(a) Employer practices

It shall be unlawful for an employer-

(1) to fail or refuse to hire or to discharge any individual or otherwise discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's age;

[...]

(f) Lawful practices; age an occupational qualification; other reasonable factors; laws of foreign workplace; seniority system; employee benefit plans; discharge or discipline for good cause

It shall not be unlawful for an employer, employment agency, or labor organization-

[...]

(2) to take any action otherwise prohibited under subsection (a), (b), (c), or (e) of this section-

(A) to observe the terms of a bona fide seniority system that is not intended to evade the purposes of this chapter, except that no such seniority system shall require or permit the involuntary retirement of any individual specified by section 631(a) of this title because of the age of such individual; 

[...]

In 1999, Sidley & Austin (as it then was) demoted 32 of its equity partners to "counsel" or "senior counsel." The significance of these terms is unclear, but Sidley does not deny that they signify demotion and constitute adverse personnel action within the meaning of the anti-discrimination laws. The EEOC began an investigation to determine whether the demotions might have violated the Age Discrimination in Employment Act. After failing to obtain all the information it wanted without recourse to process, the Commission issued a subpoena duces tecum to the firm, seeking a variety of documentation bearing on two distinct areas of inquiry: coverage and discrimination. The reason for the inquiry about coverage is that the ADEA protects employees but not employers. E.g., Simpson v. Ernst & Young, 100 F.3d 436, 443 (6th Cir. 1996); see 29 U.S.C. §§ 623(a)(2), (a)(3), 630(f). To be able to establish that the firm had violated the ADEA, therefore, the Commission would have to show that the 32 partners were employees before their demotion.

[...]

A remarkable feature of the way the case has been argued is that neither party has addressed the question why some or all members of partnerships should for purposes of the federal antidiscrimination laws be deemed employers and so placed outside the protection of these laws. That question might be avoidable if the laws contained an exemption for discrimination against partners; we might then simply look to the definition of the term in federal or state law. And if we looked there, we would find that Sidley was indeed a partnership and the 32 demoted

Page 702

partners were indeed partners before their demotion. Sidley has complied with all the formalities required by Illinois law to establish and maintain a partnership; the 32 were partners within the meaning of the applicable partnership law.

Although the EEOC does not concede that the 32 are bona fide partners even under state law, it is emphatic that their classification under state law is not dispositive of their status under federal antidiscrimination law. The antidiscrimination laws do not exempt partnerships from coverage (Sidley concedes that) or deny partners, as such, the protection of the laws. Employers are not protected by discrimination laws such as Title VII and the ADEA, but are partners employers? Always? Always for purposes of Title VII or the ADEA, or the other federal laws that prohibit employment discrimination? Statutory purpose is relevant. When the Supreme Court in Robinson v. Shell Oil Co., 519 U.S. 337, 346, 117 S.Ct. 843, 136 L.Ed.2d 808 (1997), was faced with the question whether "employee" in Title VII includes a former employee, it looked to "consistency with a primary purpose of antiretaliation provisions: Maintaining unfettered access to statutory remedial mechanisms. The EEOC quite persuasively maintains that it would be destructive of this purpose of the antiretaliation provision for an employer to be able to retaliate with impunity against an entire class of acts under Title VII." And when in Papa v. Katy Industries, Inc., 166 F.3d 937 (7th Cir.1999), we held that, in deciding whether a firm has the minimum number of employees required for it to be covered by federal antidiscrimination law we would not pierce the corporate veil, we did so on the basis of "the policy behind the exemption for employers that have very few employees." Id. at 942.

An individual who was classified as a partner-employer under state partnership law might be classified as an employee for other purposes, including the purpose for which federal antidiscrimination law extends protection to employees but not employers. Against this conclusion it can be argued that partners should be classified as employers rather than employees for purposes of the age discrimination law because partnership law gives them effective remedies against oppression by their fellow partners, because partnership relations would be poisoned if partners could sue each other for unlawful discrimination, and because the relation among partners is so intimate that they should be allowed to discriminate, just as individuals are allowed to discriminate in their purely personal relations. This is not the occasion on which to come down on one side or the other of the issue, though we note that in Hishon v. King & Spalding, 467 U.S. 69, 78, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984), the Supreme Court rejected the argument that the intimate nature of the partnership relation precludes a challenge under Title VII to a discriminatory refusal to promote an employee to partner.

[...]

