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Liability Pitfalls with Contingent Workers

 

 

 
 
   
   
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(Credit: istockphoto.com/erhui1979)

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While judge advocates (JAs) are familiar with the Army’s policy and process for handling equal opportunity (EO) and sexual harassment complaints, many are unfamiliar with the procedures for handling similar complaints by Department of the Army (DA) Civilian employees, which may be available to non-Army personnel, to include contingent workers.1 As JAs potentially advise on both military and civilian personnel law, understanding these basics, along with how leaders may unwittingly and substantially increase the Army’s financial liability, is imperative.2 The importance of this topic is even greater for those whose commands possess large numbers of contract workers or while deployed to combat environments, where otherwise-available labor and employment law support is limited.3 Complaints of discrimination filed by DA Civilians and contingent workers against the Army may result in thousands of dollars per case—potentially hundreds of thousands of dollars—all paid from the activity where the alleged discrimination took place, using the offending organization’s operational and maintenance funds.4 No corresponding concern exists for service member complainants.5

Equal Employment Opportunity (EEO) Complaints, Not Your Army Regulation 600-20 Process

In short, and for purposes of this article, two distinct administrative complaint systems exist for Army personnel, based solely on their status.6 The Army handles EO complaints of service members internally, while DA Civilians, and potentially others, as discussed below, may avail themselves of the processes dictated by the Equal Employment Opportunity Commission (EEOC), an independent federal agency with statutory authority to regulate and enforce federal employment anti-discrimination laws.7 Formal complaints by military members are brought to the commander’s attention for investigation, typically under the provisions of Army Regulation 15–6.8 In contrast, formal EEO complaints by DA Civilians are generally processed by the organization’s servicing EEO office.9 The EEO officer performs a gatekeeping function as it concerns these complaints, with one of the threshold matters determining whether to accept or dismiss the complaint.10 If dismissal is not appropriate, the Army (Agency) must accept the complaint for investigation and afford the complainant access to the Agency’s administrative complaint process.11

Contingent Workers Are Not Army Employees Under Federal Anti-discrimination Laws

Contingent workers are generally those outside of federal employment, such as volunteers and employees of government contractors.12 One reason to dismiss a complaint is that the aggrieved worker lacks standing, i.e., that person does not qualify as an Army employee, applicant, or former employee under federal anti-discrimination laws.13 As an initial matter, a contingent worker must specify whether their complaint is against their employer or the Army. If the latter, the EEO counselor informs the aggrieved that, depending on the facts and circumstances of their situation, the Army may not be their employer under federal anti-discrimination laws.14

Proceeding initially as though the standing of the complainant is not in question, an EEO counselor is assigned to conduct a pre-complaint inquiry. This inquiry begins with contacting the management officials to determine the facts behind the working relationship, specifically, the supervisory factors discussed below.15 The EEO counselor then forwards that information to the organization’s servicing legal office “for a fact based analysis and legal opinion on whether the aggrieved is a covered Army ‘employee’ under the anti-discrimination laws.”16 If the Agency determines that the Army is not the contingent worker’s employer for these purposes, the EEO officer shall dismiss the complaint for failing to state a claim.17 An aggrieved who is prohibited from filing an EEO complaint against the Army for discrimination is not entirely without recourse, though, as other avenues of redress remain available.18

The Worker’s Employer Is the One Who Controls the Worker’s Means and Manner of Their Work Performance

The determination as to whether a contingent worker qualifies as an Army employee and thus has standing to file a complaint against the Agency is conducted on a case-by-case basis after an examination of the working relationship between the management officials and the worker.19 To make this determination, the EEOC applies the common law of agency, originally set forth by the EEOC in Ma v. Department of Human and Health Services.20 This examination of “whether an employer-employee relationship exists is fact-specific and depends on whether the employer controls the means and manner of the worker’s performance.”21

While every aspect of the relationship is considered, the EEOC will look to the following non-exhaustive list of components, known as the “Ma” factors:

