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El Paso Court of Appeals Finds UTEP Subject to Suit for Harassment of a Contractor's Employee

On July 10, 2013, the El Paso Court of Appeals issued its opinion in University of Texas at El Paso v. Ochoa, No. 08-12-00115-CV (Tex. App. -- El Paso 2013) (now reported at 410 S.W.3d 327). The issue in the case was whether UTEP could be sued for sexual harassment and retaliation by the employee of a temp agency. The court answered in the affirmative.

Ochoa worked for IHC, a staffing company that provided custodial services at UTEP. She complained to UTEP that her UTEP supervisor had sexually harassed her. UTEP then ended her work assignment and sent her back to IHC.

Ochoa sued UTEP for sexual harassment.  UTEP then filed a plea to the jurisdiction, claiming that it was not her employer and that the waiver of sovereign immunity in Chapter 21 of the Labor Code was therefore inapplicable. The trial court denied the plea to the jurisdiction. UTEP took an interlocutory appeal, but the El Paso Court of Appeals affirmed the trial court.

Initially, the court considered whether Ochoa was an employee of UTEP under the hybrid economic realities/common law control test under Texas law. It was undisputed that Ochoa did not meet the economic realities component, and the court found that UTEP did not exercise sufficient control over Ochoa to make her an employee.

But that was not the end of the matter. The court noted that the Texas Supreme Court adopted an additional test in NME Hospitals, Inc. v. Rennels, 994 S.W.2d 142 (Tex. 1999). The court summarized the Rennels test as follows:

In Rennels, the Texas Supreme Court held that a direct employment relationship is not a prerequisite under the TCHRA if a plaintiff establishes that: (1) the defendant is an employer within the statutory definition of the Act; (2) some sort of employment relationship existed between the plaintiff and a third party; and (3) the defendant controlled access to the plaintiff's employment opportunities and denied or interfered with that access based on unlawful criteria. A defendant is in a position to control access to a plaintiff's employment with a third party and deny or interfere with that access based on unlawful criteria when the defendant can exert some control over the third party's employment decisions, and a contract gives the defendant control over certain employment issues. The control component under the interference theory of the Rennels test is not the same as the control factor required to conclude that an employee-employer relationship existed. (Citations omitted).

The first two elements were undisputed. The court found that the third element was also present, but it followed an unusual path to reach that conclusion. It would seem obvious that UTEP controlled Ochoa's employment opportunities at UTEP and that it interfered with her employment opportunities. However, UTEP cited two federal district court decisions for the proposition that Ochoa was required to show that it interfered with her employment opportunities at IHC. The first case does not support that proposition, and in fact it involved a dissimilar fact pattern. Magallanes v. Penske Logistics, LLC, 570 F. Supp. 2d 907 (W.D. Tex. 2008) (holding that a customer could be held liable under Runnels when it complained about a truck driver to his employer after the truck driver complained about sexual harassment). The second case does support that proposition, but discusses the issue only briefly. Mayes v. Kelly Servs., Inc., 2004 U.S. Dist. LEXIS 29675 (N.D. Tex. Feb. 11, 2004) ("When plaintiff's assignment with Onstar ended, he still had an opportunity to request Kelly to assign him to a different workplace. Thus, Onstar did not interfere with plaintiff's employment relationship with Kelly."). It is questionable whether that holding is consistent with Rennels.

In any event, the El Paso Court of Appeals ducked the issue by noting that Ochoa had applied for employment directly with UTEP. The court thus found that UTEP interfered with Ochoa's employment prospects with UTEP. UTEP noted that this was illogical, but the court rejected that argument:

UTEP asserts that Ochoa's argument is a misapplication of Rennels, and that "[i]t is nonsensical to attempt to apply Rennels standing where the allegation is essentially that an employer has somehow impaired a plaintiff's ability to obtain direct employment and has thereby interfered with itself." We disagree with UTEP's understanding of the application of the Rennels test. As noted in Rennels, under Sibley Memorial Hospital v. Wilson, 488 F.2d 1338, 160 U.S. App. D.C. 14 (D.C. Cir. 1973), the seminal case allowing suit under Title VII in the absence of a direct employment relationship between the plaintiff and the defendant, proper defendants do not have to be actual or potential employers of a complainant, but they must control access to such employment and deny such access based on discriminatory criteria. Moreover, there is nothing in the language of the Rennels test requiring that a defendant control access to or interfere with a plaintiff's employment opportunities with the third-party. The language of the test clearly states that the defendant must control access to the plaintiff's employment opportunities and deny or interfere with that access based on unlawful criteria. To be sure, the Rennels test did not arise out of concern for a defendant's ability to interfere "with itself," but rather out of the recognition and concern for the potential interference of a person's employment relationships or access to employment by those who do not have a direct employment relationship with that person. (Citations omitted).

The court thus found that Ochoa had standing to sue UTEP under Rennels.

While this appears to be the correct result, the reasoning of the court may lead to confusion in future cases. Is Rennels really inapplicable to a case in which the plaintiff is not actually fired by the temp agency or staffing service, unless the plaintiff has also applied for a job directly with the client?

David C. Holmes is a Houston employment lawyer with The Law Offices of David C. Holmes