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EEOC v. Global Horizons, No. 16-35528 (9th Cir. Feb. 6, 2019)

The Ninth Circuit addresses the legal standard for holding joint-employers liable under Title VII, in a case involving Thai contract workers hired under the H-2A guest-worker program to pick fruit in California orchards. The panel returns the case to the district court for more discovery and factual development.

EEOC v. Global Horizons, Inc., No. 16-35528 (9th Cir. Feb 6, 2019): "The H-2A program, which is administered by the Department of Labor, allows employers to hire foreign workers for agricultural labor on a temporary or seasonal basis." Under the program, the employer commits to provide food, housing and transportation.

In this case, as alleged in the EEOC's complaint, the orchards ("Growers") and Global Horizons, a temporary-labor contractor, entered a contract to provide seasonal laborers from Thailand. The Growers and Global Horizons "agreed to share responsibility for managing the Thai workers and for fulfilling the various H-2A requirements." The Growers would provide general management and oversight of the workers, "which included determining the number of workers needed for each task, setting quotas for work output, and inspecting the quality of the work." Global Horizons "agreed to provide the Thai workers with housing and transportation and to pay them" wages.

The EEOC alleged that the defendants "targeted impoverished Thai nationals" for recruitment "to work at the orchards in the belief that such workers would be more compliant and less likely to abscond than workers of other nationalities." They were charged allegedly exorbitant fees just for the privilege of working in the States.

The EEOC also alleged discrimination both at the worksite and off. The Growers "pressured the Thai workers to meet the quotas by verbally harassing them, calling them degrading names, and threatening them with pay cuts, termination, and deportation." Their passports were confiscated to prevent escape. Global Horizons failed to pay them promised wages. Moreover, "the Growers and Global Horizons assigned the Thai workers more demanding work, gave them fewer breaks, forced them to work in extreme heat and in the rain, and gave priority to Mexican workers when there was a shortage of work."

With respect to "non-orchard-related" conditions, the Thai workers were allegedly subjected to "nearly uninhabitable housing," often lacking adequate kitchens (and even in some cases running water), infested with vermin, and devoid of decent sanitation. Food was scarce ("some workers resorted to hunting rabbits or birds for food"). Transporation was dangerously overcrowded.

The EEOC filed suit, alleging discrimination, harassment, and retaliation under Title VII. "The district court entered a default judgment against Global Horizons," which was insolvent and presented no defense. It "dismissed all allegations against the Growers relating to non-orchard-related matters," holding that they were not "employers" with regard to the housing, food and transporation issues. It also "denied the EEOC's motions to compel discovery to the extent that those motions sought information related to non-orchard-related matters." Eventually, the court granted summary judgment to the Growers.

The Ninth Circuit reverses. "All parties agree that the Growers and Global Horizons were joint employers of the Thai workers with respect to orchard-related matters. Thus, the salient question before us is whether the EEOC plausibly alleged that the Growers were also joint employers with respect to non-orchard-related matters." The panel holds that they were, and that the complaint "state[s] a plausible basis for holding Green Acre liable for discrimination relating to non-orchard-related matters."

The panel observes that the Ninth Circuit had never before adopted a legal standard for evaluating claims of joint-employment under Title VII. It chooses the common-law test, developed in Nationwide Mutual Insurance Co. v. Darden, 503 U.S. 318 (1992), and Clackamas Gastroenterology Associates, P.C. v. Wells, 538 U.S. 440 (2003). Unedr that standard, "the principal guidepost" is the element of control - that is, "the extent of control that one may exercise over the details of the work of the other." This is determined by weighing "a non-exhaustive list of factors" recited by the Supreme Court:

"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 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."

The panel accordingly rejects "the economic-reality test ... developed in the context of the Fair Labor Standards Act (FLSA) and the Migrant and Seasonal Agricultural Worker Protection Act (AWPA)," and the "hybrid" test that combines elements of both standards.

Evaluating the complaint, the panel holds that the EEOC stated a claim relating to non-orchard-related matters. Although employers do not typically provide for employees' life needs, the H-2A regulations (as they stood at the time of the alleged conduct) mandated a different kind of employment relationship.

"The regulations sensibly placed the obligation for providing housing, meals, transportation, and wages on the owner of the farm designated in the certification order, since the foreign workers were admitted to the United States on a temporary basis solely to render services for the owner's benefit."

While Global Horizons contracted to provide these services, "that contractual delegation did not absolve the Growers of their legal obligations as 'employers' under the H-2A regulations. Those obligations were imposed on the Growers as a matter of law." Furthermore, the Growers had the power to enforce these contractual terms:

"If the Growers were dissatisfied with the quality of Global Horizons' services, they could have demanded changes, withheld payment, or ended the contract with Global Horizons altogether. The power to control the manner in which housing, meals, transportation, and wages were provided to the Thai workers, even if never exercised, is sufficient to render the Growers joint employers as to non-orchard-related matters."

The panel notes that although joint-employers are not vicariously liable for discrimination by their counterparts, they may be held liable "if the defendant employer knew or should have known about the other employer's conduct and 'failed to undertake prompt corrective measures within its control.'" Here, the complaint alleged that the Thai workers complained to one of the two Growers, which took no corrective action. The panel holds that with regard to the second of the Growers, the allegations were "thinner" but that the EEOC should have an opportunity to amend the complaint, in view of "declarations from several Thai workers stating that Valley Fruit personnel provided or directly observed the workers' substandard living conditions, unsafe transportation, and inadequate wages."

The panel finally "reverse[s] the district court's order denying the EEOC's motions to compel discovery regarding the Growers' liability with respect to non-orchard-related matters," which was predicated on the wrong joint-employer standard.

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