TABLE OF AUTHORITIES……………………………………………………..iii

B. Legal Proceedings and the Parties’ Arguments. 6

1. Summary judgment should be reversed with respect to the district court’s finding that there was “no basis to conclude” that VHI “was Frey’s employer.”. 12

A. The district court did not apply the correct analytical framework to determine whether VHI and Frey had an employer-employee relationship. 12

B. If the district court had applied the correct analysis, it should have agreed with Frey that VHI was one of her employers. 16

2. Summary judgment should be reversed with respect to the district court’s finding that VHI was not a covered employer. 26

CONCLUSION.. 34

CERTIFICATE OF COMPLIANCE. 36

CERTIFICATE OF SERVICE.

Table of Authorities

Page(s)

Cases

Alexander v. Rush North Shore Medical Center,
101 F.3d 487 (7th Cir. 1996)................................................................. 14, 17

Arculeo v. On-Site Sales & Marketing, LLC,
425 F.3d 193 (2d Cir. 2005).................................................................. 30, 34

Bridge v. New Holland Logansport, Inc.,
815 F.3d 356 (7th Cir. 2016)...................................................... 27, 28, 29, 33

Burwell v. Hobby Lobby Stores, Inc.,
134 S. Ct. 2751 (2014)................................................................................. 24

EEOC v. Illinois,
69 F.3d 167 (7th Cir. 1995)........................................................................ 16

Grove City Veterinary Services, LLC v. Charter Practices International,
No. 3:13-cv-02276, 2016 WL 8731781 (D. Or. Feb. 5, 2016)...................... 25

Heinemeier v. Chemetco, Inc.,
246 F.3d 1078 (7th Cir. 2001)............................................................... 14, 15

Knight v. United Farm Bureau Mutual Insurance Co.,
950 F.2d 377 (7th Cir. 1991)................................................................ passim

Knitter v. Corvias Military Living, LLC,
758 F.3d 1214 (10th Cir. 2014)................................................................... 32

Love v. JP Cullen & Sons, Inc.,
779 F.3d 697 (7th Cir. 2015)................................................................ passim

Michigan Flyer LLC v. Wayne County Airport Authority,
860 F.3d 425 (6th Cir. 2017)....................................................................... 25

Mohamad v. Palestinian Authority,
132 S. Ct. 1702 (2012)..................................................................... 23, 24, 25

Nationwide Mutual Insurance Co. v. Darden,
503 U.S. 318 (1992).................................................................................... 14

Nischan v. Stratosphere Quality, LLC,
865 F.3d 922 (7th Cir. 2017)....................................................................... 15

Papa v. Katy Industries, Inc.,
166 F.3d 937 (7th Cir. 1999)................................................................ passim

Sanford v. Main Street Baptist Church Manor, Inc.,
327 F. App’x 587 (6th Cir. 2009)............................................................... 29

Smith v. Castaways Family Diner,
453 F.3d 971 (7th Cir. 2006)................................................................ passim

Tamayo v. Blagojevich,
526 F.3d 1074 (7th Cir. 2008)..................................................................... 20

Virgo v. Riviera Beach Associates, Ltd.,
30 F.3d 1350 (11th Cir. 1994)..................................................................... 30

Walters v. Metropolitan Educational Enterprises, Inc.,
519 U.S. 202 (1997).................................................................................... 26

Whitaker v. Milwaukee County,
772 F.3d 802 (7th Cir. 2014)....................................................................... 32

Worth v. Tyer,
276 F.3d 249 (7th Cir. 2001)................................................................. 18, 20

Statutes

29 U.S.C. § 630(b)........................................................................................... 27

42 U.S.C. § 2000e-2......................................................................................... 24

42 U.S.C. § 2000e(b)................................................................................ 1, 8, 11

42 U.S.C. § 2000e(f)........................................................................................ 23

Rules and Other Authorities

EEOC Compliance Manual § 2-III(B)(1)(a)(iii)(b)......................................... 29

Fed. R. App. P. 29(a)(2).................................................................................... 1

Oxford English Dictionary 880 (2d ed. 1989)................................................ 24

STATEMENT OF INTEREST

The Equal Employment Opportunity Commission (“EEOC” or “the Commission”) is charged with the interpretation, enforcement, and administration of Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e et seq. In this Title VII case, the district court granted summary judgment in favor of one of the defendants, Vaughn Hospitality, Inc. (“VHI”), on the grounds that VHI was neither an employer of the plaintiff, Bogustawa Frey, nor a covered employer for purposes of 42 U.S.C. § 2000e(b), which establishes that, to be subject to Title VII’s prohibitions, a business must employ “15 or more employees for each working day in each of twenty or more calendar weeks” during the relevant time period.

This case raises important questions about how to define the employer-employee relationship, and what it means to be a “covered employer” for Title VII purposes. Because the answer to these questions will impact the ability of the Commission and private parties to enforce Title VII and the various other federal employment discrimination statutes, the EEOC offers its views to the Court. See Fed. R. App. P. 29(a)(2).

