March 03, 2026|Franchise Frontlines
March 3, 2026 | United States Court of Appeals for the Fourth Circuit
Executive Summary
In a significant appellate decision, the Fourth Circuit affirmed dismissal of employment discrimination claims against a healthcare system, holding that plaintiffs failed to plausibly allege the system was their employer or joint employer. The plaintiffs, certified registered nurse anesthetists employed by a staffing company, alleged that the healthcare system exercised sufficient control to be liable under Title VII, the ADA, and the Virginia Human Rights Act. The court rejected that theory, emphasizing that control—particularly over hiring, firing, and day-to-day supervision—remains the central inquiry. The decision provides a detailed, factor-driven framework clarifying what does and does not constitute joint employer control in multi-entity relationships.
Relevant Background
The plaintiffs were employed by an anesthesiology services company that contracted with a healthcare system to provide anesthesia services at its facilities. Although the plaintiffs worked exclusively at the healthcare system’s hospitals for extended periods—five and twenty years, respectively—their formal employment relationship remained with the staffing company.
The dispute arose after the healthcare system implemented a COVID-19 vaccination policy and denied the plaintiffs’ requests for exemptions. As a result, the system suspended their clinical privileges at its facilities. Several months later, the staffing company terminated the plaintiffs’ employment.
The plaintiffs brought claims against the healthcare system, asserting that it functioned as their joint employer and was therefore liable under federal and state employment statutes. They relied on allegations that the system controlled aspects of their work environment, including clinical standards, credentialing, training, and facility access.
The district court dismissed the claims, finding that the plaintiffs failed to plausibly allege an employment relationship. The Fourth Circuit affirmed.
Decision
The Fourth Circuit applied its established joint employer framework, emphasizing that the “principal guidepost” in the analysis is control, particularly with respect to hiring, firing, and day-to-day supervision.
The court evaluated nine factors relevant to determining whether an entity qualifies as an employer, with the first three—authority to hire and fire, day-to-day supervision, and control over work conditions—carrying the greatest weight.
First, the court found that the healthcare system did not have authority to hire or fire the plaintiffs. Although the system’s decision to suspend clinical privileges affected the plaintiffs’ ability to work at its facilities, the ultimate authority to terminate their employment rested solely with the staffing company. The court rejected the argument that indirect economic consequences or contractual arrangements equated to hiring or firing authority.
Second, the court concluded that the plaintiffs failed to plausibly allege day-to-day supervision by the healthcare system. General assertions that the system “exercised oversight” were insufficient without specific factual allegations identifying supervisory personnel or actual control over work performance. The court also found that isolated incidents—such as a single instruction from a system employee—did not establish meaningful supervision.
Third, the court addressed the plaintiffs’ reliance on operational control, including the system’s authority over clinical protocols, medications, and patient care standards. The court held that such control is inherent in the healthcare context and reflects regulatory and safety obligations rather than an employment relationship. Similarly, training related to compliance, patient safety, and facility procedures did not indicate employer status.
The court also rejected other factors cited by the plaintiffs, including the exclusive nature of their work at the system’s facilities and the use of the system’s equipment. The court emphasized that these factors, without evidence of control over employment decisions, do not establish joint employer liability.
Finally, the court noted that the plaintiffs themselves acknowledged that they were employed by the staffing company and did not allege any intent to enter into an employment relationship with the healthcare system.
Based on the totality of the circumstances, the court held that the plaintiffs failed to plausibly allege that the healthcare system exercised sufficient control to be deemed their employer.
Looking Forward
This decision provides a detailed and practical roadmap for evaluating joint employer exposure in multi-entity arrangements, particularly those involving staffing relationships and specialized services.
For franchisors, the court’s analysis is highly instructive. The decision reinforces that operational control—such as setting standards, requiring compliance with system-wide policies, or ensuring quality and safety—does not, standing alone, create an employment relationship. Courts may distinguish between control necessary to maintain system integrity and control over the essential terms and conditions of employment.
The ruling also highlights the continued importance of clearly allocating authority over hiring, firing, discipline, and supervision. Where those functions remain with a separate entity, courts may be reluctant to impose joint employer liability, even in situations involving long-term, exclusive working relationships.
At the same time, the decision illustrates that plaintiffs will continue to test the boundaries of joint employer theories by focusing on integrated operations, shared facilities, and overlapping responsibilities. The court’s rejection of those arguments—absent concrete evidence of control—provides a useful framework for defending against such claims.
More broadly, the case underscores that the joint employer analysis remains fact-specific but anchored in a consistent principle: liability turns on who actually controls the employment relationship. For franchisors and other multi-entity systems, maintaining that distinction in both contractual structure and day-to-day operations remains critical to limiting exposure.
This article is based solely on the opinion of the Court in this matter. The author has not conducted any independent investigation into the facts. For the avoidance of doubt, each statement related to the law and facts in this article is drawn from the Court’s opinion in this case.
Thomas O’Connell is a Partner at Buchalter LLP and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.
This communication is not intended to create, and does not create, an attorney-client relationship or any other legal relationship. No statement herein constitutes legal advice, nor should it be relied upon or interpreted as such. This communication is for general informational purposes only and is not a substitute for legal counsel. Readers should not act or refrain from acting based on any information provided without seeking appropriate legal advice specific to their situation. For more information, visit www.buchalter.com.