  1. The extent of the employer’s right to control the means and manner of the worker’s performance;
  2. The kind of occupation, with reference to whether the work usually is done under the direction of a supervisor or is done by a specialist without supervision;
  3. The skill required in the particular occupation;
  4. Whether the “employer” or the individual furnishes the equipment used and the place of work;
  5. The length of time the individual has worked;
  6. The method of payment, whether by time or by the job;
  7. The manner in which the work relationship is terminated, i.e., by one or both parties, with or without notice and explanation;
  8. Whether annual leave is afforded;
  9. Whether the work is an integral part of the business of the “employer”;
  10. Whether the worker accumulates retirement benefits;
  11. Whether the “employer” pays social security taxes; and
  12. The intention of the parties.22

Contractual language may demonstrate the intent of the parties, but the language itself is not conclusive, nor is the element of who pays the complainant’s salary.23 Neither the number of factors met nor the finding of any one factor is controlling to the analysis.24 With that said, as discussed below in Wilson v. Department of the Army, the EEOC has placed increased importance on some of these factors, such as constructively terminating the contingent worker from their employment.25

Actions Could Convert Contingent Workers into “Army Employees,” Providing Standing to File a Discrimination Complaint Against the Army

The EEOC recognizes a situation where more than one entity, to include two or more private entities, is potentially liable under federal anti-discrimination laws. This working relationship, termed “joint employment,” involves the existence of “two or more employers that each exercises sufficient control of an individual to qualify as the worker’s employer.”26 The potential for the creation of this relationship increases with the prevalence in the organization of workers provided by “staffing firms,” which are “temporary employment agencies, contract firms, and other firms that hire workers and place them in job assignments with the firm’s clients.”27 The analysis is holistic, similar to the Ma factors enumerated above.28 Thus, the EEOC will examine “the comparative amount and type of control the staffing firm and the Agency each maintain over [the] complainant’s work,” with the burden on the complainant to demonstrate the existence of the joint employment relationship.29

As with any area of law, demonstration of the legal standard by way of examples is preferential to offering a list of rules. The case of Wilson v. Department of the Army illustrates a joint employer relationship and reflects the importance placed by the EEOC’s analysis, where the Agency involves itself in the decision to remove the worker from their employment.30 A DA Civilian referred the complainant, a retired enlisted Airman with experience as a personnel specialist, to a private contractor, who hired the complainant and placed him in the S1 section of a Logistics Readiness Center within the Communications-Electronics Command.31 The DA Civilian S1 assigned daily tasks to the complainant, who worked in the Agency’s facilities alongside DA Civilians using Agency-provided equipment.32 Citing to the lack of work for the complainant, the Agency manager informed the complainant that he was terminated from his position.33 The private employer informed the complainant that they had no input on the Agency’s decision, and subsequently severed his employment based on the Agency’s action.34 The complainant filed an EEO complaint against the Agency, which dismissed the complaint on the basis that the complainant was not the Agency’s employee.35 The EEOC reversed the dismissal, providing that “[one] of the most important factors in making the Agency a joint employer was its power to remove [the complainant] from providing services to the Agency where this is tantamount to removal.”36

Reflecting the degree of importance placed by the EEOC in the hiring process, a complainant unsuccessfully sought employment with Dyncorp Technical Services LLC (Dyncorp) for a licensed practical nurse (LPN) contract position.37 The complainant alleged discrimination by the Agency, who dismissed her complaint on the basis that the complainant was not an employee or applicant for Agency employment.38 The EEOC reversed the decision, finding “that the Agency exercised sufficient control over the LPN position to qualify as a joint employer with Dyncorp.”39 The record reflected that Dyncorp forwarded the resumes of prospective candidates to an Agency representative who then made the selection and informed Dyncorp, who hired the selectee accordingly.40

(Credit: istockphoto.com/erhui1979)

Numerous other cases involve situations where the EEOC upheld the Agency’s dismissal of the EEO complaint, finding the Agency had sufficiently maintained its separation to keep from becoming considered the complainant’s employer.41 The point of this article is not to discuss any one particular fact pattern or demonstrate all the permutations of this rule, but rather to raise overall awareness of the issue to the field, especially to JAs who have yet to practice labor and employment law. Involvement with this type of situation may arise by either a military or Civilian attorney supervising a contingent worker directly (to include a volunteer or intern in a legal office) or advising a manager who maintains contingent workers as part of their workforce, the latter the more likely scenario.

