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Seventh Circuit Reaffirms Test for Employee Status

On May 8, 2019, the Seventh Circuit reaffirmed its test for determining employee status under federal anti-discrimination laws, holding that a physician lacked standing to bring Title VII claims against the hospital at which she maintained practice privileges because she was not an employee. Levitin v. Northwest Community Hospital, No. 16-cv-3774.

Background

Plaintiff owned and operated her own private practice, but maintained practice privileges and performed surgeries at the defendant hospital. After a series of complaints, the hospital subjected Plaintiff to a peer-review process, which ultimately led to the termination of her practice privileges. Plaintiff proceeded to file suit, claiming her privileges were terminated in retaliation for her complaint in violation of Title VII. She claimed the hospital effectively employed her because it subjected her to on-call requirements, reporting requirements, supplied her tools to use during surgery, restricted the types of procedures that she could perform, and subjected her to a peer-review process. Plaintiff argued that the peer-review process held her to a higher standard than basic professional or regulatory medical education standards, and thus amounted to sufficient control over her work as a surgeon such that the hospital was her employer.

Ruling

The U.S. District Court for the Northern District of Illinois granted summary judgment in the hospital’s favor, concluding Plaintiff was not an employee and therefore not subject to Title VII’s protections. The Seventh Circuit affirmed, reaffirming its test for determining employee status under Title VII.

The Seventh Circuit examined the “economic realities of the relationship” by considering the following factors:

(1) the extent of the employer’s control and supervision over the worker, including directions on scheduling and performance of work;
(2) the kind of occupation and nature of skill required, including whether skills are obtained in the workplace;
(3) responsibility for the costs of operation, such as equipment, supplies, fees, licenses, workplace, and maintenance of operations;
(4) the method and form of payment and benefits; and
(5) the length of job commitment and/or expectations.

The Seventh Circuit emphasized the significance of the first factor, stating “‘[t]he employer’s right to control is the most important’ of these factors.”

In reaching its conclusion that Plaintiff did not share an employer-employee relationship with the hospital, the court considered the following facts: the hospital did not provide Plaintiff with employment benefits or pay her professional licensing dues; Plaintiff owned her own medical practice; Plaintiff billed her own patients directly; Plaintiff filed taxes as a self-employed physician; Plaintiff set her own hours; Plaintiff could obtain practice privileges at other hospitals; Plaintiff could use her own staff in surgeries; and Plaintiff made her own treatment decisions for patients. Moreover, the Seventh Circuit noted that even if the peer review proceedings went beyond typical regulatory standards, they did not result in sufficient control over Plaintiff so as to create an employer-employee relationship, in part because Plaintiff ultimately made her own decisions regarding patient care.

Implications

This ruling reaffirms the Seventh Circuit’s test regarding the employer-employee relationship, which was first articulated in Knight v. United Farm Bureau Mut. Ins. Co., 950 F.2d 377 (7th Cir. 1991). It also provides clarity and guidance on worker classifications, particularly for healthcare entities.

© 2019 Proskauer Rose LLP.

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About this Author

Steven J Pearlman, Labor Employment Law Firm, Proskauer Law firm
Partner

Steven Pearlman is a partner in the Labor & Employment Law Department and co-head of the firm's Whistleblowing & Retaliation Group, resident in the Chicago office. Steven’s practice focuses on defending complex employment litigation involving claims of discrimination and harassment, wage-and-hour laws and breaches of restrictive covenants (e.g., non-competition agreements). He has successfully tried cases to verdict before judges and juries in Illinois, Florida and California, and defended what is reported to be the largest Illinois-only class action in the history of the U.S....

312-962-3545
Edward C. Young, Proskauer Rose, Harassment Lawyer, Labor Rights Attorney
Associate

Edward C. Young is an associate in the Labor & Employment Law Department. He represents companies nationwide in a broad range of employment issues, including discrimination, retaliation and harassment claims under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act and the Family Medical Leave Act, as well as other federal and state employment statutes and various common law torts. In addition, Eddie represents employers in trade secret matters and challenges to the independent contractor status of workers.

Prior to attending law school, Eddie earned his master’s degree in Human Resources and Industrial Relations from Loyola University while working for more than three years in the corporate human resources department of a national professional services firm. Eddie also served as a Coles Fellow with the Illinois Human Rights Commission.

Eddie is a co-author of “Discrimination Law Basics,” which was presented at the Practicing Law Institute’s Understanding Employment Law Conference in 2014. 

312-962-3595
Caralyn M. Olie Labor and Employment Attorney at Proskauer Law Firm
Associate

Caralyn Olie is an associate in the Labor & Employment Law Department.

312-962-3588