Supreme Court Test for Defining Employee under the ADA Applies to Title VII: Third Circuit | Practical Law

Supreme Court Test for Defining Employee under the ADA Applies to Title VII: Third Circuit | Practical Law

The US Court of Appeals for the Third Circuit held in Mariotti v. Mariotti Building Products, Inc. that the US Supreme Court's test from Clackamas Gastroenterology Associates, P.C. v. Wells, to determine whether a shareholder-director of a professional corporation is an employee for purposes of the Americans with Disabilities Act (ADA), also applies to business entities that are not professional corporations in an action under Title VII of the Civil Rights Act of 1964 (Title VII).

Supreme Court Test for Defining Employee under the ADA Applies to Title VII: Third Circuit

by PLC Labor & Employment
Published on 30 Apr 2013 • USA (National/Federal)
The US Court of Appeals for the Third Circuit held in Mariotti v. Mariotti Building Products, Inc. that the US Supreme Court's test from Clackamas Gastroenterology Associates, P.C. v. Wells, to determine whether a shareholder-director of a professional corporation is an employee for purposes of the Americans with Disabilities Act (ADA), also applies to business entities that are not professional corporations in an action under Title VII of the Civil Rights Act of 1964 (Title VII).
On April 29, 2013, the US Court of Appeals for the Third Circuit issued an opinion in Mariotti v. Mariotti Building Products, Inc., holding that:
  • The test articulated by the US Supreme Court in Clackamas Gastroenterology Associates, P.C. v. Wells for determining whether a shareholder-director of a professional corporation is an "employee" under the ADA applies in the Title VII context.
  • The Clackamas test is not limited to professional corporations, but also applies to other business entities.
Robert A. Mariotti, Sr., worked in the family business, Mariotti Building Products, Inc. (MBP), with his father and two brothers. As a founding member, Mariotti was an officer of MBP, served as a member of the board of directors and was a shareholder by written agreement. After his father died, MBP's other shareholders terminated his employment, although Mariotti continued to serve as a member of the board of directors for several months. After his termination, Mariotti sued MBP alleging religious discrimination and hostile work environment harassment in violation of Title VII, in addition to state law claims.
The district court dismissed Mariotti's federal claims and declined to exercise jurisdiction over his state law claims, holding that he was not an employee under Title VII and, even if he was, that he had failed to state a hostile work environment claim. Mariotti appealed.
Under the Clackamas test, to determine whether a shareholder-director is an employee, courts consider whether:
  • The employer can hire or fire the individual or set his rules of employment.
  • The employer supervises the individual's work and, if so, to what extent.
  • The individual reports to someone else at the employer.
  • The individual can influence the employer and, if so, to what extent.
  • Any written agreements or contracts show that the parties intended the individual to be an employee.
  • The individual shares in the employer's profits, losses and liabilities.
Although Clackamas was decided in the context of determining whether a shareholder-director of a professional corporation is an employee under the ADA, the Third Circuit found the Clackamas test was equally applicable to this Title VII action, as:
  • Title VII's definition of employee is the same as the ADA's definition, and the EEOC guidelines that the Clackamas Court relied on apply to coverage under both Title VII and the ADA, as well as the ADEA and the Equal Pay Act.
  • Although Clackamas concerned whether an individual was an employee for purposes of determining if the employee threshold had been met for ADA purposes (which was not at issue in this case), both the ADA and Title VII's definitions of employer and employee are relevant in determining whether both:
    • an entity qualifies as an employer under Title VII; and
    • an individual is an employee who may invoke Title VII's protections.
  • The Clackamas test does not apply only to professional corporations. Rather, the nature of the business entity is merely an attribute of the employment relationship courts should consider when applying the Clackamas analysis.
The Third Circuit affirmed the district court's decision, finding that under the Clackamas test, Mariotti was not an employee under Title VII.
With this opinion, the Third Circuit joins the US Court of Appeals for the First Circuit in explicitly adopting the Clackamas test in the Title VII context. Employers in the Third Circuit should be aware that the Clackamas test is not limited to cases brought under the ADA or involving professional corporations.
For more information on covered entities under Title VII, see Practice Note, Discrimination under Title VII: Basics.
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