Enforcement Guidance on Equal Employment Opportunity Commission & Walters v. Metropolitan Educational Enterprises, Inc.
Web Posted on: December 18, 1997
NOTICE
EEOC
NUMBER 915.002
DATE 5/2/97
Distribution: CM Holders
Revised EEOC form 106 (6/91)
Previous editions of this form are obsolete and must not be used
TN: footnotes are found at the end of the text.
1. SUBJECT. Enforcement Guidance on Equal Employment Opportunity Commission & Walters v. Metropolitan Educational Enterprises, Inc., 117 S. Ct. 660 (1997).
2. PURPOSE. This enforcement guidance analyzes the Metropolitan decision and provides guidance on how to count employees when determining whether the Respondent satisfies the jurisdictional prerequisite for coverage under Title VII, the ADA, and the ADEA.
3. EFFECTIVE DATE.
4. EXPIRATION DATE. As an exception to EEOC Order 205.001, Appendix B, Attachment 4, Section a (5), this Notice will remain in effect until rescinded or superseded.
5. ORIGINATOR. Title VII/EPA Division, Office of Legal Counsel
6. INSTRUCTIONS. File after Section 605.8 (b) of Volume II of the Compliance Manual.
7. SUBJECT MATTER.
I. Introduction
The Supreme Court has held that the "ultimate touchstone" in determining whether an employer has a sufficient number of employees to satisfy the jurisdictional prerequisite for coverage under Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. Section 2000e (b), is "whether an employer has employment relationships with 15 or more individuals for each working day in 20 or more weeks during the year in question." Equal Employment Opportunity Commission and Walters v. Metropolitan Educational Enterprises, Inc., 117 S. Ct. 660, 666 (1997). The Court adopted the EEOC's position that employees should be counted whether or not they are actually performing work for or being paid by the employer on any particular day.
In Metropolitan, the Court interpreted Section 701 (b) of Title VII, which defines a covered employer as one who "has fifteen or more employees for each working daily in each of twenty or more calendar weeks in the current or preceding calendar year." [footnote 1] The Commission has interpreted this provision to include employers who have an employment relationship with 15 or more employees for the relevant days, regardless of the daily work schedules of the individual employees. See EEOC Policy Guidance No: N-915-052, "Whether Part-time Employees Are Employees Within the Meaning of Section 701 (b) of Title VII and Section 11 (b) of the ADEA," April 20, 1990, 8 FEP Manual (BNA) 405:6857, EEOC Compliance Manual (CCH) paragraph 2167 ("part-time employees are counted whether they work part of each day or part of each week").
The method the Court adopted is often called the "payroll method" because "the employment relationship is most readily demonstrated by the individual's appearance on the employer's payroll." Id. at 663-64. However, the Court stressed that "what is ultimately critical is the existence of an employment relationship, not appearance on the payroll." [footnote 2] Id. at 666. The Court upheld the EEOC's interpretation, reasoning that "an employer 'has' an employee if he maintains an employment relationship with that individual" on the day in question. Id. at 664 (emphasis added). The Court rejected Metropolitan's interpretation that an employer "has" an employee for a particular working day only when it is actually compensating the employee for that day. Id. at 664.
The Court also disagreed with Metropolitan's argument that the EEOC's interpretation rendered the statutory phrase "for each working day" superfluous. Without the phrase, the Court said, it would be unclear how to count an employee who departs in the middle of a calendar week or an employee who departs after the end of the workweek, but before the end of the calendar week. Id. at 664-65. The Court held that "all one needs to know about a given employee for a given year is whether the employee started or ended employment during the year and, if so, when. He is counted as an employee for each working day after arrival and before departure." Id. at 665-66.