While detailed guidance on the proper supervision of contracted workers by federal employees is outside the scope of this article, as a best practice, it is recommended to adhere to the terms of the contract, as—if drafted correctly—abiding by the terms should avoid the types of issues discussed above.42 Those in managerial positions with contract workers within their workspace should tread cautiously in any matter that may involve a personnel action, such as taking or requesting disciplinary action, issuing or recommending awards or promotions, directing or suggesting the removal of a worker, or evaluating individual performance.43 These managers should instead remain in close contact with their respective contracting officer representative to address any concerns involving individual contract workers as they arise.44 Through an understanding of this potential issue, attorneys may best advise their leaders to sidestep this avoidable liability trap. Successfully doing so may save your command hundreds of thousands of dollars in damages paid to a non-Army employee complainant, money better spent on the organization’s warfighting mission.

 


MAJ Reiter is an attorney-advisor for the Labor and Employment Law Division, Office of The Judge Advocate General, Washington, D.C.



Notes

1. U.S. Dep’t of Army, Reg. 690-600, Equal Employment Opportunity Discrimination Complaints para. 3-10 (9 Feb. 2004) [hereinafter AR 690-600]. The other listed types of contingent workers are “individuals participating in training, work-study or fellowship programs, and all other individuals working on Army installations or projects without being on the activity’s payroll or meeting the definition of a civil service employee . . . or a nonappropriated fund employee.” Id. For a definition of civil service employee and nonappropriated fund employee, see 5 U.S.C. § 2105 (2020).

2. See generally U.S. Dep’t of Army, Reg. 690-12, Equal Employment Opportunity and Diversity app. D-1 (22 Dec. 2016) [hereinafter AR 690-12] (information on how the Army may be liable for complaints of harassment). The regulation directs that “supervisors will make reasonable efforts to prevent and promptly correct harassing behavior in the workplace,” and will investigate when an employee makes a complaint about alleged harassment. Id. apps. D-2(a), D-2(b).

3. See U.S. Dep’t of Army, Reg. 27-1, Judge Advocate Legal Services para. 2-11(b)(3) (24 Jan. 2017).

4. AR 690-600, supra note 1, para. 5-13(c); U.S. Equal Emp. Opportunity Comm’n, Equal Employment Opportunity Management Directive for 29 C.F.R. Part 1613, ch. 12 (5 Aug. 2015) [hereinafter EEO-MD-110]; U.S. Dep’t of Def., 7000.14-R, DoD Financial Management Regulation, vol. 10, ch. 12, sec. 120309 (Aug. 2019).

5. See generally U.S. Dep’t of Army, Reg. 600-20, Army Command Policy app. C (6 Nov. 2014) [hereinafter AR 600-20].

6. There are potentially other avenues of redress available, such as the Merit Systems Protection Board and filing a civil action in U.S. District Court, but most Equal Employment Opportunity (EEO) complaints against the federal government are handled within the system established by the Equal Employment Opportunity Commission (EEOC).

7. 42 U.S.C. § 2000e-4 (2019). Although the military departments are subject to the provisions of 29 C.F.R. § 1614 (which applies EEO protections and processes to the federal sector), the uniformed members of those departments are explicitly excluded from its provisions. Id. §§ 1614.103(b)(1), 1614.103(d)(1).

