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Topic: "Who is covered?" | Main

Employee or contractor?
May 08, 2007 by Ross Runkel at LawMemo

Sometimes it's a fine line between an "employee" and an "independent contractor."

What about people who make clothing at home?

Vermont's Employment Security Board determined that the individuals who make clothing at home for the Fleece on Earth company were employees for purposes of assessing unemployment taxes on the employer. The Vermont Supreme Court agreed, on a 3-2 vote. Fleece on Earth v. Dept of Employment (Vermont 05/04/2007).

The employees worked at home, were paid by the piece, owned their machines, worked at their own pace, and presented a bill at the end of each month. Fleece on Earth provided the patterns and yarn for the knitters, provided the patterns and pre-cut fabric for the sewers, designed the clothing, set the price per piece with occasional negotiations, and retained the right to reject pieces.

The primary issue was whether the individual had been and will continue to be free from the control or direction over the performance of such services, both under his contract of service and in fact (21 VSA section 1301(6)(B)(i)). The employer argued that the control test was essentially the common law master-servant test. The court disagreed. Noting that the Unemployment Compensation Act sought to protect workers and envisioned employment broadly, the court concluded that the degree of control and direction over production of a retailer's product was no different when the sweater was knitted at home at midnight than if it were produced between nine and five in a factory.

The DISSENT argued that the employer did not supervise or direct the employees' performance and that specifying a result only indicated independent contractor status.



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Is Ken Starr Supreme Court Justices' "employer"?
March 27, 2007 by Ross Runkel at LawMemo

High Court Advocate Ken Starr Is Justices' Summer Employer is the headline for Tony Mauro's commentary at today's Legal Times.

An interesting story. Ken Starr wears three hats:

  • Dean of the Pepperdine Law School in Malibu, California
  • Of Counsel at the Kirlkand & Ellis law firm
  • Advocate for one of the parties in a pending Supreme Court case. Not just any case. This is Morse v. Frederick, in which a high school principal suspended a kid for unfurling a "Bong Hits 4 Jesus" banner at a parade.

Two Justices - Scalia and Alito - will be employed by Pepperdine Law School this summer to teach in a couple of summer programs.

At the Supreme Court Times blog I've raised the question of a conflict of interests.

Here I want to explore whether it is accurate to say that Starr will be the Justices' "employer."

Most lawyers will insist that the answer is no, a law school dean is not the "employer" of the law school's faculty members. The school is the employer of both the dean and the faculty members. It's probably more accurate to say that Starr will be the Justices' supervisor or manager. (Of course, for purposes of analyzing a conflict of interests, that simply shifts the question.)

Under California law, however, a supervisor can be individually liable for certain violations of California's Fair Employment and Housing Act (FEHA). Jones v. Lodge at Torrey Pines (California Ct App 02/05/2007).

So Starr will not be in what I would call a traditional "employer" role. Yet he will be in a role which is not exactly "co-employee."



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Title VII's 15-employee threshold is not jurisdictional
February 22, 2006 by Ross Runkel at LawMemo

Arbaugh v. Y & H Corp (US Supreme Court 02/22/2006): The US Supreme Court holds (unanimously) that Title VII's definition of "employer," which includes only those having "fifteen or more employees" is matter going to the substantive ingredients of a Title VII claim for relief, and is not a matter that affects federal court subject-matter jurisdiction.

Arbaugh sued in federal court under Title VII and state tort law. After a jury verdict for Arbaugh, the trial court granted summary judgment for the defendants and vacated the verdict because the defendant corporation did not employ 15 or more employees and thus was not an "employer" under Title VII. The 5th Circuit affirmed. The US Supreme Court reversed the 5th Circuit decision.

So what?

  • If a federal court lacks subject-matter jurisdiction, the court must dismiss the complaint in its entirety. That would mean the court would lose jurisdiction over both the Title VII case and the state law case (over which the federal court has supplemental jurisdiction).
  • A subject matter jurisdiction question can be raised at any time (even on appeal) and can be raised by the court even if the parties do not raise it. Because the 15-employee threshold goes to the merits, it has to be raised by the defendant or it is waived, and it has to be raised prior to the close of trial on the merits.



