Thursday, May 19, 2016

Once Again, a “Partner” is Not an “Employee”

Once Again, a “Partner” is Not an “Employee”

      Previously, the Western District of Kentucky denied an effort by a partner in a partnership to have herself recharacterized as a “employee” afforded protections under Title VII. HERE IS A LINK to that review. Earlier this week, the Sixth Circuit Court of Appeals affirmed that determination. Bowers v. The Ophthalmology Group, LLP, No. 14-6196 (6th Cir. May 16, 2016).
      As recounted by the Sixth Circuit, Title VII prohibits the firing of an employee based upon their sex. The statute protects the rights of employees. In that, however, partners are not employees, Title VII does not protect partners. As to this last point, the court cited Simpson v Earst & Young, 100 F.3d 436, 441 (6th Cir. 1996). Whether a person is a partner or an employee for purposes of Title VII is typically a question of law to be determined by the court. Applying the factors set forth in the Simpson decision as well as those set forth in Clackamas Gastroenterology Associates v. Well, 538 U.S. 440 (2003), the Sixth Circuit was able to set aside Bowers’ assertion that she was only formally a partner and was in actuality a nominal partner who should be treated as an employee. Rather, the court found:

·                     Bowers bought into the partnership;

·                     The partnership bought out Bowers interest when she was expelled;

·                     Bowers signed the partnership agreement;

·                     Bowers signed the LLP's statement of registration with Kentucky Secretary of State;

·                     Her expulsion was in accordance with the terms of the partnership agreement;

·                     Bowers shared in the partnership’s profits;

·                     Bowers received additional compensation based upon her own production;

·                     Bowers was issued a Form K-1 instead of a Form W-2;

·                     Bowers received certain payments when additional physicians joined the practice;

·                     Bowers participated in a vote as to whether one of those new partners could spread out his buy-in-payment over three months;

·                     Bowers attended partnership meetings and meetings were held at her request;

·                     Bowers participated in equipment purchases;

·                     Bowers “participate[d] in decisions to alter the formula by which profits were divided”;

·                     Bowers requested and received the partnership’s confidential financial information;

·                     Bowers requested the certain patients not be scheduled with her and otherwise made request as to her scheduling; and

·                     Bowers requested and received her own group of partnership employees with whom to work.
      The Sixth Circuit as well affirmed the trial court issuance of summary judgment even as Bowers alleged additional discovery was necessary and it's declining to exercise supplemental jurisdiction over state law claims.

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