Earlier this week, the Third Circuit issued its opinion
v. Mariotti Building Products, Inc. [an enhanced version of this opinion is available to lexis.com
subscribers], holding that a shareholder was not an
"employee" under Title VII.
The plaintiff was a shareholder-director in the family business. One day,
he had a "spiritual awakening" that was not well received by his
family members and fellow shareholders. They began to harass him about his
newfound spiritualism (the opinion doesn't really go into what religious
beliefs he discovered). The breaking point was Plaintiff's eulogy at Babe
Mariotti's funeral that included references to the new religion (Babe was the
founder of the business).
So, the shareholders fired their own family member and he
filed a discrimination lawsuit. Can a shareholder file a Title VII claim?
In Clackamas Gastroenterology Associates, P.C. v. Wells, 538 U.S. 440
(2003) [enhanced version], the Supreme Court adopted
the EEOC's six-part test for determining who is an "employee":
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
3. Whether the individual reports to someone higher in
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
6. Whether the individual shares in the profits, losses,
and liabilities of the organization.
The Third Circuit applied that test here, with a focus on
the element of control to conclude that Plaintiff was not an
"employee" and the District Court properly dismissed his case.
This case was not just a repeat of the Supreme Court case, and the Third
Circuit addressed some of the differences. For example, this was a Title VII
case and Clackamas was an ADA case, and this case dealt with a
non-professional corporation. Also, this case dealt with whether Plaintiff
was an employee for purposes of filing a lawsuit and not whether an individual
was an employee for purposes of meeting the employee-threshold to determine whether
the employer was covered. Ultimately, none of these differences changed the
This opinion is likely no surprise to those of you who remember Kirleis v. Dickie, McCamey, and Chilcote (Third Circuit holding
that a law firm shareholder was not an employee) [enhanced version]. However, Mariotti is a
precedential opinion and Kirleis was not.
Read additional employment law articles on Phillip Miles'
blog, Lawffice Space
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