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How the Definition of "Employee" Can Change the Course of a Lawsuit


A recent case out of Louisiana highlights the issues that can arise in employment discrimination cases simply based on the definition of "employee”. It is not uncommon for the success of an employment discrimination case to hinge on the definition of a single term. Oftentimes, that term is "employee". It may be a case of determining whether the individual is an independent contractor or an actual employee. As in the Louisiana case, the issue may be which statute, if any, protects the aggrieved individual, depending on his or her status as an "employee".

Two statutes, two different definitions

You may ask how one person could be considered an employee in one context and not an employee in another, but that is exactly what happened in a recent Louisiana sexual harassment case. John Doe worked for a staffing services company and was assigned to work with National Oilwell Varco (NOV). While fulfilling his assignment at NOV, he claims he was subjected to both verbal and sexual harassment by his coworkers. He was ultimately terminated from NOV and filed a harassment lawsuit.

His lawsuit was filed under two separate statutes, the Louisiana Employment Discrimination Law (“LEDL”) and the Louisiana Workers’ Compensation Act (“LWCA”). Based on these two laws, Doe had to establish that he was an employee of NOV for purposes of the employment discrimination law, but not an employee under the Workers' Compensation Act, which provides the sole remedy and excludes other claims for damages. Ultimately, the district court dismissed both claims, finding that he was both an employee (for LWCA purposes) and not an employee (for LEDL purposes), simultaneously.

The Third Circuit Court of Appeals did not agree

The Third Circuit found that simply because NOV paid the staffing agency instead of paying Doe directly, Doe was still “given compensation” under the LEDL. In other words, the money was ultimately paid to Doe for services he performed for the benefit of NOV. As a result, the Third Circuit reversed the district court decision and allowed Doe to proceed with his sexual harassment claim.

Defining the term "employee"

The Court of Appeals used a ten factor test to define “employee” under the Worker's Compensation Act. The factors included who paid the employee’s wages, who had the right to terminate the employee, and whether there was an agreement between the borrowing and lending employers. After weighing all the factors and determining that an agreement existed between the two purported employers, the Court of Appeals found that Doe was an employee under the LWCA. That meant he was barred from bringing his negligence claim.

The difference between an independent contractor and an employee

Similar to the issues raised in the Louisiana case, clients are often faced with the dilemma of whether they are employees or independent contractors? In many cases, the status actually matters because there are legal differences between these two designations and these differences may affect your rights. From an employer’s prospective, an independent contractor saves the company a lot of money because they are not required to withhold income taxes from an independent contractor.

How do you determine independent contractor status?

There are a few questions you can ask yourself, to help you determine whether you should be considered an employee or an independent contractor. For example, if your compensation is based on a project-by-project basis then you are likely an independent contractor. If the hours you work are determined by your employer and that employer provides the materials and equipment you need to perform your job duties, then you are more likely an employee. If your employer provides instructions on how to accomplish your work, as opposed to being given autonomy to complete the job as you see fit, then you are probably an employee.

If you feel you have been the victim of discrimination or retaliation, or if you have any questions regarding your employment rights, please contact Michel | King , either online or by calling us at (205) 265-1880.

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