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Franczek Sullivan reviews high court rulings

November 23, 2010
The U.S. Supreme Court, in its 2002-  2003 term, addressed a variety of labor and employment issues. This review summarizes key decisions and analyzes their likely impact on employers. Standard of proof in employment Litigation In Desert Palace v. Costa, the Court unanimously rejected the reasoning of most lower federal courts regarding the proof required in mixed-motive Title VII cases (situations where both legitimate and illegitimate reasons allegedly motivated an employment decision). Until this ruling, most federal courts required plaintiffs in mixed-motive cases to present direct evidence of discrimination, such as a statement by a decision-maker acknowledging that the employer used discriminatory criteria in its decision. The court rejected that reasoning and held that a plaintiff must produce only circumstantial evidence of discrimination to win under the mixed-motive theory. Direct evidence is not required. Now that plaintiffs may rely upon circumstantial evidence to avoid dismissal of Title VII lawsuits under the mixed-motive theory, it is even more crucial that employment actions are based solely on legitimate business reasons unrelated to an employee's protected status.
Americans with Disabilities Act Clackamas Gastoenterology v. Wells evaluated the increasingly common question of whether shareholder-directors are qualifying "employees" for purposes of the ADA and other federal anti-discrimination statutes. To qualify as an "employer" under the ADA, a business must employ 15 or more employees for 20 weeks during the current or previous calendar year. Determining the number of employees can be difficult in a professional corporation, where the owners (who are not qualifying employees under the ADA) also work for the business. The Court held that whether a shareholder- director is a qualifying "employee" is fact-specific and depends on the extent of control exercised over the workplace. Many factors are relevant to this analysis, including whether the shareholder-director "can hire and fire employees, can assign tasks to employees and supervise their performance, and can decide how the profits and losses of the business are to be distributed." The shareholder-director's title is not derterminative. The Court remanded the case to the district court with instructions to apply the revised multi-factor test. This case clarifies that shareholder-directors may constitute "employees" under the ADA and similar employment statutes depending on the circumstances, notwithstanding their ownership interest.