“Although [subcontractor] ResourceMFG disbursed Butler’s paychecks, officially terminated her, and handled employee discipline, it did not prevent Drive from having a substantial degree of control over the circumstances of Butler’s employment. Accordingly … Drive and ResourceMFG are Butler’s joint employers,” the court said in its opinion.
Terry O’Connor, director of government contracts at the law firm Berenzweig Leonard, told Federal Drive with Tom Teminthat primes will have to tinker with the standard contract language it uses with its subcontractors.
“I would say that the primes have the real problem here because the subcontract agreements that we see here typically have boilerplate provisions that say subcontractors are independent employees, and that the employees of one party are not employees of the other,” O’Connor said. “And the court, in this case, acknowledged those kinds of provisions in subcontracts and basically ignored them.”
The appeals court’s decision impacts Washington, D.C., Maryland, Virginia, West Virginia, North Carolina, and South Carolina. O’Connor said the Fourth District is one of the last of its kind to make this type of ruling.
“The theory is here and they’ve got to deal with it,” O’Connor said. “And besides, why wouldn’t the prime want to take care of and refuse to tolerate the sexual harassment of its supervisors against anybody? Not just against their employees, but against anybody.”
O’Connor said primes can protect themselves by purchasing Employment Practices Liability Insurance.
The ruling, he said, works both ways: A prime contractor employee could, in theory, sue a subcontractor for employee misconduct, but such a case seems unlikely.
“In reality, the prime is pretty much the driving force of subcontractor employees,” O’Connor said. “We have cases where the subcontractor employees wear the uniform of the prime, they work at the prime’s location… so that control is really top-down. I don’t see the control going from the bottom up. And that was basically the holding of the court.”