STATEMENT OF THE ISSUES [1]

1. Did the district court err in finding “no basis to conclude” that VHI was Frey’s employer, where VHI: (1) exerted absolute control over the terms and conditions of Frey’s employment; (2) oversaw her training and provided her with workplace policies; (3) hired her into a permanent job; and (4) perpetrated the allegedly unlawful acts of which she complains?

2. Did the district court err in finding that VHI was not a Title VII covered employer, even though VHI had a joint-employment relationship with more than 15 individuals during the relevant time period, and this Court has held that individuals may count as employees of more than one employer, so long as they maintain an employment relationship with each?

STATEMENT OF THE CASE

A. Statement of Facts

1. VHI, Hotel Coleman, LLC, and the Hotel Management Agreement

VHI is a corporate hotel management company, owned and operated by Michael Vaughn. A-2-3. Hotel Coleman, LLC (“HC”), another defendant in this action, was the owner of a Holiday Inn Express hotel in Algonquin, Illinois. A-2. Although HC owned the hotel, it was not involved in the hotel’s daily operations. Id. Instead, HC entered into a contract with VHI, a “Hotel Management Agreement,” by which VHI would manage the hotel. Id.; R.80-3 at 2.[2] The Hotel Management Agreement vested VHI “with absolute discretion in the hiring, supervising, directing, discharging and determining the compensation, other benefits and terms of employment of [all personnel working in the hotel].” R.80-3 at 3. As the district court observed, HC even agreed in the contract “that it would ‘not give direct instructions to any employee of the [hotel] . . . [which] may interfere, undermine, conflict with or affect in any manner the authority and chain of command as established by [VHI].’” A-3.

Other than the Hotel Management Agreement, there was no affiliation between VHI and HC. Rather, “VH[I] and HC were distinct and unrelated legal entities” that “maintained separate financial records, filed separate tax returns, and did not share bank accounts” or common ownership. Id. In addition, despite VHI’s contractual authority over the hotel workers, the Hotel Management Agreement stipulated that these individuals were employees of HC, and it is undisputed that they were on HC’s payroll. Id. The parties also agree that more than 15 individuals worked at the Holiday Inn Express during the relevant time period. A-6.

2. Vaughn subjects Frey to sex and pregnancy discrimination, as well as retaliation

In August of 2008, Michael Vaughn—who, in addition to owning VHI, was acting as the hotel’s on-site manager—hired Frey to work as a guest services representative at the Holiday Inn Express. R.81 at 2. Shortly thereafter, Vaughn began subjecting Frey to unwanted sexual advances and comments. These included telling her that “he could have any woman he wanted; that she should put a penny in a jar every time she had sex with her husband; asking her if he could touch her stomach; inviting her to join him in a hotel room; telling her he wanted to have phone sex with her; [and] telling her she had a sexy body.” R.96 at 2. As the district court said, “Frey objected to these comments and . . . she complained about Vaughn’s conduct to the housekeeping manager. But when the housekeeping manager spoke to Vaughn about Frey’s complaints, [he] allegedly laughed them off and the harassment continued.” Id. (record citation omitted).

In June of 2009, Frey informed Vaughn that she was pregnant, at which point Vaughn reduced her hours on the schedule, rescinded a promise he had made to promote her, and reassigned her to work the night shift, without paying her the amount “normally associated with that position.” Id. at 3. He also remarked that her pregnancy was a “waste” of her “sexy body.” Id. at 2-3.

Then, in early 2010, Frey took maternity leave and filed an administrative charge of sex discrimination. R.96 at 3. One week after Frey returned from leave, “Vaughn fired her for allegedly stealing another employee’s cell phone.” Id. It is now undisputed, however, that Vaughn lacked evidence to support the theft allegation, and it was not the actual reason for Frey’s termination. Id.

B. Legal Proceedings and the Parties’ Arguments

Frey filed suit, naming HC, VHI, and Holiday Inn Express as defendants. R.1 at 1.[3] In her complaint, Frey alleged sex-based harassment, pregnancy discrimination, and retaliation, in violation of Title VII and the Illinois Human Rights Act. Id. at 1-2.

VHI moved for summary judgment, arguing that it did not employ a sufficient number of employees to qualify as a covered employer under Title VII. R.70; R.72 at 2-3. In passing, VHI also denied that it had an employment relationship with Frey, arguing that she “was actually an employee of [HC], a company who contracted with VHI to provide management services.” R.72 at 5 n.1.

In response, Frey argued that employment relationships depend on “common law rules of [a]gency.” R.81 at 5-6. Under such rules, Frey continued, VHI should be deemed Frey’s employer because it controlled “the manner and means of [her] work,” adding that “nothing . . . precludes an employee from having more than one employer for the purposes of” Title VII. Id. at 6. Next, Frey contended that VHI should be deemed to have employed more than 15 employees because its “sole business” was running “the day-to-day operations of [the Holiday Inn Express], as well as other hotels, and to accomplish that VH[I] completely controlled the terms and conditions of employment for more than 15 workers during the [relevant] period.” Id. at 7.

