de facto employer must have been directly engaged in the discriminatory act in order for a de facto employment relationship to exist. Paulson argues that what LIRC in fact held in Szleszinski was that both the nominal employer, which was not directly engaged in the discriminatory act, and the de facto employer, which was directly engaged in the discriminatory act, were proper respondents. Paulson argues that here, it is the nominal employer who is directly involved in the discriminatory act and the de facto employer who is not, however, the same conclusion that both are proper respondents must apply. Paulson argues that to hold otherwise would mean that de facto employer status would be dictated by whether the de facto employer was directly involved in the conduct alleged to be discriminatory and that is clearly outside the economic realities test of Spirides.
Paulson argues that Jennie-O seized upon language in Szleszinski in which LIRC found an alternative basis to find the de facto employer liable-that being its direct involvement in the discrimination. However, that did nothing to affect LIRC's finding that both the nominal and de facto employers were proper respondents in that case nor can a different result occur in this case.
Under Title VII, de facto or indirect employer liability is a viable theory. (1) In Kerr v. WGN Continental Broadcasting Co. and Trio Video, 229 F. Supp. 2d 880, 886 (N.D. Ill, 2002), the court stated:
De facto or indirect employer liability depends on the amount of the control a putative Title VII defendant exerts over the plaintiff's employment. This theory of liability addresses the situation where a formal employment relationship may be absent, but the putative defendant is so extensively involved with the plaintiff's day to day employment that the putative defendant is the "real" employer for all intents and purposes, including Title VII liability. See E.E.O.C v. State of Illinois, 69 F.3d at 171-72 (noting that an entity that "pulls the strings" in the background, and essentially controls employment decisions will be considered the de facto employer for purposes of Title VII liability)....
[T]he de facto/indirect analysis is appropriately used where it is clear that a putative defendant does not directly employ the plaintiff, but nevertheless controls the plaintiff's employment to the point that it would contravene the intent of Title VII for the putative defendant to avoid liability for its own discriminatory actions.
In State of Illinois, where the court examined whether the state exerted the requisite amount of control over the school district so as to be the indirect employer of two school teachers, the court stated that so far as discrimination in hiring and firing on the basis of forbidden characteristics is concerned, "the key powers are, naturally, those of hiring and firing"; that "Were the state pulling the strings in the background-telling the local school districts whom to hire and fire and how much to pay them-a point would soon be reached at which the state was the de facto employer and the local school districts merely its agents. That point is not reached here." 69 F.3d at 171-72.
Furthermore, in the court's original order in Kerr, 2002 U.S. Dist. LEXIS 12476 (N.D. Ill. July 9, 2002) -- reasoning the court re-affirmed in its second decision in Kerr, 229 F. Supp. 2d at 886 -- the court stated:
The type of control is critical, for freedom of contract permits contracting parties to "control" each other by detailing obligations in their agreement. See e.g. Hojnacki, 285 F.3d [544] at 551. Such control is different in kind from the type of discretionary daily control that employers routinely exert over employees. Id. ...
There is nothing in the record to demonstrate that WGN exercised any discretionary control over Kerr's activities outside of the contractual relationship between WGN and Trio Video....The control that WGN exercised over Kerr stems from the contract between WGN and Trio Video, and not from any employment relationship between Kerr and WGN.
In Hojnacki, supra., a doctor employed by a company (Addus Healthcare, Inc.) under contract with the Illinois Department of Corrections to supply healthcare services to inmates at the DOC argued that the DOC controlled her work through the various policies and procedure with which the DOC required her to comply. Responding to this argument the court stated:
[In EEOC v. North Knox School Corp., 154 F.3d 744, 748 (7th Cir. 1998)] [w]e determined that bus drivers were not school district employees even though the district set the precise route and schedule of each driver, limited the number of times and for what reasons a driver could be absent, and required drivers to enforce its disciplinary policies but did not allow them to administer punishment or set their own rules for appropriate behavior....We observed that "one can 'control' the conduct of another contracting party by setting out in detail his obligations; this is nothing more than the freedom of contract. This sort of one-time 'control' is significantly different than the discretionary control an employer daily exercises over its employees' conduct."... Here, too, the DOC's contract with Addus requires Addus' employees to abide by the DOC's rules and regulations. The DOC's manual, which Dr. Hojnacki characterizes as the "most important evidence" in her case...merely details Dr. Hojnacki's obligations....
Dr. Hojnacki also submits that the DOC controlled her by setting her working hours and requiring her to be on call. We rejected a similar argument in Ost v. West Suburban Travelers Limousine, Inc., 88 F.3d 435, 438 (7th Cir. 1996)...
The commission concludes that Paulson has failed to show that Jennie-O controlled the necessary aspects of her employment in order to establish that Jennie-O was her de facto employer. Paulson argues that Jennie-O exercised a significant degree of control over her in that she was "subjected to the same working hours" as Jennie-O employees and that she was "supervised by Jennie-O supervisors." In actuality, however, the "control" Paulson argues that Jennie-O exerted over her is nothing more than the control authorized by the contract between Jennie-O and Interchick. The contract required that Paulson's sexor services be performed on Monday, Tuesday, Thursday and Friday for approximately 8.5 hours per day. The contract provided that of the 800 poults Interchick sexors were required to sex per day, that Jennie-O personnel would sex check a minimum of 50 hens and 50 toms for each operator each full day. Jennie-O did not pay Paulson. Jennie-O did not have the authority to discipline or terminate Paulson's employment. There is also no evidence that Jennie-O was "pulling the strings in the background-telling Interchick whom to hire and fire and how much to pay them." Paulson has not demonstrated that Jennie-O exercised any discretionary control over her activities outside of the contractual relationship between Jennie-O and Interchick. Jennie-O's control over Paulson's employment is insufficient to render Jennie-O liable as Paulson's de facto or indirect employer.
Finally, Paulson's reliance on Szleszinski is misplaced. Although Jennie-O notes that the court did not find that Midwest Coast was a joint employer (with Transhield Leasing), because of the control each exerted over Szleszinski's employment as a driver, joint employers best describes what Transhield Leasing and Midwest Coast were to Szleszinski. Transhield Leasing hired and paid drivers, yet Midwest Coast could reject the individuals Transhield hired as drivers; however, if Midwest Coast approved of Transhield's hires, the drivers were assigned work and supervised by Midwest Coast. Unlike the situation presented in Szleszinski, however, Jennie-O did not hire or pay the sexors hired by Interchick, nor could it discipline or terminate them. Furthermore, the "control" that Jennie-O did exert over Paulson was nothing more than the control authorized by the contract between Jennie-O and Interchick. Paulson has not established that Jennie-O so far controlled her employment that it is appropriate to regard Jennie-O as her de facto or indirect employer.
cc:
Attorney Carol S. Dittmar
Attorney Thomas L. Nuss
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