We are not ruling that the 32 demoted partners were in fact employees within the meaning of the age discrimination law. Such a ruling would be premature. Sidley has respectable arguments on its side, not least that the functional test of employer status toward which the EEOC is leaning is too uncertain to enable law firms and other partnerships to determine in advance their exposure to discrimination suits — that it would be better if the courts and the Commission interpreted the employer exclusion to require treating all partners as employers, with perhaps a narrow sham exception. These issues will become ripe when Sidley finishes complying with the coverage part of the subpoena. We hold only that there is enough doubt about whether the 32 demoted partners are covered by the age discrimination law to entitle the EEOC to full compliance with that part, at least, of its subpoena.

Specific EEOC guidelines discuss both the broad question of who is an "employee" and the narrower question of when partners, officers, members of boards of directors, and major shareholders qualify as employees. See 2 Equal Employment Opportunity Commission, Compliance Manual

[538 U.S. 449]

§§ 605:0008-605:00010 (2000) (hereinafter EEOC Compliance Manual).⁷ With respect to the broad question, the guidelines list 16 factors — taken from Darden, 503 U. S., at 323-324 — that may be relevant to "whether the employer controls the means and manner of the worker's work performance." EEOC Compliance Manual § 605:0008, and n. 71.⁸ The guidelines list six factors to be considered in answering the narrower question, which they frame as "whether the individual acts independently and participates in managing the organization, or whether the individual is subject to the organization's control." Id., § 605:0009.

We are persuaded by the EEOC's focus on the common-law touchstone of control, see Skidmore v. Swift & Co., 323 U. S. 134, 140 (1944),⁹ and specifically by its submission that each of the following six factors is relevant to the inquiry whether a shareholder-director is an employee:

"Whether the organization can hire or fire the individual or set the rules and regulations of the individual's work

[538 U.S. 450]

"Whether and, if so, to what extent the organization supervises the individual's work

"Whether the individual reports to someone higher in the organization

"Whether and, if so, to what extent the individual is able to influence the organization

"Whether the parties intended that the individual be an employee, as expressed in written agreements or contracts

"Whether the individual shares in the profits, losses, and liabilities of the organization." EEOC Compliance Manual § 605:0009.¹⁰

As the EEOC's standard reflects, an employer is the person, or group of persons, who owns and manages the enterprise. The employer 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 mere fact that a person has a particular title — such as partner, director, or vice president—should not necessarily be used to determine whether he or she is an employee or a proprietor. See ibid. ("An individual's title ... does not determine whether the individual is a partner, officer, member of a board of directors, or major shareholder, as opposed to an employee"). Nor should the mere existence of a document styled "employment agreement" lead inexorably to the conclusion that either party is an employee. See ibid. (looking to whether "the parties intended that the individual be an employee, as expressed in written

[538 U.S. 451]

agreements or contracts"). Rather, as was true in applying common-law rules to the independent-contractor-versus-employee issue confronted in Darden, the answer to whether a shareholder-director is an employee depends on "`all of the incidents of the relationship ... with no one factor being decisive.'" 503 U. S., at 324 (quoting NLRB v. United Ins. Co. of America, 390 U. S. 254, 258 (1968)).

Defendant has moved to dismiss plaintiff's complaint under Fed.R.Civ.P. 12(b)(1) for lack of subject matter jurisdiction. Defendant asserts that plaintiff cannot bring her discrimination claims under federal law, because she is a bona fide partner, rather than an employee, and in the alternative that plaintiff agreed to arbitrate those claims. Following full briefing and oral argument on the motion, the parties submitted supplemental briefing, which the court has also considered in making its determination on the motion, as set forth below.

[...]

 1. Partner v. Employee

Defendant's first argument is that plaintiff, who was labeled by the firm as a "percentage partner," was in fact a bona fide partner, who cannot bring a claim under a federal anti-discrimination statute.¹ Defendant cites to Equal Employment Opportunity Commission v. Sidley Austin Brown & Wood, 315 F.3d 696, 698 (7th Cir.2002) for the proposition that plaintiff must be an employee, rather than a partner or employer, to make such claims. This is not contested by plaintiff. Rather, plaintiff's position is that she is an employee for purposes of making claims under those statutes, because the applicable

Page 376

"common-law agency" test for determining whether plaintiff is an employee or an employer, as set forth in Clackamas Gastroenterology Associates, P.C. v. Wells, 538 U.S. 440, 444, 123 S.Ct. 1673, 155 L.Ed.2d 615 (2003), dictates that in this case the plaintiff, although labeled a "partner," is an employee.