In its reply, VHI maintained that it “was the employer of neither [Frey], nor anyone on the hotel staff.” R.85 at 2. According to VHI, instead of an employer, it was a manager of the hotel employees, and its “agreement to manage Hotel Coleman’s operations was no different from an agreement between Hotel Coleman and a natural person entrusted with the same duties.” Id. “Just as a natural person who managed the hotel would not be considered an ‘employer’ under anti-discrimination law,” VHI continued, “a corporate person should not be considered [Frey’s] ‘employer’ here.” Id. at 6-7. Although it admitted it had the authority to “hire, fire, train, and discipline [hotel] employees,” including Frey, VHI denied the existence of an employment relationship with Frey and other hotel workers because such “authority is commonly invested in individual supervisors who, despite wielding such power, are not liable under the . . . anti-discrimination laws.” Id. at 8 (citation omitted).

C. District Court’s Decision

The district court granted VHI’s motion for summary judgment. The court first said that the motion “presents a single question: was Frey an employee of VH[I]?” A-4. It then observed that “Title VII governs only ‘employers,’ and not all employers at that,” adding “for a business to fall within the purview of Title VII, the organization must employ a minimum of fifteen employees for at least twenty weeks during the calendar year.” Id. (citing 42 U.S.C. § 2000e(b)). The district court then noted that “‘the starting point’ to determine who counts as the employees of an employer” is that “entity’s payroll records.” A-5 (citation omitted). “And here,” the court wrote, “there is no dispute about whose payroll Frey and the other hotel staff were on: Hotel Coleman’s.” Id.

The court next rejected Frey’s contention that “she and the other hotel workers were . . . employees of VH[I] by virtue of the nearly total control that VH[I] exercised over the terms and conditions of their employment.” A-5-6. The district court acknowledged, however, that if Frey were correct on this point, “then VH[I] had more than 15 employees and qualifies as an employer [because] the parties agree that more than 15 people worked at the hotel.” A-6.

Relying on Smith v. Castaways Family Diner, 453 F.3d 971 (7th Cir. 2006), the court stated that, by “focusing on the degree of control that VH[I] exercised over the hotel staff and the hotel’s operations,” Frey was “ignor[ing] the source of VH[I]’s authority,” which was “the delegation of management authority by HC to VH[I].” A-7. “It is undisputed,” the district court continued, “that VH[I]’s authority derived not from ownership of” the hotel, “but from its management contract with HC.” Through that contract, “HC hired VH[I] as its agent to . . . manage the hotel.” Id. And, the court wrote, “[a]s the hired manager, VH[I] wasn’t an employer of the hotel staff—it was part of the hotel staff.” Id. In other words, the district court adopted VHI’s argument—that rather than an employer, “it was a manager,” and its “agreement to manage Hotel Coleman’s operations was no different from an agreement between Hotel Coleman and a natural person entrusted with the same duties.” R.85 at 2.

Next, the court agreed with VHI’s argument that it was not a covered employer, holding that there was no “basis to aggregate the employees” of VHI with those of HC. A-8-9. In this context, the court observed that in Papa v. Katy Industries, Inc., 166 F.3d 937 (7th Cir. 1999), this Court held that “employees of affiliated enterprises should [not] be aggregated for purposes of determining whether they could be deemed ‘employers’ under Title VII.” A-8 (citing Papa, 166 F.3d at 942). Accordingly, the district court found “no basis to conclude that VH[I] was Frey’s employer” and it held that “VH[I] cannot be liable for Vaughn’s alleged harassment.” A-10.[4]

ARGUMENT

Although the district court opined that VHI’s “motion for summary judgment presents a single question: was Frey an employee of VH[I]?,” this appeal in fact raises two questions. First, to be sure, Frey must establish that she was an employee of VHI. See Love v. JP Cullen & Sons, Inc., 779 F.3d 697, 701 (7th Cir. 2015) (“[T]o bring a Title VII claim against [a particular defendant], [the plaintiff] must prove the existence of an employer-employee relationship.”) (citation omitted). But even if Frey demonstrates that she was VHI’s employee, she must also show that VHI employed 15 or more employees. See 42 U.S.C. § 2000e(b) (establishing a 15-employee threshold for coverage of employers under Title VII). Although the district court did not analyze these issues separately, they are independent requirements and, for the reasons that follow, Frey satisfied both here.

1. Summary judgment should be reversed with respect to the district court’s finding that there was “no basis to conclude” that VHI “was Frey’s employer.”

A. The district court did not apply the correct analytical framework to determine whether VHI and Frey had an employer-employee relationship.

