Are Law Partners Covered by Employment and Anti-Discrimination Laws?

by | August 16, 2017 | Employment Law

The short answer is quite possibly.

In many cases, law partners may be regarded as “employees” under Title VII, the Equal Pay Act (EPA), the Family and Medical Leave Act (FMLA), and other laws – and therefore eligible to sue their firms for employment discrimination, retaliation, and similar unlawful treatment.

The issue of whether a law partner is an “employee” under such laws requires a fact-intensive inquiry that is highly dependent on the circumstances. The leading Supreme Court case in Clackamas Gastroenterology Associates, P.C. v. Wells, 538 U.S. 440 (2003). As the Supreme Court held in Clackamas, whether a partner is an “employee” “depends on all of the incidents of the relationship with no one factor being decisive.” Id. at 451.

The Clackamas Court adopted a standard grounded in the law of agency – with the overall focus on the “common-law touchstone of control.” Id. at 448-49. Under this rubric, the Court identified six non-exhaustive factors relevant to whether a shareholder-director of an organization is also an employee:

(i) Whether the organization can hire or fire the individual or set the rules and regulations of the individual’s work;(ii) Whether and, if so, to what extent the organization supervises an individual’s work;(iii) Whether the individual reports to someone higher in the organization;(iv) Whether and, if so, to what extent the individual is able to influence the organization;(v) Whether the parties intended that the individual be an employee, as expressed in written agreements or contracts; and(vi) Whether the individual shares in the profits, losses, and liabilities of the organization.

Id. at 449-50. No single factor is decisive, id. at 451, and the six factors are not exclusive id. at 450 n.10. “The answer to whether a shareholder-director is an employee or an employer cannot be decided in every case by a shorthand formula or magic phrase.” Id. An individual’s title or characterization under a written agreement or contract is not dispositive. Id. at 450-51.

Further, the Court recognized that partners at many professional organizations, such as law firms, may often qualify as “employees.” As stated in Clackamas: “Today there are partnerships that include hundreds of members, some of whom may well qualify as ‘employees’ because control is concentrated in a small number of managing partners.” 538 U.S. at 446. Likewise, in E.E.O.C. v. Sidley Austin Brown & Wood, 315 F.3d 696 (7th Cir. 2002) (Posner, J.), the Seventh Circuit recognized that large, modern law firms may be more akin to corporate banks than conventional partnerships. Id. at 707. Thus, Sidley postulated, ordinary partners would often be “employees” of the firm, with centralized management committees exercising control over the business and acting as the true “employers.”

Under Clackamas, courts have acknowledged that the “employee” inquiry is a fact-specific one – dependent on the “facts on the ground” – that requires factual development and analysis. For example, in our case against former Am Law powerhouse Chadbourne & Parke (recently combined into Norton Rose Fulbright), the court rejected defendant’s bid for summary judgment in advance of discovery. See Campbell v. Chadbourne & Parke LLP, No. 1:16-cv-8632, 2017 WL 2589389 (S.D.N.Y. June 14, 2017). Often, summary judgment is inappropriate altogether. And partners in professional organizations can and do succeed on claims that they are employees.

Ultimately, we maintain, the overarching question is whether firm management exercised sufficient control over a partner’s employment to be in a position to discriminate and retaliate against that individual. If it is perceived that the answer is yes, there is likely to be a viable claim.

[1] Moreover, certain relevant statutes – including 42 U.S.C. § 1981, which covers racial and ethnic discrimination; the FMLA’s anti-retaliation provisions (29 U.S.C. § 2615); and various whistleblower protection laws – do not require a plaintiff to be an “employee.”