The parties are in agreement as to the six factors the court must consider under Clackamas to make this determination:

1. Whether the organization can hire or fire the individual or set the rules and regulations of the individual's work;

2. Whether and, if so, to what extent the organization supervises the individual's work;

3. Whether the individual reports to someone higher in the organization;

4. Whether and, if so, to what extent the individual is able to influence the organization;

5. Whether the parties intended that the individual be an employee, as expressed in written agreements or contracts;

6. Whether the individual shares in the profits, losses, and liabilities of the organization.

Id. at 449-50, 123 S.Ct. 1673. As plaintiff points out, the Clackamas majority emphasized that "whether a shareholder-director is an employee depends on `all of the incidents of the relationship ... with no one factor being decisive.'" Id. at 451, 123 S.Ct. 1673 (citing Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 322, 112 S.Ct. 1344, 117 L.Ed.2d 581 (1992) (citation omitted)).

Each of the parties to this litigation discusses the six factors stated above in sequence. After considering both arguments, the court agrees that the question of whether plaintiff is an employee is not appropriately determined on the motion to dismiss.

1. It shall be an unlawful discriminatory practice:

(a) For an employer or licensing agency, because of an individual's age, race, creed, color, national origin, sexual orientation, gender identity or expression,military status, sex, disability, predisposing genetic characteristics, familial status, marital status, or status as a victim of domestic violence, to refuse to hire or employ or to bar or to discharge from employment such individual or to discriminate against such individual in compensation or in terms, conditions or privileges of employment.

[...]

Defendants seek dismissal of the second and third counts of Plaintiff's complaint (alleging, respectively, violations of New York Executive Law § 296 ("NYHRL"), on which Plaintiff's second count is based, and under New York City Code § 8-107), asserting that Plaintiff, as an independent contractor, lacks standing to sue under those statues because their protections are generally limited to employees. Plaintiff alleges that she was "characterized as a 1099 worker for payroll purposes" pending "the final negotiation of a written employment contract." Complaint at P 15. While IRS forms in the 1099 series are generally used to document amounts paid to independent contractors, rather than employees, paragraph 15 of the complaint is hardly conclusive of Plaintiff's status as a worker. Indeed, for the purposes of the NYHRL, a decision on whether a worker is an employee or an independent contractor depends on the application of the common law of agency. Eisenberg v. Advance Relocation & Storage, Inc., 237 F.3d 111, 113 (2d Cir. 2000). [*11]  In such an analysis, "special weight should ordinarily be placed on the extent to which the hiring party controls the 'manner and means' by the which the worker completes her assigned task, rather than on how she is treated for tax purposes or whether she receives benefits." Id. at 119. Moreover, independent contractors fall within the protections of City Code section 8-107 as long as they are "natural persons" who "carry out work in furtherance of an employer's business enterprise." New York City Code § 8-102(5) (Westlaw 2003). See also O'Neill v. Atlantic Security Guards, 250 A.D.2d 493, 671 N.Y.S.2d 976 (N.Y. App. Div. 1998); Lavergne v. Burden, 244 A.D.2d 203, 665 N.Y.S.2d 272 (N.Y. App. Div. 1997). Additionally, in that Plaintiff alleges she was denied an employment contract on the basis of her race, it is clear that, at a minimum, she alleges failure to hire on account of race. Because it is far from "beyond doubt that plaintiff can prove no set of facts in support in support of [her] claim which would entitle [her] to relief," Defendant's motion is denied insofar as it seeks dismissal of Plaintiff's state and local law [*12]  claims.

Both Executive Law §296(1) (a) and New York City Administrative Code §8-107 (1) (a) only allow an employee to sue based upon some allegation of discrimination. The courts have

Page 4

found this to exclude partners in a company (See Ballen-Stier v. Hahn & Hessen, L.L.P., 284 AD2d 263, 727 NYS2d 421 [1st Dept 2001]; Levy v. Schnader, Harrison, Segal & Lewis, 232 AD2d 321, 648 NYS2d 572 [1st Dept 2006]). Thus, under both Executive Law §296(1) (e) and New York City Administrative Code §8-107 (7) a person can sue for retaliation only if their employer discriminated under Executive Law §296(1) and New York City Administrative Code §8-107(1) respectively. Even though the word person is used in these statutes, they still only refer to an employee because only employees can bring suit under Executive Law §296(1) (a) and New York City Administrative Code §8-107 (1) (a) (See Weir v. Holland & Knight, LLP, 34 Misc3d 1207(A) [New York Supreme Court 2011]).

