Fuzzy Employee Definition Still Bars Title VII Suit

August 27, 2001 (PLANSPONSOR.com) - Independent contractors can't sue under Title VII, even if they are performing the same job -- for the same employer --that they previously did as employees, according to a federal court.

“Title VII protects workers who are ’employees,’ but does not protect independent contractors,”   Judge Lowell A. Reed Jr. of the US District Court for the Eastern District of Pennsylvania wrote in his 12-page opinion in Holtzman v. The World Book Company Inc, according to the Legal Intelligencer.

“Unfortunately,” Reed said, “Title VII vaguely defines ’employee’ as ‘an individual employed by an employer …’ The Supreme Court has chided Congress for providing a definition of employee that ‘is completely circular and explains nothing.’ … As a result of Title VII’s fuzzy definition of employee, federal courts have struggled with how to ascertain whether a person is an employee for the purposes of Title VII.”

Still, based on the facts in this case, the court found that plaintiff Arlene Holtzman?s status had clearly changed from employee to independent contractor.

Sales Shift

Plaintiff Arlene Holtzman began working for World Book as a part-time sales representative in 1983, a position she kept until 1995.   At that time World Book opted to separate its parent division from the school and library division and reorganize its sales force by outsourcing the function to ‘regional directors.’ Those directors would then contract with individual sales representatives.

As it turned out, many of the former World Book employees took on the positions in the new structure, performing the same jobs.  

When Holtzman was notified of the changes, she pursued an opportunity to work with Rosemarie Lee, a former World Book branch manger who had formed her own corporation, and who had put together a sales force comprised largely of former World Book sales representatives.

Holtzman signed a contract with Lee’s corporation and eventually became a territory coordinator.   In 1998 Holtzman was told that she was losing her territory –a move that she alleged amounted to a job termination.

Independent Days

The court, relying on factors in Nationwide Mutual Insurance v. Darden, determined that World Book’s contract with Lee and all of its regional directors “expressly and unequivocally” said they were independent contractors, and also found that written agreements between the sales reps and the regional directors provided strong evidence of that status.