Independent Contractors Not Protected by ADA, ADEA, and FMLA

Larry Alexander v. Avera St. Luke's Hospital, No. 13-2592 (8th Cir. 2014)

The United States Court of Appeals for the Eighth Circuit recently ruled that independent contractors are not protected by the Americans with Disabilities Act ("ADA"), the Age Discrimination in Employment Act ("ADEA"), and the Family and Medical Leave Act ("FMLA"). Instead, these statutes protect only employees.

In January 1991, the Plaintiff, Dr. Larry Alexander ("Dr. Alexander"), entered into a Contract for Professional Services regarding his pathological services. The contract expressly stated that Dr. Alexander was an independent contractor, not an employee; that Dr. Alexander controlled the manner in which he provided his services; and that he would pay all applicable federal and state taxes. Dr. Alexander entered into several, subsequent contracts with Avera with nearly identical terms. During the course of services, Dr. Alexander suffered from various health conditions: in March 2008, he suffered a heart attack; in May 2009, he underwent a heart transplant; and in October 2010, he was hospitalized for bipolar disorder. After Avera invoked a with or without cause termination provision in Dr. Alexander's contract, he filed suit against Avera alleging violations of the ADA, ADEA, FMLA, and state claims.

The Eighth Circuit affirmed the District Court's grant of summary judgment for Avera. The Court held that the ADA and ADEA protect only an "employee" employed by the employer, not an independent contractor. The Court applied common-law factors to determine if the relationship between Dr. Alexander and Avera was a protected employer-employee relationship or an unprotected independent contractor relationship, including but not limited to the right to control the manner and means of the service rendered, the source of the instrumentalities and tools, whether the hiring party has a right to hire others to complete the work, and the tax treatment of the hired party. In this case, the Court emphasized the fact that Dr. Alexander entered into a written contract where he expressly agreed he was an independent contractor; that no one from Avera exercised material control over his professional services; that he maintained freedom to control his schedule; that he had the right to hire substitute pathologists and assistants at his own expense; that Avera did not provide him with benefits or malpractice insurance; that Avera did not withhold income and FICA taxes and reported his income on a Form 1099; and that Dr. Alexander reported his income as a self-employed independent contractor.

As an issue of first impression for the Eighth Circuit, the Court determined that the status of Dr. Alexander's relationship with Avera, for purposes of the FMLA, should be governed by the common-law factors discussed in the ADA and ADEA analysis, instead of a shorter six-factor "economic realities" test. The Court determined that the common-law factors essentially included the "economic realities" test, and it noted that Dr. Alexander's professional work was otherwise totally exempt from the FLSA's minimum standards.

If you have any questions regarding the scope of coverage of the ADA, ADEA, and FMLA, please contact Ray Rinkol.