• Feudal System
  • May 20, 2003
  • Law Firm: McGlinchey Stafford, PLLC - New Orleans Office
  • The United States Supreme Court declared that it followed the common-law definition of the master-servant relationship in its consideration of a case whose outcome set down guidelines to determine when small professional corporations are exempt from certain antidiscrimination laws. The complaint in question was filed under the Americans with Disabilities Act, but its impact could be felt by the Age Discrimination in Employment Act and Title VII of the Civil Rights Act of 1964. All these laws provide compliance exceptions for business entities with fewer than 15 employees during at least 20 weeks over the period of a year. Small businesses are thus protected from dealing with the complex requirements and burdensome recordkeeping of the laws.

    In Clackamas v. Wells, the justices looked at who should be considered an employee in professional corporations such as law firms and medical practices for purposes of meeting the 15 employee requirement. When Clackamas Gastroenterology Associates, P.C. fired its bookkeeper, she sued under the ADA. Four doctor-shareholders who own the Oregon medical clinic argued that they should not be considered employees, and asserted that they did not figure into the clinic's employee count. The high court's use of the common-law definition, which focuses on the master's control over the servant, extricates the owners, the clinic is considered to have fewer than 15 employees, and consequently isn't covered by the law. The Ninth Circuit Court of Appeals' decision to the contrary was reversed, and the case remanded for further proceedings.

    In stating the dissenting opinion, Justice Ruth Bader Ginsburg, who was joined by Justice Stephen Breyer, claimed that the seven-justice majority took too narrow a view. She wrote that "[w]hen acting as clinic doctors, the physician-shareholders appear to fit" the definition of employees, providing services on behalf of the corporation.

    The recent proliferation of professional partnerships, the Supreme Court said, has created some confusion over who is a worker and who is a boss. "We think that the common-law element of control is the principle guidepost that should be followed in this case." The Equal Employment Opportunity Commission, which enforces the ADA and similar statutes, holds this position as well. Justice John Stevens, writing for the majority, said that the professional corporation was a "new type of business entity that has no exact precedent," and the EEOC's common-law inspired six-point employer/employee test was the best tool for making such decisions.