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Do you know how many employees you have? The answer may not be as clear-cut as you think. Many employers classify workers as independent contractors and volunteers, but Courts might consider those workers as actual employees. A recent case from the United States District Court  in Denver, Colorado, Johnston v. Espinoza-Gonzalez, highlights these distinctions.

In the Johnston case, Brittany LaLonde was a volunteer with the Ellicot Volunteer Fire Department. She alleged, among other things, violations of Title VII including sexual harassment, hostile work environment, and retaliation.

The Defendants argued that LaLonde’s Title VII claims should be dismissed because only employees can assert Title VII claims, and LaLonde was merely a volunteer. The Court disagreed. To determine whether someone is an employee under Title VII, courts consider the totality of circumstances surrounding the working relationship. In the Tenth Circuit, courts focus on “whether and to what extent the employer has the right to control the means and manner of the worker’s performance.” The Court will also consider the following 11 factors:  (1) the kind of occupation at issue, with reference to whether the work usually is done under the direction of a supervisor or is done by a specialist without supervision; (2) the skill required in the particular occupation; (3) whether the employer or the employee furnishes the equipment used and the place of work; (4) the length of time the individual has worked; (5) the method of payment, whether by time or by job; (6) the manner in which the work relationship is terminated; (7) whether annual leave is afforded; (8) whether the work is an integral part of the business of the employer; (9) whether the worker accumulates retirement benefits; (10) whether the employer pays social security taxes; and (11) the intention of the parties.

There is an additional threshold for volunteers. The Second, Fourth, Fifth, Eighth, Tenth and Eleventh Circuits have adopted a remuneration test for cases where the putative employee is not paid for his or her work. Thus, before even reaching the independent contractor test above, a Court will first force a Plaintiff to show that they received remuneration for their work. If the volunteer fails to demonstrate any remuneration, they cannot proceed with a Title VII claim. “Remuneration may consist of either direct compensation, such as salary or wages, or significant indirect benefits not merely incidental to the volunteer activity.” Johnston, p. 4. The extent of remuneration required is still an open question in the Tenth Circuit, but the Johnston court found that the following remuneration was sufficient for LaLonde to proceed with her Title VII claims: (1) workers’ compensation; (2) funeral benefits; (3) death benefits; (4) reimbursement of pre-approved expenses;(5) off-site travel and training costs, as approved; (6) tuition credits under state programs; (7) death gratuity eligibility under state and federal laws; (8) the ability to purchase vehicle tires under a state procurement contract; (9) personal protective equipment; (10) radios for point-to-point communication; (11) pagers for dispatch; (12) uniform shirts and outerwear; and (13) consideration for part-time or full-time employment.

The classification of employees can have far-reaching impacts on your small business. For example, you may assume, as many small business owners do, that your business is not subject to Title VII because you have fewer than 15 employees (the threshold for application of Title VII). But companies that use contract labor should carefully assess whether those “independent contractors” are truly independent. If they are considered employees, and that reclassification bumps your employee total to over 15 employees for Title VII (or 50 employees for FMLA) you will want to be sure that you have sufficient safeguards in place (such as appropriate policies and training) to be ready to defend against an employment discrimination claim.

Contact Kevin Perez or Christopher P. Brown if you have any questions regarding employee classification, Title VII concerns, or employment policies and procedures.