Title VII Anti-Discrimination Protections May Not Extend to Equity Partners

At the start of the year, the Fourth Circuit Court of Appeals in Lemon v. Myers Bigel, affirmed the dismissal of a North Carolina lawsuit brought by an equity partner alleging gender and race discrimination on the part of her former law firm. The Court agreed that because the claimant was appropriately characterized as an owner (rather than an employee), she was not entitled to the protections afforded employees by Title VII of the Civil Rights Act. In its analysis, the Court applied the six “Clackamas Factors,” outlined by the Supreme Court in 2003, to evaluate whether a claimant meets the definition of an “employee” who can benefit from Title VII’s anti-discrimination protections.

Those 6 factors are as follows:

  1. Whether the organization can hire or fire the individual or set the rules and regulations of the individual’s work;
  2. Whether and, if so, to what extent the organization supervises the individual’s work;
  3. Whether the individual reports to someone higher in the organization;
  4. Whether and, if so, to what extent the individual is able to influence the organization;
  5. Whether the parties intended that the individual be an employee, as expressed in written agreements or contracts; and
  6. Whether the individual shares in the profits, losses, and liabilities of the organization.

Companies with a similar partnership structure to that of law firms, including but not limited to, those in the fields of medicine, architecture and accounting may want to take note of this decision and consider taking the steps necessary to confirm that their senior partners are not considered employees. It is also worth noting, however, that a legal distinction often exists between senior partners and junior partners who typically do not have the same voice in business operations and are likely subject to greater oversight.

Meredith S. Campbell
Chair Employment and Labor Group
Co-Chair Corporate Investigations, Governance
 & Risk Management

Email mcampbell@shulmanrogers.com T(301)255-0550

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