7th Circuit Reverses Summary Judgment in Favor of Employer Based on Joint-Employer Test

By: Jessica B. Jackler

Earlier this month, the Seventh Circuit ruled that the district court erred in granting the defendant’s pretrial motion for summary judgment in plaintiff’s action under Title VII and the Illinois Human Rights Act. In Frey v. Hotel Coleman, No. 17-2267 (September 11, 2018), plaintiff alleged that the defendant—a hospitality group hired to run the daily operations of the hotel—hired plaintiff to work in a hotel owned by another entity, sexually harassed her and terminated her in retaliation for making a discrimination complaint.

The district court granted summary judgment in favor of the defendant finding that it was not plaintiff’s actual employer, and the entity that owned the hotel and actually paid plaintiff was the only applicable employer. Although both parties conceded that the hotel was plaintiff’s employer, the 7th Circuit held that the district court erred in failing to use a 5-part “economic realities” test under Knight v. United Farm Bureau Mut. Ins. Co., 950 F.2d 377, 378–79 (7th Cir. 1991) when determining that defendant was not a joint employer. Those factors include: (1) the extent of the employer’s control and supervision over the worker, including directions on scheduling and performance of work; (2) the kind of occupation and nature of skill required, including whether skills are obtained in the workplace; (3) responsibility for the costs of operation, such as equipment, supplies, fees, licenses, workplace, and maintenance of operations; (4) method and form of payment and benefits; and (5) length of job commitment and/or expectations. Knight, 950 F.2d at 378–79.

The court explained that when looking at two different unrelated corporate entities and trying to determine if one or both were plaintiff’s employer, the Knight test is the one a court must use for such purposes.

The 7th Circuit further suggested that, due to the Knight factors, there was likelihood that the district court, on remand, would find defendant to be a joint employer based upon its day-to-day control/supervision it exercised over plaintiff and her job assignments, and its role in the overall operation of the hotel.

This decision is a strong reminder that 7th Circuit courts apply the Knight factors when determining whether there is a joint-employer relationship.

The National Labor Relations Board recently announced that it would publish a “Notice of Proposed Rulemaking” in the Federal Register regarding its joint-employer standard. Read our post on the proposed rule here.

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