- Because Title VII of the Civil Rights Act of 1964 only applies to employees, an Illinois hospital was successful recently in turning back a lawsuit brought against it by a surgeon who claimed she was subjected to discrimination at the medical center (Levitin and Chicago Surgical Clinic, Ltd. v. Northwest Community Hospital, et al., No. 16-3774 (7th Cir. May 8, 2019)).
- Yelena Levitin had complained to hospital officials that another doctor was criticizing her decisions and undermining her in front of her patients. Her relationship with Northwest and at least four other doctors was "uneasy," according to court documents; several filed complaints concerning her professional judgment and one refused to work with her entirely. When the doctors' credentialing committee terminated her practice privileges at the hospital, Levitin sued, alleging discrimination on the basis of sex, religion and ethnicity, as well as retaliation.
- A district court determined that Levitin wasn't entitled to Title VII protections because she wasn't the hospital's employee. The 7th Circuit affirmed, noting that the case rested on agency law, which looks to the "economic realities of the relationship and the degree of control the employer exercises over the alleged employee." Northwest placed restrictions on Levitin, the court said, but they weren't enough to make her an employee. Likewise, the peer review process didn't render her an employee; the right to control generally comes from contractual and other workplace terms that govern the parties' relationship, not an isolated peer review proceeding, the appeals court said.
Classification remains a pain point for employers as there is no single test determining whether individuals are employees or independent contractors. The classification differs depending on the law in question and the relevant jurisdiction — and, sometimes, on who does the examining.
According to the IRS, for example, "people such as doctors, dentists, veterinarians, lawyers, accountants, contractors, subcontractors, public stenographers, or auctioneers who are in an independent trade, business, or profession in which they offer their services to the general public are generally independent contractors." The general rule, the IRS says, is that an individual is an independent contractor if the payer has the right to control the result and not what will be done and how the work will be done.
The U.S. Equal Employment Opportunity Commission, in enforcing Title VII, looks at a lengthy list of factors, including the employer's right to control when and where work is done, whether the employer provides tools and equipment and whether there is a continuing relationship between the parties.
And when it comes to the Fair Labor Standards Act, employers have even less clarity. The U.S. Department of Labor has its test, while federal appellate courts have their own. Complicating this wage and hour question are state laws and courts. A California court, for example, recently sent shockwaves through the Golden State's burgeoning gig economy in Spring 2018 when it scrapped the old rules for worker classification and held that there is a presumption that workers are employees. To classify someone as an independent contractor, the court said businesses must satisfy three factors: the worker must be free from the control and direction of the employer; perform work that is outside the hirer's core business; and customarily engage in "an independently established trade, occupation or business."
Employers can work to avoid misclassification — and therefore liability under various laws — by limiting the control they exercise over independent contractors and familiarizing themselves with the standards applied by the courts and enforcement agencies to which they are subject.