The district court erred in finding “no basis to conclude that VH[I] was Frey’s employer.” To begin with, the district court did not apply the appropriate analytical approach to determine whether an employment relationship existed. The correct approach finds its origins in this Court’s decision in Knight v. United Farm Bureau Mutual Insurance Co., 950 F.2d 377 (7th Cir. 1991). There, the plaintiff sued United Farm Bureau Mutual Insurance Company, alleging that it discriminated against her on the basis of her sex in violation of Title VII. Id. The defendant argued, and the district court agreed, that the plaintiff “was an independent contractor, not an employee,” and thus her claims “fell outside the protection of Title VII.” Id.; see also id. at 380 (“Independent contractors are not protected by Title VII.”). On appeal, this Court said: “in order to maintain a Title VII action against” the defendant, the plaintiff “must prove the existence of an employment relationship.” Id. at 380. It then said, “[i]n determining whether a business relationship is one of employee-employer, courts look to the ‘economic realities’ of the relationship and the degree of control the employer exercises over the alleged employee.” Id. (citations and quotations omitted). The Knight court then endorsed a five-factor test to shed light on the nature of the relationship between the plaintiff and her would-be employer. Those factors are:

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.

Id. at 378-79, 381. Of these factors, the court in Knight made clear that “the employer’s right to control is the most important [consideration] when determining whether an individual is an employee or an independent contractor.” Id. at 378 (citations omitted).[5]

Although this Court originally applied this five-factor Knight test only to differentiate between employees and independent contractors, it later began using the test also to determine what entity or entities were a plaintiff’s “employer” for purposes of Title VII liability. See, e.g., Heinemeier v. Chemetco, Inc., 246 F.3d 1078, 1082-83 (7th Cir. 2001) (reversing district court’s decision that one defendant was not the plaintiff’s employer for purposes of Title VII and the ADEA based on an application of the Knight factors and the conclusion that both defendants “shared control” over the plaintiff); see also Love, 779 F.3d at 702-05 (confirming that the Knight test applies to situations where the plaintiff seeks to impose liability on an additional defendant as her joint employer).

These decisions stand for the proposition that the Knight test is the correct approach in situations like this one—where the court must determine whether an individual has more than one employer for Title VII purposes. Indeed, in Heinemeier and Love, the workers in question undisputedly had an employment relationship with one entity, and the issue in each was whether those workers also had a joint employment relationship with another entity—in other words, whether the would-be employers shared control over the workers. Likewise, here, the parties agree that Frey was an employee of HC. The question, then, is whether she also had an employment relationship with VHI. To answer that question, the district court should have applied the Knight test, and its failure to do so constitutes reversible error. See also Nischan v. Stratosphere Quality, LLC, 865 F.3d 922, 928-29 (7thCir. 2017) (applying the Knight factors to test the plaintiff’s theory that “Chrysler . . . had sufficient authority over her to be considered a ‘joint employer’”).

B. If the district court had applied the correct analysis, it should have agreed with Frey that VHI was one of her employers.

Had the district court applied the Knight test to the undisputed facts of this case, it should have concluded that VHI was Frey’s employer. As mentioned, the first Knight factor—the extent of the putative employer’s control and supervision over the employee—is the “‘most important’ consideration in ascertaining the existence of an employer-employee relationship.” Love, 779 F.3d at 702-03 (citation omitted). The first factor includes “the key powers” of “hiring and firing,” EEOC v. Illinois, 69 F.3d 167, 171 (7th Cir. 1995), and “whether the employer provided direction with respect to scheduling and performance of the work.” Love, 779 F.3d at 703 (citation omitted). The record reflects that VHI’s owner, Michael Vaughn, hired Frey. R.80 at 4. VHI directed her work, determined her compensation and other benefits, and made the decision to fire her. A-3. In fact, “HC even agreed that it would ‘not give direct instructions to any employee of the [hotel] [which] may interfere, undermine, conflict with or affect in any manner the authority and chain of command as established by [VHI].’” Id. Thus, VHI’s control over Frey was not just extensive; it was absolute. The first and most important Knight factor is satisfied here.

The second factor in evaluating the existence of an employment relationship is the type of occupation and nature of the skills required for the position in question, “including whether skills are obtained in the workplace.” Knight, 950 F.2d at 378. The record is not well developed on this point, but to the extent Frey obtained skills in the workplace, it was under the direction of VHI, not HC. For example, Michael Vaughn “supervised and directed the training of [hotel] employees,” “including Ms. Frey.” R.80 at 5. He also gave hotel employees a “Vaughn Hospitality Employee Handbook,” which set forth employment policies, benefit programs, and office procedures. A-3-4; R.80 at 5. Nor is there evidence that, as a guest services representative, Frey brought any specialized skills to the hotel. See Alexander v. Rush N. Shore Med. Ctr., 101 F.3d 487, 493 (7th Cir. 1996) (noting that the second Knight factor takes into account whether a would-be employee possesses “significant specialized skills”). Thus, the second factor, like the first, also supports the conclusion that VHI was Frey’s employer.