The Court noted Metropolitan's argument that the EEOC's interpretation could produce some "strange consequences," such as counting an employee who works irregularly only a few days a month. Id. at 665. However, the Court observed that Metropolitan's approach "produces unique peculiarities of its own." Id. at 665. For example, by counting employees only on the days that they are compensated, a half-time worker who works every morning would be counted, while one who works on alternate days would not. Id. at 665. Also, Metropolitan's approach "would turn the coverage determination into an incredibly complex and expensive factual inquiry." Id. at 665. "For an employer with 15 employees and a 5-day workweek, the number of daily working histories [that would have to be examined] for [a] two year period is 7,800." Id. at 665.
II. Charge Processing
The Supreme Court's decision accords with the longstanding Commission position that all workers who have an ongoing employment relationship with an employer are counted for purposes of determining coverage. [footnote 3] The phrase "for each working day" means simply that an employee is counted as an employee for each working day starting on the day that the employment relationship begins and ending on the last day of the employment relationship. [footnote 4]
There should be fewer disputes about the number of employees in an employer's workforce because the Court has made the rules clear and simple. The Commission will assume in the first instance that all individuals who perform work for the Respondent are employees. However, if a Respondent alleges that some individuals are not employees and/or alleges that it has fewer than the jurisdictional prerequisite of 15 employees for Title VII and ADA coverage or 20 employees for ADEA coverage, it will be necessary to obtain and evaluate additional information.
A. Information to Be Requested from Respondents Who Claim to Fall Below the Jurisdictional Thresholds
Since the information needed will vary from case to case, information requests should be tailored to address the disputed facts. Typically, it will be most effective to focus on records about those workers whose employment status or dates of employment are in dispute. In other situations, it will be more efficient to obtain records of all workers. The types of records that should be sought will typically include:
1. Payroll records and employment contracts relating to relevant workers for the year of and the year preceding the alleged adverse employment action. Include contracts that involve workers provided by temporary employment agencies, contract firms, and other types of staffing firms. For example, include maintenance workers and security personnel assigned by a contract firm and temporary clerical personnel assigned by a temporary employment agency.
2. Personnel, payroll and/or contract documents that reflect the dates that the disputed workers began and/or ended their employment relationship with the Respondent.
B. Determining Who Qualifies as an Employee
1. Evaluate whether the worker(s) whose status is disputed are employees or are, instead, independent contractors or otherwise not employees. To make this determination, consult EEOC Enforcement Guidance No: N-915, "Title VII Coverage of Independent Contractors and Independent Businesses," September 4, 1987; and EEOC Enforcement Guidance No: N-915.007, "Whether Individuals Who Are Partners, Officers, Directors, or Major Shareholders in Organizations May Be Considered Employees Under Title VII, ADEA, and the EPA," July 14, 1987.
Example:
The Respondent is a publishing company with fourteen employees. It has recently installed a new computer system in its office. The Respondent contracted with an expert computer technician (worker) to perform a myriad of duties relating to the installation of, and training on, the new system. The worker's contract will expire in six months. The Respondent alleges that this worker is an independent contractor, and not an employee. The Respondent does not supervise the worker or control the details of how she performs her job. The worker is engaged in a distinct occupation which requires special knowledge and expertise. The contract, and thus the relationship with the Respondent, will end at a specified time. The worker is not paid by the hour, but paid to complete the specific job. In this case, the worker would be found to be an independent contractor and not counted as an employee.
2. Determine whether the employees have an employment relationship with the Respondent. Some employees who perform work for the Respondent may be employees of other businesses, such as temporary employment agencies or contract firms, but may also be employees of the Respondent. Consult EEOC Enforcement Guidance No: N-915, "Concepts of Integrated Enterprise and Joint Employer," May 6, 1987, and EEOC Enforcement Guidance No: N-917-002, "Employment Agencies," September 20, 1991, 8 FEP Manual (BNA) 405:6951 (Section I, C.). Such employees should be included in Respondent's employee count.