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Arbaugh v. Y & H Corp argument
January 11, 2006 by Ross Runkel at LawMemo

SCOTUSblog has an extended discussion of the ins and outs of the arguments in Arbaugh v. Y & H Corp, where the question is whether Title VII's 15-employee threshold is a matter of federal court jurisdiction or merely another element going to the merits. Tomorrow's Argument in Arbaugh v. Y & H Corporation.

Here's just one paragraph:

As an Amicus Curiae supporting the petitioner, the United States emphasizes, among other arguments, that neither Y & H nor the circuit courts holding the fifteen-employee requirement to be jurisdictional had provided a persuasive reason for why ยง 701(b) should be thought to limit the jurisdiction of the federal courts. The United States critiques each of the four arguments offered for such a holding, including the Third Circuit's argument under the canon of avoidance (notably, even the Third Circuit rejected this argument after outlining it).


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Is Title VII 15-employee threshold jurisdictional?
January 10, 2006 by Ross Runkel at LawMemo

I don't see how Title VII's definition of what "employer" means can be construed as a limitation on federal court jurisdiction. Yet several Circuits have so held, and the US Supreme Court will hear oral arguments tomorrow on this question.

Part of the definition of "employer" is that the employer have 15 or more employees. In this case, size does matter. Smaller employers simply are excluded from the reach of the statute.

Title VII has all sorts of definitions: "employer," "employee," "labor organization," etc. These definitions are designed to identify what entities are within the statute. Title VII's definitions are not written in jurisdictional terms. I'm talking here about the plain language of a statute.

The US Government's brief [see all briefs here] agrees with me. (Wow!)

Jenifer Arbaugh sued in federal court under Title VII and state tort law. After a jury verdict for Arbaugh, the trial court granted summary judgment for the defendants and vacated the verdict because the defendant corporation did not employ 15 or more employees and thus was not an "employer" under Title VII. The 5th Circuit affirmed.

The US Supreme Court granted certiorari to review the 5th Circuit decision.

The 5th Circuit held that Title VII's 15-employee threshold determines federal court subject matter jurisdiction, and is not merely a matter going to the merits of a Title VII claim.

If this is jurisdictional, then it can be raised for the first time at any time (even after verdict, or on appeal), and it means that the federal court has zero jurisdiction over the state law claim as well. If it's a matter of the merits, then it has to be raised in a timely manner and decided just like any other factual issue.

The Courts of Appeals are split on this issue. Courts holding it is jurisdictional are the 4th, 6th, 9th, 10th, and 11th Circuits. Courts holding it is non-jurisdictional are the 2nd, 7th, and Federal Circuits.

Arbaugh v. Y & H Corp (Docket No. 04-944)
Oral argument January 11, 2006
Decision below: Arbaugh v. Y & H Corp (5th Cir 08/02/2004)
Briefs: http://www.lawmemo.com/docs/us/arbaugh/

For a related law review article, see Jurisdiction and Merits at Ross' Employment Law Reviews.



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Partners are "employees"? - EEOC v. Sidley Austin
December 21, 2005 by Ross Runkel at LawMemo

A U.S. District Judge will allow EEOC's suit against the Sidley Austin Brown & Wood law firm to go forward, saying the EEOC could obtain monetary relief for "partners" expelled or forced to retire on account of their age.

An EEOC press release dated December 20 says, in part:

The EEOC lawsuit is a "class" age discrimination case brought, first, with respect to 31 former Sidley & Austin partners who were involuntarily downgraded and expelled from the partnership in October 1999 on account of their age; and, second, with respect to other partners who were involuntarily retired from Sidley & Austin since 1978 on account of their age pursuant to a mandatory retirement policy. The Age Discrimination in Employment Act (ADEA) prohibits employers with 20 or more employees from making employment decisions, including decisions regarding the termination of employment, on the basis of age (over 40). The ADEA also prohibits such employers from utilizing policies or rules which require employees to retire when they reach a particular age (over 40).


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Is 15-employee threshold jurisdictional?
May 16, 2005 by Ross Runkel at LawMemo

Federal circuit courts have long been split on the question of whether Title VII's 15-employee threshold determines federal court subject matter jurisdiction, or is merely a matter going to the merits of a Title VII claim.