On the other hand, the third and fourth Knight factors do less to buttress a finding that VHI was Frey’s employer. Those factors are, respectively, “whether the putative employer was responsible for the costs of operation,” and “whether the putative employer was responsible for providing payment and benefits.” Love, 779 F.3d at 704 (citation omitted). Given Frey’s admission that “HC bankrolled the operation and owned the property,” it does not appear that VHI covered the costs of operating the hotel. R.81 at 7. Also, although VHI determined Frey’s salary, it did not pay her directly. Frey and all the other Holiday Inn Express workers were on HC’s payroll. Nevertheless, in Love, this Court made clear that “a plaintiff can survive summary judgment even when not all [of the Knight] factors support [her].” 779 F.3d at 705 (observing that in Worth v. Tyer, 276 F.3d 249, 264 (7th Cir. 2001), the court “held that an issue of material fact existed with respect to whether the plaintiff was an employee of the defendant, even when some of [the] control analysis cut in favor of finding no employment relationship”). It is not fatal to Frey’s claim that the third and fourth Knight factors do not necessarily support her effort to impose joint liability on VHI.

The fifth factor, which examines the length of the employee’s job commitment and the expectations of the parties, see Knight, 950 F.2d at 379, does support Frey’s argument. So far as the record reveals, VHI hired Frey into a permanent position and expected her to stay. In its Employee Handbook, for instance, VHI wrote “we hope your employment relationship with us will be long term[.]” R.80-4 at 5. As it turned out, Frey worked for the hotel for approximately two years and she could have continued indefinitely were it not for Vaughn’s discriminatory and retaliatory acts. This is not a case in which an employee worked primarily for one entity and merely took on a temporary assignment for another. See, e.g., Love, 779 F.3d at 705 (finding that the fifth factor “weighs against” the plaintiff’s argument that the defendant was his employer because the plaintiff worked for that entity only for an eight-month assignment, and the parties had an understanding that he would return thereafter to work for his original employer). Thus, three Knight factors, including the most important one, establish the existence of an employment relationship here.

Imposing liability on VHI is particularly appropriate under these circumstances because VHI’s owner perpetrated the discriminatory and retaliatory acts of which Frey complains. In Tamayo v. Blagojevich, 526 F.3d 1074, 1088 (7th Cir. 2008), this Court said that “an affiliated corporation . . . may be considered an employer under Title VII . . . if the affiliate ‘directed the discriminatory act, practice, or policy of which the employee is complaining.’” (quoting Worth, 276 F.3d at 260). Although in Love the court said, “evidence that a de facto employer ‘directed the discriminatory act’ is not—without more—enough to establish a de facto employer-employee relationship,” 779 F.3d at 706, this final consideration nonetheless bolsters the conclusion that VHI was Frey’s co-employer here.

Instead of applying the Knight test to determine whether VHI and Frey had an employment relationship, the district court criticized Frey for “overlook[ing] the . . . holding in [Smith v.] Castaways Diner,” and found that decision to “require[ ] judgment in VH[I]’s favor.” A-6, 10. However, Smith requires no such thing. In that case, the plaintiff sued her former employer, a restaurant, alleging Title VII violations. Smith, 453 F.3d at 972. The restaurant asserted that Title VII did not apply to it because it was not a business with at least fifteen employees, and the issue was whether two of the restaurant’s managers, Ricardo Gonzalez and Phyllis Foust, counted as employees, which was dispositive in determining whether the restaurant was a covered employer. Id. at 973. The district court found it significant that Gonzalez and Foust exercised extensive day-to-day control over the restaurant’s operations and thus concluded that these managers could not be classified as Title VII “employees.” Id. at 974.

This Court reversed. It acknowledged that Gonzalez and Foust had “near-total if not total managerial discretion,” but it observed that they could only exercise such discretion by delegation from the business owner, who, “as the sole proprietor of the business, enjoy[ed] the inherent power to overrule their decisions.” Id. at 978, 981. Because the authority Gonzalez and Foust exercised derived solely from “the pleasure of the business owner,” the Smith court held that they counted as employees of the restaurant, “no different from . . . any other worker.” Id. at 980. The lesson from Smith is that supervisors or managers—even those who as a practical matter exercise “virtually unbounded day-to-day discretion”—nonetheless count as Title VII employees unless they have an “inherent right . . . to control the business.” Id.; see also id. at 979-80 (“[A] supervisor or manager, however highly placed, is still an employee. Like any other employee, he serves the employer’s interests and, like other employees, he has interests as a servant that are distinct from those of the employer.”).

The district court here likened VHI to the managers in Smith and thus found that VHI could not be classified as Frey’s employer. After discussing Smith, it stated: “As the hired manager, VH[I] wasn’t an employer of the hotel staff—it was part of the hotel staff. VH[I] was an agent, not a principal, and the fact that one agent . . . exercises authority over another agent . . . does not render the senior agent the junior’s employer. Were that the case, any employee with supervisory or management responsibility would be deemed an employer under Title VII.” A-7-8. According to the district court, then, VHI was not an employer under Title VII, but rather an “employee with supervisory or management responsibility.” This raises the question of whether a non-human corporate entity such as VHI could ever constitute a Title VII “employee.” If it could, then Smith might have some bearing on this case. If corporations cannot count as Title VII employees, however, the logical foundation for the district court’s analysis crumbles, and Smith is inapposite.

