- A San Antonio in-home companion service for seniors is an “employer” covered by Title VII — and can’t avoid paying more than $83,000 in lost wages and damages for retaliation — because its approximately 50 caregivers are “employees,” not independent contractors, the 5th U.S. Circuit Court of Appeals held Sept. 13 in Mason v. Helping Our Seniors, LLC.
- The company, owned by a husband and wife, employed a mother and daughter as caregivers and office employees, according to court documents. The daughter complained to the wife that the husband was creating a sexually hostile work environment by loudly watching pornography while she was alone with him in the office, court records said. She called the U.S. Equal Employment Opportunity Commission about filing a sexual harassment charge, and the company fired her and her mother the next day, according to the record.
- The women sued the company for violating Title VII. After a bench trial, a federal district court ruled in their favor, and the 5th Circuit upheld the ruling. The company argued it couldn’t be held liable for retaliation because it didn’t have at least 15 employees and therefore wasn’t subject to coverage under Title VII. The 5th Circuit disagreed. It explained that a company is covered if it employs 15 or more employees for the relevant time period. The company met this threshold because under a hybrid “economic realities/common law control” test, its caregivers are employees, the court held.
The challenge of determining who is an employee and who is an independent contractor is familiar to employers.
Employment laws generally don’t apply to independent contractors but misclassifying an employee as an independent contractor can be costly. Courts and government agencies charged with enforcing the laws typically use one of two tests — “economic realities” or “common law control” — or a combination of both. Depending on the law, the court or the agency, various factors are involved.
Employers also have to be aware of changes. The U.S. Department of Labor, for example, is expected to soon finalize a rule that would tighten its standard for who may be classified as an independent contractor — and ineligible for minimum wage and overtime — under the Fair Labor Standards Act.
In Title VII cases, the 5th Circuit said it places greater weight on the common law control test. Under this test, numerous factors showed the company is an employer subject to Title VII’s coverage, the New Orleans-based court, which covers Texas, Louisiana and Mississippi, said.
According to the evidence, the company exercised substantial control over the “details and means” by which the caregivers performed their job: It hired and fired them, set their schedules, requireed them to attend an orientation and quizzed them about its policies, the 5th Circuit noted. It also proscribed certain behaviors during client interactions, annually reviewed the caregivers’ performance and reprimanded them for performance issues.
As for the economic realities test, the question is whether under the totality of the circumstances, the caregivers are, as a matter of economic reality, dependent on the business, the court explained.
The evidence pointed to yes, the 5th Circuit said. For instance, their work didn’t require any special skills, prior experience or a high school degree, although one was preferred. Also, they were paid on an hourly basis, provided with supplies, reimbursed for expenses, such as mileage and parking, and didn’t have to maintain liability insurance.
HR professionals may want to note that having workers sign an agreement labeling them as independent contractors will not, by itself, make it so, the 5th Circuit emphasized. Also, not paying the caregivers’ Social Security taxes and not providing them with annual leave or retirement benefits doesn’t make them independent contractors, either, the court added.