The US Supreme Court says it will review the question. Arbaugh v. Y & H Corp (Docket No. 04-944), certiorari granted 05/16/2005, Decision below: Arbaugh v. Y&H Corp (5th Cir 08/02/2004)

Arbaugh sued in federal court under Title VII and state tort law. She worked at the Moonlight Cafe in New Orleans, and claimed that one of the owners of the corporation subjected her to a sexually hostile environment. A jury returned a verdict for Arbaugh.

Now get this. After the jury verdict, the defendants moved to dismiss for lack of subject matter jurisdiction, citing Title VII's definition of an "employer" and pointing out that the defendant corporation did not employ 15 or more employees and thus was not an "employer" under Title VII. The trial court converted the motion to a motion for summary judgment, and granted the motion. So, case dismissed for lack of subject matter jurisdiction.

The 5th Circuit affirmed, holding that Title VII's 15-employee threshold determines federal court subject matter jurisdiction, and is not merely a matter going to the merits of a Title VII claim. The US Supreme Court granted certiorari to review the 5th Circuit decision.

The Courts of Appeals are split on this issue.

Courts holding it is jurisdictional are the 4th, 6th, 9th, 10th, and 11th Circuits. Courts holding it is non-jurisdictional are the 2nd, 7th, and Federal Circuits.



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Do volunteers get statutory protection?
April 21, 2005 by Ross Runkel at LawMemo

Lorraine Lowery claimed a co-worker sexually harassed her. Peter Mendoza claimed he was discharged because of his disability. Each was an unpaid volunteer worker. Can they get legal relief?

It depends on what state they live in, and also depends on whether or not the claim is for sexual harassment.

Mendoza's case follows the prevailing viewpoint that a volunteer worker who is not being compensated does not get the benefit of employment discrimination statutes. Mendoza v. Town of Ross (California Ct App 04/19/2005).

Mendoza was volunteer community service officer who worked a regular schedule and took two weeks vacation per year. Please note: he was not paid any money and not covered by any employer insurance plans. He claimed he lost this position because he was disabled, and sued under California's anti-discrimination statute (FEHA).

The California court gave a bunch of reasons for concluding that Mendoza was not an "employee" under the statute. First, the court deferred to the administrative rule which defined an "employee" as an "individual under the direction and control of an employer under any appointment or contract of hire or apprenticeship." Then the court found there was no formal "appointment," no "contract," and no "apprenticeship." It was also significant that unpaid volunteers are specifically excluded from the worker comp statute.

Finally, the practically uniform interpretation of Title VII has been that unpaid volunteer workers are not protected.

Lowery's case is different, and clearly hinges on a specific Massachusetts statute. Lowery v. Klemm (Massachusetts Ct App 04/21/2005).

Lowery worked daily as a volunteer at a "swap shop" operated as part of a municipality's landfill. Please note: she was not paid any money and not covered by any employer insurance plans. She claimed sexual harassment by a co-worker, and sued under (this is important) G. L. c. 214 Section 1C(1).

The Massachusetts court allowed this suit to go forward, concluding that the statute covers a volunteer worker who is sexually harassed. The statutory structure in Massachusetts is important here. There is a general non-discrimination statute that was amended in 1986 to add sexual harassment as a prohibited employment practice. However, that statute will not cover Lowery because the general statute gets interpreted in the traditional way, and excludes Lowery because she is a volunteer.

G. L. c. 214 Section 1C(1) was adopted in 1986, and is entitled "an act directed to prohibiting sexual harassment." It applies to many situations where the general statute does not apply, for example, to cases where an employer has fewer than the six employees needed for coverage. The court gave many reasons for extending coverage to unpaid volunteers, and perhaps the most persuasive was that the specific statute (G. L. c. 214 Section 1C(1)) grants rights to "persons" rather than to "employees."

My view: Both courts are really following the traditional view that anti-discrimination statutes do not protect unpaid volunteers. That may offend some observers, but these statutes were designed to target the employment relationship and that relationship involves an exchange of services for remuneration. Massachusetts, on the other hand, simply has a unique statute targeted at sexual harassment - and that statute extends beyond the traditional notions of employment. Don't expect to see that happen anywhere else.



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