September 11, 2025|Articles/Op-eds
September 11, 2025 | U.S. District Court for the Eastern District of North Carolina | Opinion and Order
Executive Summary
In an unpublished opinion, Chief Judge Richard E. Myers II of the Eastern District of North Carolina granted summary judgment to Halcyon Group International, LLC and partial summary judgment to Echelon Services, LLC in an employment dispute arising out of advisory work in Somalia. Plaintiff, a senior advisor, alleged race discrimination, hostile work environment, and retaliation under Title VII, § 1981, and state law. Halcyon argued it was not liable because Echelon exercised primary control over assignments and suspensions. The court agreed, holding that joint employer status does not by itself create liability. Instead, as Judge Myers emphasized, “a joint employer relationship does not create liability in the co-employer for actions taken by the other employer unless it participates in the discrimination, or if it knows or should have known of the [other employer’s] discrimination but fails to take corrective measures within its control.” Swindell v. CACI NSS, Inc., No. 5:17-CV-617-D, 2020 WL 5824024, at *7–8 (E.D.N.C. Sept. 30, 2020), aff’d, No. 20-2179, 2022 WL 3754531 (4th Cir. Aug. 30, 2022).
Relevant Background
According to his complaints and EEO filings, Ronald Thaxton, a Black Army veteran with over thirty years of service, alleged that he was hired by Halcyon in 2021 to serve as a senior advisor on the Ministry of Defense Advisory Team (“MODAT”), a U.S. State Department program in Somalia. He alleged that Echelon was the prime contractor on the program and Halcyon acted as subcontractor. He further alleged that although Halcyon issued his W-2, Echelon controlled staffing decisions, including which candidates would be submitted to the State Department for approval, the scheduling of rotations, and the authority to suspend or remove staff from assignments.
Thaxton alleged that during his final rotation in 2022, Echelon employees engaged in discriminatory and harassing conduct. He alleged that an Echelon manager disparaged Somali officials as “corrupt” and “stupid,” and that he was frequently interrupted and criticized in meetings. He further alleged that he was unfairly singled out in several reprimanding emails, including communications relating to visa paperwork for an interpreter and assistance with onboarding a new colleague. He alleged that white employees were not treated in the same way.
Thaxton also alleged that an interpreter engaged by Echelon was regularly referred to by the nickname “Blackie,” which he described as blatantly racist. He alleged that he reported this concern to Halcyon leadership, but the nickname continued to be used in correspondence. He further alleged that in September 2022 he filed an EEO complaint with the State Department’s Office of Civil Rights asserting discrimination and hostile work environment. He alleged that within days of that complaint, Echelon suspended him from further rotations. He alleged that although Halcyon expressed support and asked Echelon to lift the suspension, Echelon declined, citing its ongoing investigation. He alleged that he was never reinstated before the State Department contract expired in 2023.
Decision
The central issue before the court was whether Halcyon could be held liable as a joint employer. The Fourth Circuit has held that two entities may be joint employers if they “share or co-determine those matters governing the essential terms and conditions of employment.” Butler v. Drive Auto. Indus. of Am., Inc., 793 F.3d 404, 408 (4th Cir. 2015). The Butler court emphasized that the “principal guidepost” is control, and identified three particularly important factors: (i) which entity has the power to hire and fire; (ii) the extent of day-to-day supervision; and (iii) where and how the work is performed. Id. at 414–15.
Judge Myers explained that meeting the Butler test is not enough to impose liability. Citing Swindell v. CACI NSS, Inc., the court stressed that “a joint employer relationship does not create liability in the co-employer for actions taken by the other employer unless it participates in the discrimination, or if it knows or should have known of the [other employer’s] discrimination but fails to take corrective measures within its control.” Thaxton v. Halcyon Grp. Int’l, LLC, No. 5:23-CV-208-M, 2025 WL 2627681, at *6 (E.D.N.C. Sept. 11, 2025) (quoting Swindell, 2020 WL 5824024, at *7–8).