8. AR 600-20, supra note 5, app. C-4(b). Commanders are then free to dispose of the misconduct as they deem appropriate. Id. app. C-7. See generally U.S. Dep’t of Army, Reg. 15-6, Procedures for Administrative Investigations and Boards of Officers (1 Apr. 2016) [hereinafter AR 15-6].

9. See AR 690-600, supra note 1, paras. 1-12(k), 3-1(a). Management must still investigate alleged harassment, regardless of whether the EEO office accepts or dismisses the complaint. AR 690-12, supra note 2, app. D-2(b). The supervisor or manager who receives the complaint will contact their serving legal office within one business day to seek guidance on the appropriate type of inquiry. Id. app. D-5(a). This inquiry may, if necessary, be conducted under the provisions of AR 15-6. Id. app. D-5(b).

10. AR 690-600, supra note 1, para. 1-12(k). 29 C.F.R. § 1614.107 (2019) and AR 690-600, supra note 1, para. 4-4, provide the criteria for when to dismiss a complaint.

11. 29 C.F.R. § 1614.108 (2019); AR 690-600, supra note 1, para. 4-3(d).

12. AR 690-600, supra note 1, para. 3-10.

13. Id. para. 3-1(a).

14. Id. para. 3-10(a)(3). See also AR 690-600, supra note 1, para. 1-4.

15. AR 690-600, supra note 1, para. 3-10(b), fig. 3–8.

16. AR 690-600, supra note 1, para. 3-10(b). Legal offices must be cognizant of the requirement in EEO-MD-110, which directs separation between “the agency’s EEO complaint program and the agency’s defensive function,” i.e., there must be a firewall between the attorneys conducting the acceptance or dismissal analysis and those attorneys for the organization who defend the agency and litigate the case. EEO-MD-110, supra note 4, ch. 1, sec. IV(D). This separation avoids any potential conflict of interest for the agency. Id.

17. AR 690-600, supra note 1, para. 3-10(b)(1)(b); 29 C.F.R. § 1614.107(a)(1) (2019). See also 29 C.F.R. § 1614.106(a) (2019) (“[a] complaint must be filed with the agency that allegedly discriminated against the complainant”); EEO-MD-110, supra note 4, ch. 5, sec. IV(A)(3); Strickland v. Dep’t of the Army, 111 LRP 15660, 111 FEOR 197 (2011).

18. These methods of redress include filing a complaint with the contingent worker’s employer (through the processes established by that employer, if any), filing an EEO complaint with the nearest EEOC field office, or appealing the EEO office’s decision to the EEOC Office of Federal Operations. AR 690-600, supra note 1, paras. 3-10(a), 3-10(b).

19. Id. para. 3-10(b).

20. Ma v. Dep’t of Health and Human Servs., 105 LRP 31239, 98 FEOR 3226 (1998), citing Nationwide Mutual Ins. Co. v. Darden, 103 LRP 43160, 503 U.S. 318, 323-24 (1992).

21. Bryant v. Dep’t of Justice, 107 LRP 27058, 107 FEOR 385 (2007).

22. Strickland, 111 LRP 15660. See also AR 690-600, supra note 1, fig. 3–8.

23. See generally Taylor v. Dep’t of Ed., 108 LRP 15015, 108 FEOR 294 (2008); Tucker v. General Servs. Ad., 111 LRP 63706, EEOC No. 0120102242 (2011); Serita B. v. Dep’t of the Army, 116 LRP 49261, 117 FEOR 122 (2016); Joanna G. v. Dep’t of the Army, 118 LRP 33643, EEOC No. 0120180957 (2018).

24. See Strickland, 111 LRP 15660. See also Darden, 103 LRP 43160 (providing that “[since] 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”) citing NLRB v. United Ins. Co. of America, 390 U.S. 254, 258, 88 S.Ct. 988, 991 (1968).

25. See Wilson v. Dep’t of the Army, 111 LRP 65157, EEOC No. 0120112541 (2011); Ames v. Dep’t of the Air Force, 108 LRP 10175, 108 FEOR 263 (2008).