Being a partner does not necessarily disqualify a person from bringing a cause of action under these statutes. The courts have determined that if an individual looks more like an employee than a partner, then the title or label of partner does not preclude them from bringing a cause of action as an employee Caruso v. Peat, Marwick, Mitchell & Co., 717 F. Supp. 218 [SDNY 1989]).

According to the ADEA as well as the NYHRL, an employer may not, among other things, terminate an employee because of his or her age. See 29 U.S.C. § 623(a)(1) (2006); N.Y. Exec. LAW § 296(3-a)(a) (McKinney 2008). Discrimination claims pursuant to the ADEA and NYHRL are subject to the same analysis. Abdu-Brisson v. Delta Air Lines, Inc., 239 F.3d 456, 466 (2d Cir. 2001). Persons who are not employees within the meaning of the ADEA and NYHRL are not protected by  [*12] those statutes. See Tuohy v. Bally, Inc., No. 95-Civ.-1499, 1997 U.S. Dist. LEXIS 1602, 1997 WL 66784, at *3 (S.D.N.Y. Feb. 14, 1997). Here, Defendant principally argues that Plaintiff was not its employee, but instead was an independent contractor, and consequently, the age discrimination claims must be dismissed on that basis. For his part, Plaintiff argues that he was not an independent contractor, but an employee of Defendant, and consequently is a "covered person" under the ADEA, requiring an award of summary judgment to Plaintiff on that issue.

Plaintiff claims age discrimination and retaliation under the New York State and City

Page 8

Human Rights Laws, based on his expulsion from the firm at age 55. The State Law, Executive Law § 296(1)(a), provides that "[i]t shall be an unlawful discriminatory practice" for an "employer" to discriminate against an "individual" based on age and other prohibited classifications. The City Law, Administrative Code § 8-107(l)(a), provides that "[i]t shall be an unlawful discriminatory practice" for an "employer" to discriminate against any "person" based on age or other prohibited classifications. The State Law, Executive Law § 296(l)(e), also prohibits an "employer" from retaliating against any person who has opposed or complained of a practice forbidden by the statute. The City Law, Administrative Code § 8-107(7), similarly prohibits retaliation by persons engaged in activity to which the Code applies - here, employers -against any person on the ground, among others, that the person has opposed or complained of a practice forbidden by the Code.

Focusing on the word "person" and again ignoring contradictory terms of the statutes - in this instance, that they prohibit discriminatory or retaliatory conduct by an "employer" - plaintiff agues that nothing in the statutes requires a plaintiff to be an "employee" to invoke their protection. (P.'s Memo. Of Law In Opp. To Ds.' Motion at 4-5 [P.'s Memo. In Opp.].) This contention is insupportable under the express terms of the statutes.

The issue, rather, is whether plaintiff, although a partner, was an employee within the meaning of the statutes. In claiming that plaintiff was not, defendants rely on two New York cases which held that a partner was not an employee entitled to the protection of the antidiscrimination laws. (See Ballen-Steir v Hahn & Hessen. L.P., 284 AD2d 263 [1st Dept 2001], lv dismissed 97 NY2d 699 [2002]; Levy v Schnader, Harrison, Segal & Lewis, 232 AD2d 321 [1st Dept 2006].) However, these cases are not inconsistent with the extensive authorities, decided

Page 9

under the analogous federal anti-discrimination laws, which hold that the detemination of whether a partner is an employee is fact-specific, and should be made by applying a factors test which assesses the individual's control over the terms and conditions of employment.

In Clackamas Gastroenterology Assocs., P.C. v Wells (538 US 440 [2003]), the Supreme Court articulated the standard for determining whether a shareholder of a professional corporation is an employee for purposes of the Americans with Disabilities Act (ADA). The Court held that the determination should "focus on the common-law touchstone of control" (id. at 449), and that six factors are relevant to the inquiry:

"Whether the organization can hire or fire the individual or set the rules and regulations of the individual's work
Whether and, if so, to what extent the organization supervises the individual's work
Whether the individual reports to someone higher in the organization
Whether and, if so, to what extent the individual is able to influence the organization
Whether the parties intended that the individual be an employee, as expressed in written agreements or contracts
Whether the individual shares in the profits, losses, and liabilities of the organization"