Applying that standard, the court concluded that even if Halcyon and Echelon were joint employers, Halcyon could not be held liable. The record established that Echelon, as prime contractor, controlled which personnel were submitted to the State Department and retained the authority to suspend Thaxton from rotations. Judge Myers wrote that “Thaxton’s continued work on the MODAT was at Echelon’s pleasure,” and that Halcyon “could not somehow overrule Echelon to keep Thaxton on the MODAT.” 2025 WL 2627681, at *12. Far from ignoring the issue, Halcyon “stood with him 100 percent” and made “multiple written requests” that Echelon lift the suspension. Id. Because Halcyon lacked authority to reinstate Thaxton and attempted corrective measures within its limited role, it could not be held liable.
Turning to the discrimination claims, the court applied the McDonnell Douglas burden-shifting framework. See McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802–04 (1973). Thaxton alleged disparate treatment and failure to promote, but the court found he had not shown any adverse employment actions or that he was more qualified than the individual promoted. See Ware v. Potter, 106 F. App’x 829, 832 (4th Cir. 2004). Reprimanding emails, without evidence of further consequences, did not rise to the level of actionable adverse actions. See Newman v. Giant Food, Inc., 187 F. Supp. 2d 524, 528–29 (D. Md. 2002), aff’d, 68 F. App’x 393 (4th Cir. 2003).
The hostile work environment claims were also dismissed. The court explained that Title VII requires harassment “sufficiently severe or pervasive to alter the conditions of employment.” Okoli v. City of Baltimore, 648 F.3d 216, 220 (4th Cir. 2011). While Thaxton objected to disparaging comments and the interpreter’s nickname, the court found these did not create an objectively hostile environment and were not directed at Thaxton himself. Citing Oncale v. Sundowner Offshore Servs., Inc., 523 U.S. 75, 80 (1998), the court reiterated that Title VII is not a “general civility code.”
Finally, the retaliation claims produced a split result. Thaxton alleged that his September 2022 EEO complaint led directly to his suspension. The court held that this theory was sufficient to survive as to Echelon because of the suspicious timing. Against Halcyon, however, the claim failed. The court found that Halcyon had no authority to reinstate him and in fact attempted to support his return, defeating any inference that it condoned retaliation.
Looking Forward
The most significant lesson in Thaxton is the court’s discussion of joint employer liability. The decision suggests that joint employer status alone may not be enough to impose liability. Courts may focus instead on whether the putative co-employer either participated in the challenged conduct or failed to take corrective action within its sphere of authority. For franchisors, this reinforces that liability often turns on proof of actual control, not the mere existence of a franchise relationship.
The case also illustrates how contractual allocation of authority can shape outcomes. Because Echelon retained the right to approve personnel and suspend staff, Halcyon’s exposure was reduced. Franchisors may draw a parallel by ensuring franchise agreements clarify that employment decisions remain with franchisees. When courts analyze joint employer theories, they often look to whether the franchisor truly controls day-to-day employment decisions.
The opinion further shows the importance of documenting corrective action. Halcyon’s repeated efforts to advocate for Thaxton’s reinstatement helped it avoid liability. Franchisors who demonstrate support and take reasonable steps, even without final authority, may be better positioned to defend against joint employer claims.
Other aspects of the ruling provide broader lessons. The court noted that reprimands and workplace disagreements, without tangible consequences, may not constitute adverse employment actions. Hostile work environment claims require severe or pervasive conduct, and not every offensive or unprofessional remark will meet that standard. Retaliation, however, remains a significant risk: courts may allow such claims to move forward based on timing alone, underscoring the need for careful documentation when adverse actions follow complaints.
Taken together, Thaxton illustrates how courts may evaluate liability in multi-entity arrangements. For franchisors, the case highlights that liability is less about labels and more about whether the franchisor controlled essential terms and took appropriate steps in response to problems.
Thomas O’Connell is a Shareholder at Buchalter APC 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.
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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.
