Michael Fox has a good post on the recent EEOC charges filed against a major law firm for age discrimination. He has links to the EEOC’s press release here as well as a link to a prior case decided in 2002–EEOC v. Sidley Austin Brown & Wood, 315 F.3d 696 (7th Cir. 2002). He writes:
The basic legal question is simple — when does a partner (and probably equity shareholder, in firms that are professional corporations) have so little say in the running of the firm, that they are for purposes of the discrimination laws just another employee.In an earlier decision, partially enforcing an EEOC subpoena which preceded the filing of last week’s complaint, Judge Posner lays out the arguments and issues in EEOC v. Sidley Austin Brown & Wood, 315 F.3d 696 (7th Cir. 2002). Although clearly only deciding a preliminary issue, it is hard to read the opinion without coming to the conclusion that Sidley Austin may have an uphill battle on the initial legal question. Of course overcoming the hurdle of the partnership is only the first step. . .
Regarding this issue of whether “partners” are “employees”, the EEOC press release has this to say:
EEOC’s Regional Attorney in Chicago, John C. Hendrickson, said that in resisting the EEOC investigation and in forcing the EEOC to obtain judicial enforcement of its subpoena, “Sidley’s unwavering position has been that the matters involving how the law firm dealt with those it referred to as ‘partners’ and whether it engaged in discrimination were simply way beyond the reach of the ADEA and EEOC.” However, according to Hendrickson, the EEOC administrative investigation revealed that, “except for a very few controlling partners at the very top, Sidley’s lawyers appeared to be ordinary employees not unlike their colleagues at parallel levels in the business community and, therefore, covered by the ADEA.”Hendrickson said, “Whatever titles Sidley had decided to give these lawyers–partner, counsel, or otherwise–our investigation indicated that they had no voice or control in governance of the firm and that they could be and were fired just like any other employees without notice and without the vote or consent of their fellow attorneys. A small self-perpetuating group of managers at the top ran everything, and that was it–end of story.”
Interestingly enough, the opinion written by Judge Posner for the case decided in 2002, relies on an ERISA case in reaching the conclusion that the “partners” in question could possibly indeed be “employees” for purposes of the ADEA. He states:
The problem of line drawing presented by this case is not unique to employment. It arises whenever legal consequences turn on classification as partner versus employee, whether in tax and tort cases or in discrimination cases. . .The same problem of the tyranny of labels arose when the Supreme Court had to draw the line in ERISA between an “employee,” defined unhelpfully as in the ADEA as “any individual employed by an employer,” 29 U.S.C. § 1002(6), and an independent contractor. The Court could have said that an employee is anyone who is called an employee. Instead it said:
In determining whether a hired party is an employee under the general common law of agency, we consider the hiring party’s right to control the manner and means by which the project is accomplished. Among the other factors relevant to this inquiry are the skill required; the source of the instrumentalities and tools; the location of the work; the duration of the relationship between the parties; whether the hiring party has the right to assign additional projects to the hired party; the extent of the hired party’s discretion over when and how long to work; the method of payment; the hired party’s role in hiring and paying assistants; whether the work is part of the regular business of the hiring party; whether the hiring party is in business; the provision of employee benefits; and the tax treatment of the hired party. Since the commonlaw test contains no shorthand formula or magic phrase that can be applied to find the answer, . . . all of the incidents of the relationship must be assessed and weighed with no one factor being decisive.Nationwide Mutual Ins. Co. v. Darden, 503 U.S. 318, 323-25 (1992) (citations and internal quotation marks omitted). In a subsequent case, we said the most important factor in deciding whether a worker was an employee or an independent contractor was the employer’s right to control the worker’s work.
The EEOC case could have a great impact on law firms and the legal profession, in general, as the demographics of firms change with more and more of the baby boom generation of lawyers coming of age.