The answer lies in the plain language of Title VII, which defines “employee” as “an individual employed by an employer.” 42 U.S.C. § 2000e(f) (emphasis added). Although Title VII does not define “individual,” the Supreme Court recently provided guidance on the ordinary meaning of that word in Mohamad v. Palestinian Authority, 132 S. Ct. 1702 (2012). The Court there held that “[t]he ordinary meaning of the word, fortified by its statutory context, persuades us that the [Torture Victim Protection] Act authorizes suit against natural persons alone.” Id. at 1706. Although Mohamad analyzed the meaning of the term “individual” in the context of the Torture Victim Protection Act, it set forth some general principles. For example, the Court reasoned that “‘individual’ ordinarily means ‘[a] human being, a person.’” Id. at 1707 (quoting 7 The Oxford English Dictionary 880 (2d ed. 1989)). It then added: “Evidencing that common usage, this Court routinely uses ‘individual’ to denote a natural person, and in particular to distinguish between a natural person and a corporation.” Id. (emphasis added) (citation omitted). Accordingly, the Supreme Court held that a statute’s use of the term “individual” presumptively means “natural person” unless some indication exists in the “statutory context” that Congress intended a different meaning. Id.

There is no indication from the context of Title VII that Congress intended to include non-human entities within the definition of “employee.” To the contrary, the statute prohibits “discriminat[ion] against any individual . . . because of such individual’s race, color, religion, sex, or national origin.” 42 U.S.C. § 2000e-2. Although corporations and other business associations may enjoy the same rights as natural persons in some contexts, see, e.g., Burwell v. Hobby Lobby Stores, Inc., 134 S. Ct. 2751, 2768 (2014), they are generally not thought of as belonging to a particular “race, color, religion, sex, or national origin.” It is therefore not surprising that no court of appeals has ever held that non-human entities qualify as Title VII employees. To the extent this issue has been litigated at all, courts have found just the opposite. See Grove City Veterinary Serv., LLC v. Charter Practices Int’l, LLC, No. 3:13-cv-02276, 2016 WL 8731781, at *15 (D. Or. Feb. 5, 2016) (analyzing Title VII’s structure and purpose, and finding that Congress intended to “exclude business entities” from the “class of ‘individuals’ eligible to sue” under the statute), findings and recommendation adopted in 2016 WL 8711508, at *1 (D. Or. March 11, 2016). In the related context of a retaliation suit under the Americans with Disabilities Act (“ADA”), the Sixth Circuit recently held that the ADA’s “use of the term ‘individual’ is unambiguous and does not include corporations.” Mich. Flyer LLC v. Wayne Cty. Airport Auth., 860 F.3d 425, 431 (6th Cir. 2017). These decisions confirm that Title VII’s use of the term “individual” is most reasonably construed to mean “natural person,” which is that term’s “routine” or “ordinary” meaning. Mohamad, 132 S. Ct. at 1706-07. The district court’s reliance on Smith was misplaced.

2. Summary judgment should be reversed with respect to the district court’s finding that VHI was not a covered employer.

VHI not only had an employer-employee relationship with Frey, it also had such a relationship with all the hotel workers. And, because the parties agree that more than 15 individuals worked in the hotel, VHI should be deemed a Title VII covered employer. In Walters v. Metropolitan Educational Enterprises, Inc., 519 U.S. 202, 211-12 (1997), the Supreme Court established that “the ultimate touchstone” under Title VII’s numerosity requirement “is whether an employer has an employment relationship with 15 or more individuals for each working day in 20 or more weeks during the year in question.” Thus, Frey must establish that VHI had an employment relationship with 15 or more individuals during the relevant time period, and, as discussed, this Court applies the Knight test to determine “whether a business relationship is one of employee-employer.” 950 F.2d at 380 (quotations and citations omitted). Here, because VHI was contractually authorized to “hire, supervise, direct, discharge, and determine the compensation, other benefits, and terms of employment of all personnel working in the Hotel,” R.80-3 at 3 (emphasis added), the above application of the Knight factors with respect to the relationship between VHI and Frey applies with equal force to the entire hotel staff. It is therefore appropriate to deem VHI a Title VII covered employer.

The district court seemed to acknowledge as much, saying that “if [Frey] is correct” that “she and the rest of the hotel staff should . . . be counted as employees of VH[I],” “then VH[I] had more than 15 employees and qualifies as an employer [because] the parties agree that more than 15 people worked at the hotel.” A-6. Moreover, in Bridge v. New Holland Logansport, Inc., 815 F.3d 356, 359-61 (7th Cir. 2016), which was decided after the district court’s decision here, this Court ratified such an approach.

