On April 22, 2003, the U.S. Supreme Court weighed in on an issue that created a split among the lower federal courts: when should owner/shareholders of professional corporations be considered “employees” for purposes of federal employment laws?
The issue is important for two reasons. First, it determines who can be sued for violations. The Americans With Disabilities Act (“ADA”), like many federal employment laws, does not cover relatively small businesses. Under the ADA, an employer is not covered unless its workforce includes 15 or more employees for each working day in each of 20 or more calendar weeks in the current or preceding calendar year. Similarly, Title VII of the Civil Rights Act of 1964, which precludes discrimination in employment on the basis or race, gender, religion and national origin, has a 15-employee threshold. The Age Discrimination in Employment Act (“ADEA”) has a threshold of 20, and the Family and Medical Leave Act applies only to employers with 50 or more employees. Thus, for professional corporations hovering around 15-20 workers, the determination of who counts as an “employee” often can be vital.
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