26. Joanna G., 118 LRP 33643. The finding by the EEOC that the Agency has created this relationship does not only impart potential financial liability on the Agency, more fundamentally, it allows the complainant to use the Agency’s administrative complaint process. Id.

27. U.S. Equal Emp. Opportunity Comm’n, Enforcement Guidance: Application of EEO Laws To Contingent Workers Placed by Temporary Employment Agencies and Other Staffing Firms, EEOC Notice No. 915.002 (1997).

28. Joanna G., 118 LRP 33643 (“[the] EEOC considers, inter alia, the Agency’s right to control when, where, and how the worker performs the job; the right to assign additional projects to the worker; whether the work is performed on Agency premises; whether the Agency provides the tools, material, and equipment to perform the job; the duration of the relationship between the Agency and the worker, and whether the Agency controls the worker’s schedule; and whether the Agency can discharge the worker”), citing U.S. Equal Emp. Opportunity Comm’n, EEOC Compliance Manual, sec. 2-III(A)(1) (12 May 2000) (rev. Aug. 2009).

29. Herrera v. Dep’t of the Army, 108 LRP 64943, 109 FEOR 96 (2008).

30. Wilson, 111 LRP 65157.

31. Id.

32. Id.

33. Id.

34. Id.

35. Id.

36. Wilson, 111 LRP 65157. See also Tucker, 111 LRP 63706.

37. Baker v. Dep’t of the Army, 106 LRP 16330, 106 FEOR 292 (2006).

38. Id.

39. Id.

40. Id. With regards to the complainant, the Agency representative had, in addition to denying her application, sent a note to Dyncorp that the complainant’s resume clearly showed “that she is NOT someone we want and that [the Regimental Surgeon] does not believe a woman should fill the position over a male.” Id. The EEOC also found that the Agency had retained supervisory control over the LPN position, and the work was performed on Agency premises with Agency equipment, as contributing factors to their determination. Id.

41. See generally, Palmer v. Dep’t of Homeland Sec., 111 LRP 41481, 112 FEOR 4 (2011) (upholding agency’s dismissal, despite the agency and private employer sharing supervision, work assignments, and creation of the complainant’s work schedule, as the contractor paid the complainant’s salary and the employer’s portion of her retirement benefits, provided her health and life insurance, approved or disapproved her leave, prepared her job evaluation, and removed her from the agency’s project); Strickland, 111 LRP 15660 (upholding Agency’s dismissal, despite the complainant working on the Agency’s premises using Agency equipment, when the contractor hired her, paid her salary, prepared her performance evaluations, set her work hours, and approved her leave requests); Herrera, 108 LRP 64943 (upholding Agency’s dismissal, despite complainant working on Agency premises using Agency equipment, attending mandatory Agency training, receiving Agency tasks, and requiring the pre-clearance of leave requests, as the contractor hired, paid, and terminated the complainant, completed his evaluations, and addressed performance concerns with the complainant).

42. See FAR 37.104 (2019), which prohibits the creation of personal service contracts (unless specifically authorized). The section describes such contracts as those “characterized by the employer-employee relationship it creates between the Government and the contractor’s personnel. An employer-employee relationship under a service contract occurs when, as a result of (i) the contract’s terms or (ii) the manner of its administration during performance, contractor personnel are subject to the relatively continuous supervision and control of a Government officer or employee.” Id.

43. See FAR 37.602, subpart 37.603 (2019) (authorizing the evaluation of performance standards to ensure contract compliance, but not extending such performance assessments to individual contract workers).

44. See generally U.S. Dep’t of Def., Instr. 3020.41, Operational Contract Support (OCS) (20 Dec 2011) (C2, 31 Aug. 2018); U.S. Dep’t of Army, Reg. 715-9, Operational Contract Support Planning and Management (24 Mar. 2017).