There, the plaintiff sued his former employer, New Holland Logansport, under the ADEA, which sets forth that, to be a covered employer, one must have twenty or more employees. Id. at 359-60 (citing 29 U.S.C. § 630(b)).[6] New Holland Logansport employed “at least seventeen formal employees,” and the plaintiff argued that three other individuals, who were by all accounts employed by another entity, New Holland Rochester, “also maintained employment relationships with [New Holland] Logansport—thus bringing the latter within the ADEA’s reach.” Id. at 360-361. As the court described it, the issue in Bridge was whether the three individuals in question “were jointly employed by both corporations.” Id. at 361 (citation omitted). To answer that question, the court applied the Knight factors and said that the plaintiff “did not marshal evidence from which a jury could find that New Holland Logansport was an ‘employer’ under the ADEA,” because New Holland Logansport could neither hire nor fire the employees, or even “dictate[ ] [their] duties, set their schedules, or otherwise supervise[ ] the performance or execution of their work.” Id. at 361-63, 366. It is implicit in Bridge that if an application of the Knight factors had revealed an employment relationship between New Holland Logansport and the three employees in question, the court would have deemed it a covered employer. Therefore, it is clear from Bridge that individuals may count as employees of more than one entity, so long as they have an employment relationship with each.

Frey’s argument in favor of counting the hotel workers as employees of both VHI and HC also finds support in the EEOC’s Compliance Manual and the decisions of other courts of appeal. The Compliance Manual, for instance, says: “To determine whether a respondent is covered, count the number of individuals employed by the respondent alone and the employees jointly employed by the respondent and other entities. If an individual is jointly employed by two or more employers, then s/he is counted for coverage purposes for each employer with which s/he has an employment relationship.” EEOC Compliance Manual § 2-III(B)(1)(a)(iii)(b), available at www.eeoc.gov/policy/docs/threshold.html (last visited Oct. 20, 2017). Because the hotel workers had an employment relationship with VHI under the Knight test, and the parties agree they were also employees of HC, the Compliance Manual indicates that these workers should be counted as employees of both entities for Title VII coverage purposes. See also Sanford v. Main St. Baptist Church Manor, Inc., 327 F. App’x 587, 594 (6th Cir. 2009) (finding the EEOC’s Compliance Manual persuasive on this point and holding that “aggregation of joint employees for the purposes of establishing the Title VII numerosity requirement is permissible when one joint employer exercises control over the employees of the other joint employer.”); Arculeo v. On-Site Sales & Mktg., LLC, 425 F.3d 193, 199 (2d Cir. 2005) (“Some authorities have . . . adopted a rule permitting aggregation so as to satisfy the fifteen-employee requirement on the ground that distinct entities have acted jointly with respect to employment.” (citing the Compliance Manual and Virgo v. Riviera Beach Assocs., Ltd., 30 F.3d 1350, 1359-61 (11th Cir. 1994)).

Despite these authorities, the district court ruled (A-9), based on Papa, 166 F.3d at 940, that there was no “basis to aggregate” the employees of HC and VHI. Papa is distinguishable. There, the would-be defendants were formally distinct entities, which individually employed fewer than 15 employees, but had a degree of integration with one another. Id. at 939. For example, they shared common bank accounts and computer operations; their employees participated in one another’s pension plans; their board of directors overlapped; and employees “moved back and forth among affiliates.” Id. The plaintiffs in Papa cited these indicia of integration in an attempt to have the court construe the affiliated firms as a single enterprise for purposes of aggregating their employees and bringing them within the coverage requirements of Title VII, the ADA and the ADEA. Id. at 939-40. This Court rejected that effort, reasoning that small businesses must be permitted to integrate aspects of their operations with other businesses to achieve economies of scale, and should not be penalized for doing so by forfeiting Title VII’s small firm exemption. See id. at 942 (“Firms too tiny to achieve the realizable economies of scale or scope in their industry will go under unless they can integrate some of their operations with those of other companies, whether by contract or ownership.”).

But here, unlike the plaintiffs in Papa, Frey does not argue that VHI employed 15 or more employees because it and HC constitute a single, integrated enterprise. Nor could she: the parties agree that VHI and HC were “distinct and unrelated legal entities.” A-3. Frey’s position instead is that VHI is a covered employer because it “completely controlled the terms and conditions of employment for more than 15 workers” working at the hotel. R.81 at 7. This joint-employer theory of liability is conceptually different from the integrated enterprise doctrine at issue in Papa. See, e.g., Whitaker v. Milwaukee Cty., 772 F.3d 802, 810 (7th Cir. 2014) (“[W]hen more than one entity is potentially involved in the employment relationship, two prominent tests have been applied . . . to determine who qualifies as an employer under the [antidiscrimination] statute[s]. One argues that two nominally distinct entities in fact comprise a ‘single employer’; the other acknowledges that two entities are, in fact, distinct, but concerns whether each exercises sufficient control over the terms and conditions of employment such that they are ‘joint employers,’ either of which faces potential liability under the statute[s].”); see also Knitter v. Corvias Military Living, LLC, 758 F.3d 1214, 1227 (10th Cir. 2014) (“Unlike the joint employer test, which focuses on the relationship between an employee and its two potential employers, the single employer test focuses on the relationship between the potential employers themselves.”). In other words, by relying on Papa, the district court conflated two analytically distinct tests to determine if an entity is subject to Title VII liability.