Example:
A temporary employment agency hires, pays, and assigns legal secretaries to the Respondent's law firm. The Respondent supervises, establishes work schedules, and assigns duties to the secretaries. If the Respondent is dissatisfied with any secretary, it can require the agency to remove him/her. In this case, the agency and the Respondent exercise sufficient control over the secretaries to both be deemed their employer. The secretaries are counted as employees of both the Respondent and the agency.
C. Counting the Employees
The next step is to count the employees. The investigator should do the following:
1. Determine the first and last day of the Respondent's workweek.
Example:
The Respondent is a clothing store. The store is open Monday through Saturday. Every day that the Respondent has employees scheduled to work is a working day for the Respondent. Accordingly, the Respondent's workweek is Monday through Saturday.
2. If an employee began employment during either year in question, that employee is counted as an employee for each working day after arrival. For example, if an employee started work on a Friday, that employee would be counted as an employee on that Friday and thereafter.
3. If an employee ended employment during either year in question, that employee is not counted as an employee after his/her departure. For example, if an employee ends his/her employment on Wednesday, he or she is counted as an employee up to an including Wednesday, but he or she is not counted after Wednesday.
Example:
If an employer's workweek is Monday through Friday and during one of the weeks examined, it had fourteen employees plus Employee A who ended his employment on Tuesday and Employee B who started her employment on Wednesday of the same week, then the employer has fifteen employees for each working day for that workweek.
Example:
If an employer's workweek is Monday through Friday and during one of the weeks examined, it has fourteen employees plus Employee A who ended his employment on Tuesday and Employee B who started her employment on Thursday of the same week, the employer did not have fifteen employees for each working day of that workweek because it only had employment relationships with fourteen employees on Wednesday.
4. To determine the employee count for each week examined in the relevant years: a) calculate the number of workers who were on the payroll; b) subtract any workers who were on the payroll, but were not employees; and c) add any workers who were not on the payroll, but who qualified as employees of the Respondent. Do not count any week where the Respondent had employment relationships with fewer than the jurisdictional prerequisite of 15 employees for Title VII and ADA coverage, or 20 employees for ADEA coverage, for each working day of a particular week.
If the jurisdictional prerequisite is not met, determine whether the Respondent is integrated with another employer. See EEOC Policy Statement No: N-915, "Concepts of Integrated Enterprise and Joint Employer," May 6, 1987, for a discussion of how to determine whether the Respondent is integrated with another employer. If the Respondent is integrated with one or more other employers determine whether the combined number of employees of the integrated employers meets or exceeds the jurisdictional prerequisite.
TN: affixed here are date and signature.
Date 5/2/97
Gilbert F. Casellas, Chairman
FOOTNOTES
1. The Court's analysis also applies to the Age Discrimination in Employment Act of 1967 (ADEA) and the Americans with Disabilities Act of 1990 (ADA), which have similar statutory language. Section 101 (5) (A) of the ADA, 42 U.S.C. Section 12111 (5) (A) defines an employer as one who "has fifteen or more employees for each working day in each of twenty or more calendar weeks in the current or preceding calendar year." Section 11 (b) of the ADEA, 29 U.S.C. 630 (b), defines an employer as one who "has twenty or more employees for each working day in each of twenty or more calendar weeks in the current or preceding calendar year."
2. The Court noted that an individual who was on the payroll, but who was not an "employee" under traditional agency principles, would not be counted. Id. at 666. The converse is also true. An individual who has two joint employers would be counted as an employee of both employers even though the employee may be on the payroll of only one. See EEOC Enforcement Guidance No: N-915, "Concepts of Integrated Enterprise and Joint Employer," May 6, 1987.
3. EEOC Compliance Manual, Section 605.8 (b) (2), concerning the counting of part-time and temporary employees, was clarified by the Enforcement Guidance on Part-time Employees.
4. The phrase "in each of twenty or more calendar weeks in the current or preceding calendar year" means that the employer must have the requisite number of employees for twenty or more calendar weeks in either the current of preceding calendar year. The weeks need not be consecutive. EEOC Compliance Manual, Volume II, Section 605.8 (b).
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