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Independent contractors scored a big win last November. A Texas jury slapped cosmetics giant Mary Kay Inc. with an $11.2 million verdict for wrongful termination of a sales manager. “This verdict means the alleged 920,000 independent contractors working for Mary Kay have their civil rights,” said Angela Alioto of the Law Offices of Mayor Joseph L. Alioto and Angela Alioto in San Francisco. “If they get sick, they have a remedy. They can take a leave.” Plaintiff Claudine Woolf, who had been selling Mary Kay products since 1995, was a manager for the company in 1997 when she was fired for failing to achieve sales goals. Woolf, who was being treated for cancer at the time, sued, claiming wrongful termination due to a medical disability. The case dates back to March 1997, when Woolf learned she was pregnant. Only two weeks later, she was diagnosed with breast cancer. Advised by doctors that the required mastectomy and chemotherapy might cause birth defects or even kill her fetus, Woolf and her husband chose to continue the pregnancy nonetheless. (Woolf subsequently gave birth to a premature but healthy baby.) In September 1997, while “sick and bald and pregnant” and running her sales operation from her hospital room, Woolf contacted Mary Kay, asking for a reprieve from her sales goals. The company’s managers denied the request. Mary Kay argued that Woolf was not an employee. It offered as evidence an agreement she had signed, stipulating that she was an independent contractor from 1995 to 1997. Woolf’s tax filings for those years also identified her as an independent contractor. But Alioto countered that despite those documents, the control the company exerted over Woolf meant that she was in fact an employee. In January 1997, for example, Woolf attained the rank of “Fabulous 50s director” for managing to assemble a 50-person sales organization at age 27. As a result, her company car was upgraded to a cherry-red Pontiac Grand Am. At that point, says Alioto, Woolf stopped selling directly and switched to managing her sales team full-time. The jury, whose award included $10 million for punitive damages, agreed with Alioto’s arguments. Following a two-week trial in Dallas, headquarters of Mary Kay, jurors found that Woolf had been the company’s employee. The jury also found that Mary Kay had “acted with oppression or malice” by refusing to accommodate her illness. Defense counsel Ellen Perlioni of the Dallas office of San Francisco — based Littler Mendelson declined to comment, but Alioto says that she expects Mary Kay to appeal the case. — Peter Page A version of this article appeared in The National Law Journal, a sibling publication of Corporate Counsel and a part of American Lawyer Media.

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