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Supreme Court Provides New Guidance in Determining Who is an Employee Under the ADA

Volume 2, Issue 5
May 23, 2003

In the recent decision of Clackamas Gastroenterology Associates v. Wells, 123 S. Ct. 1673 (2003), the Supreme Court addressed the issue of how to properly determine who will be counted as an "employee" for purposes of coverage under the Americans with Disabilities Act (ADA). Currently, employers with fifteen (15) or more employees for each working day in each of twenty (20) or more calendar weeks in the current or preceding calendar year are covered by the ADA.

The Clackamas case involved a terminated employee's suit against his former employer, a medical clinic, alleging disability discrimination in violation of the (ADA). The medical clinic was a professional corporation owned by director-shareholder physicians. The district court granted summary judgment, finding that the clinic did not employ 15 employees, finding that the director-physicians were not employees. The Ninth Circuit Court of Appeals reversed. In resolving the case, the Supreme Court held that the district court should have utilized the six-factor test set forth in the EEOC Compliance Manual to determine when partners, officers, members of the board of directors, and major shareholders qualify as employees under the federal statutes the EEOC enforces. The six factors are:

Whether the organization can hire or fire the individual or set the rules and regulations of the individual's work

  1. Whether the organization can hire or fire the individual or set the rules and regulations of the individual's work;

  2. Whether and, if so, to what extent the organization supervises the individual's work;

  3. Whether the individual reports to someone higher in the organization;

  4. Whether and, if so, to what extent the individual is able to influence the organization

  5. Whether the parties intended that the individual be an employee, as expressed in written agreements or contracts; and;

  6. Whether the individual shares in the profits, losses, and liabilities of the organization.

This case is important for small employers that may be on the cusp of ADA coverage and need to determine if their partners, officers, members of the board of directors, or major shareholders could be deemed employees under the ADA and Title VII.

Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.