Mid-Atlantic Health Law TOPICS
Physician-Shareholders Are Employees Under Employment Discrimination Laws
In Wells v. Clakamas Gastroenterology Associates, P.C., the U. S. Court of Appeals for the Ninth Circuit, the federal appellate court with jurisdiction for California and other Western states, recently held that physician-shareholders of a professional corporation are employees of the corporation, and must, therefore, be counted in determining whether the corporation had enough employees to be covered by the Americans With Disabilities Act (ADA).
Employers must have a minimum of 15 employees to be covered by the ADA. By counting the physician-shareholders as employees for these purposes, the Ninth Circuit held that a former employee, including a shareholder, could proceed with a discrimination claim.
The lower court had applied an "economic realities" test and concluded that, because they were "really" self-employed persons, like partners in a partnership, shareholders in professional corporations are not to be counted as employees for purposes of federal employment discrimination law.
In rejecting this analysis, the appellate court reasoned that having freely made the choice to adopt the corporate form for their business, the physician-shareholders "should not now be heard" to say that their firm is "essentially a medical partnership," and not a corporation.
Since the federal appellate court with jurisdiction for Maryland has not ruled on this question, and since other courts have reached the opposite conclusion, it is not clear how a federal court in Maryland would deal with this issue.
March 22, 2002