Diversity & Inclusion, HR Management & Compliance

10th Circuit Rejects Harassment Charges, Revives Premises Liability Claim

The U.S. 10th Circuit Court of Appeals (whose rulings apply to all New Mexico employers) recently affirmed the summary dismissal of a sexual harassment discrimination lawsuit against a pipeline construction company and a pipeline operator’s successor-in-interest but sent the related premises liability claim back to the lower court.

Facts

Jessica Adams, an employee on C3 Pipeline Construction, Inc.’s pipeline construction crew, alleged three C3 workers sexually harassed her while they were working on a project in New Mexico.

C3 provided construction and maintenance services under a contract with Alpha Crude Connector, LLC (ACC) on an ACC pipeline system in New Mexico and Texas. Adams sued C3 and Plains Defendants, ACC’s corporate successors, for sexual harassment, discrimination, and retaliation under Title VII of the Civil Rights Act of 1964, the New Mexico Human Rights Act (NMHRA), and related state tort (wrongful act) law claims.

Specifically, Adams alleged three male C3 employees required her to perform sexual favors for them to keep her job, sent her offensive and unwanted pornographic images, made sexually explicit comments, and engaged in unwanted touching of her. In 2019, a jury awarded her $55 million for her claims against C3, which was lowered to approximately $20,000 by the U.S. district judge. Before the trial, the court had dismissed her claims against ACC, determining the company didn’t control her working conditions because she was employed by C3.

Joint-Employer Test

Adams appealed the summary dismissal of her claims against ACC. The 10th Circuit upheld the dismissal of her discrimination claims against the company because it wasn’t a joint employer with C3 but reversed the lower court’s dismissal of her premises liability claim against it.

The 10th Circuit concluded ACC wasn’t a joint employer for purposes of Title VII liability because it:

  • Didn’t have the authority to hire Adams;
  • Didn’t have control of payroll;
  • Didn’t supervise her; and
  • Didn’t have authority to discipline her.

The court specifically noted the most important fact was that ACC couldn’t fire Adams and concluded no reasonable jury could have found the company exercised significant control over C3’s employees.

Premises Liability

The 10th Circuit did, however, send Adams’ state law premises liability claim back to the lower court for further proceedings.

Under New Mexico law, the employer of an independent contractor is generally not liable for injuries to an independent contractor’s employee. There are exceptions to this general rule, including when the employer controls the premises on which the work is being performed or when it retains control over the independent contractor’s performance of its work. The analysis for determining whether control of a contractor’s employee exists, however (as in the joint-employer test), is separate than control of the workplace for premises liability.

Under premises liability, an employer can be held liable for its own negligence in exercising or failing to exercise control over the contractor’s work. The duty also extends to contractors’ employees when an injury occurs as a result of such negligence.

The 10th Circuit determined the lower court failed to consider evidence ACC controlled the worksite and ignored Adams’ complaints to ACC’s corporate management about the sexual harassment. The lower court also failed to consider that ACC didn’t act to stop the treatment and took no steps to keep its premises safe after it knew. The claim was sent back to the district court for further consideration. Adams v. C3 PipelineConstr. Inc., No. 20-2055, 2021 WL 5068337 (10th Cir., Nov. 2, 2021).

Takeaway

You may be subjected to different types of liabilities when hiring contractors. You need to be aware you can be considered joint employers for the purpose of antidiscrimination claims unless you refrain from hiring, firing, disciplining, and directly paying a contractor’s employees.

Even if you aren’t a joint employer, however, you need to take action when you receive complaints from a contractor’s employee regarding a harassing or discriminatory environment. Such responses may include asking the contractor to investigate its employees and remove them if the complained of conduct is substantiated. Termination of a contractor’s employee directly could result in a finding of joint employment under Title VII. If such a situation arises, consult counsel to determine the best course of action to take after considering the competing liabilities.

Sarah K. Downey is an attorney with Jackson Loman Stanford Downey & Stevens-Block, P.C., in Albuquerque, New Mexico. You can reach her at sarah@jacksonlomanlaw.com.