It is important to emphasize that counting the hotel workers as VHI’s employees in the manner Frey advocates is not the type of “aggregation” this Court rejected in Papa. The plaintiffs in Papa argued that, because the affiliated firms in that case were, in effect, a single integrated entity, all of the employees of each of the affiliates were properly counted as employees of the integrated employer. See, e.g., 166 F.3d at 939 (observing that the nominal employer did not “have 15 employees but [was] a part of an affiliated group . . . , which . . . ha[d] many more employees than is necessary to trigger the coverage of the anti-discrimination laws”). Frey, by contrast, does not contend that all of HC’s employees count as VHI’s employees. Instead, she argues that only those HC employees over whom VHI exercised the requisite degree of control, i.e., those working in the Holiday Inn Express, are properly deemed VHI’s employees.[7] As discussed, Frey’s argument is well-grounded in Bridge, the EEOC Compliance Manual, and decisions from other courts. See, e.g., Arculeo, 425 F.3d at 200 (analyzing the Compliance Manual and saying: “the employees of a joint employer who can be counted for aggregation purposes are only those employees either directly or constructively employed by it”). (emphasis added). Her argument should carry the day here as well.

CONCLUSION

For the foregoing reasons, the district court’s judgment should be reversed and the case remanded for further proceedings.

Respectfully submitted,

JAMES L. LEE

Deputy General Counsel

JENNIFER S. GOLDSTEIN

Associate General Counsel

LORRAINE C. DAVIS

Assistant General Counsel

s/Philip M. Kovnat

PHILIP M. KOVNAT

Attorney

Equal Employment

Opportunity Commission

Office of General Counsel

131 M St. N.E., 5th Floor

Washington, D.C. 20507

(202) 663-4769

philip.kovnat@eeoc.gov

CERTIFICATE OF COMPLIANCE

This brief complies with the type-volume limitation of Fed. Rs. App. P. 29(a)(5) and 32(a)(7)(B), and Circuit Rule 29, because it contains 6,464 words, excluding the parts of the brief exempted by Fed. R. App. P. 32(f).

This brief complies with the typeface requirements of Fed. R. App. P. 32(a)(5) and the type style requirements of Fed. R. App. P. 32(a)(6) because it has been prepared in a proportionally spaced typeface using Microsoft Word 2016 in Palatino Linotype 14 point.

s/Philip M. Kovnat

PHILIP M. KOVNAT

Attorney

Equal Employment

Opportunity Commission

Office of General Counsel

131 M St. N.E., 5th Floor

Washington, D.C. 20507

(202) 663-4769

philip.kovnat@eeoc.gov

Dated: October 23, 2017

[1] The EEOC takes no position on any other issue in this appeal.

[2] Citations to documents not included in Frey’s appendix will be to the docket entry and page numbers in the district court’s docket.

[3] Holiday Inn Express is a brand name for another entity called InterContinental Hotel Group (“ICHG”), which licensed the Holiday Inn Express name to HC for a fee. R.26 at 1-2. ICHG moved to dismiss Frey’s complaint, arguing that it was not named as a respondent in her administrative charges and was not her employer in any event. R.13 at 1. The district court granted this motion and Frey has not challenged that decision on appeal. R.40.

[4] This was not to say, the district court hastened to add, that Frey had no remedy. Rather, “HC was Frey’s employer,” the court said, “and it is to HC that Frey’s claim[s] must be directed.” Id.

[5] The Supreme Court subsequently endorsed a multi-factor test for determining whether an employer-employee relationship exists under ERISA, a statute which contains the same definition of “employee” as Title VII. See Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 323-24 (1992). Since Darden was decided, this Court has found that its five-factor Knight test is the functional equivalent of the Supreme Court’s Darden test. See Alexander v. Rush N. Shore Med. Ctr., 101 F.3d 487, 492 n.1 (7th Cir. 1996) (“Just as we held in Knight, the Supreme Court [in Darden] identifie[d] the employer's control over the manner of work performance as the test's primary focus. The other factors mentioned [in Darden] are essentially subsumed within (and therefore equivalent to) the Knight five-factor test.”). Thus, for present purposes, there is no difference between the Darden and Knight tests.

[6] As the court in Bridge observed, “Title VII defines ‘employer’ in the same way as the ADEA, except that the former requires only fifteen employees . . . while the latter demands twenty.” Id. at 361 n.1. Thus, the same standard applies to counting employees for purposes of the ADEA and Title VII.

[7] The record does not reveal whether HC employed individuals beyond those working in the Holiday Inn Express. But the point is just that if HC did employ such persons, Frey would have no logical justification for counting them as VHI’s employees—because VHI did not control the terms and conditions of their employment.