(Id. at 449-450 [internal quotation marks omitted], citing EEOC Compliance Manual.) The Clackamas factors have been extended beyond the ADA to the definition of employee under Title VII. (42 USC § 2000e, et seq.) These factors have thus been applied by courts in determining whether a shareholder/director or shareholder/partner in a professional corporation is an employee for purposes of Title VII (e.g. Kirleis v Dickie. McCamey &

Page 10

Chilcote. P.C., 2010 WL 2780927 [3d Cir 20101. cert denied 2011 WL 55433[2011]; Bragg v Orthopaedic Assocs. of Virginia. Ltd., 2007 WL 702786 [ED Va 2007]), and whether a partner in a professional association is an employee for such purposes. (Solon v Kaplan. 398 F3d 629 [7th Cir 2005] [attorney]; Mehta v HCA Health Servs. of Florida. Inc., 2006 WL 3133327 [MD Fla 2006] [physician].)

As the Court of Appeals recently noted, it has "generally interpreted state and local civil rights statutes consistently with federal precedent where the statutes are substantively and textually similar to their federal counterparts. And [it has] always strived to resolve federal and state employment discrimination claims consistently." (Zakrzewska v New School, 14 NY3d 469, 479 [2010] [internal quotation marks, citations, and emphasis omitted].) Here, none of the parties argues that there is a textual inconsistency between the definition of employer in Title VII and that in the New York State and City Human Rights Laws. Moreover, while the Appellate Division of this Department has emphasized that the New York City Human Rights Law has remedial purposes that go beyond those of the state and federal civil rights laws and therefore should be "more broadly" construed (Williams v New York City Hous. Auth., 61 AD3d 62, 66, 74 [1st Dept 2009], lv denied 13 NY3d 702), the definition of employer for purposes of the federal anti-discrimination statutes "has been construed liberally." (Lima v Addeco. 634 F Supp 2d 394, 399 [SD NY 2009], affd 375 Fed Appx 54 [2d Cir 2010].) The Clackamas test is therefore appropriate under both the New York State and City anti-discrimination laws.

Applying this test, the court finds that defendants make a prima facie showing that plaintiff was not an employee:

[...]

As the Supreme Court cautioned in Clackamas, "[t]oday there are partnerships that include hundreds of members, some of whom may well qualify as 'employees' because control is concentrated in a small number of managing partners." (538 US at 446.) Under the federal Age Discrimination in Employment Act (29 USC § 621, et seq.), a partner has thus been held not to be an employee of a partnership that included hundreds of partners, where "all power reside[d]" in a small executive committee that was not even elected by the partners, and the partner had no bona fide ownership interest (see Equal Empl. Opportunity Commn, v Sidley Austin Brown & Wood, 315 F3d 696, 702-703 [7th Cir 2002]), or where an unelected management committee exercised exclusive authority over the admission or discharge of partners, and the partner had no

Page 13

ownership interest. See Simpson v Ernst & Youne, 100 F3d 436, 441-442 [6th Cir 1996], cert denied sub nom Ernst & Young v Simpson. 520 US 1248 [1997].)

On this record, in contrast, although the Holland & Knight partnership included numerous Class B Capital partners, plaintiff does not submit any evidence to show that he was not a bona fide partner, or to raise a triable issue of fact in this regard. Plaintiff does not dispute that, under the Partnership Agreement, he had the right to elect the Managing Partner and Directors Committee and, indeed, was eligible for election to such positions. The Clackamas factor regarding influence "does not require that all of those with influence had equal potential to control the organization." (Cronkhite v Unity Physician Group. P.C., 2007 WL 1035091 [SD Ind 2007] * 9 [emphasis in original].) Plaintiff also does not dispute that he had the right to participate in the firm's governance, was not subject to expulsion without a 70 percent vote of the Directors Committee, and was entitled to share in the profits of the firm. Such rights have been held to support the finding as a matter of law that a partner or shareholder-director in a professional association is not an employee for purposes of the anti-discrimination laws. (Kirleis v Dickie. McCamey & Chilcote. P.C., 2010 WL 2780927, supra; Solon v Kaplan. 398 F3d 629, supra.) Here, similarly, the court holds that plaintiff was not an employee within the meaning of the New York State and City Human Rights Laws, and that his claims under these statutes for age discrimination and retaliation must be dismissed.

In view of this holding, the court does not reach the merits of plaintiff's claims under the anti-discrimination laws. The court notes parenthetically, however, that on these motions, plaintiff rests solely on bare assertions, unsupported by any evidence, that his expulsion was based on age discrimination and that he was subject to retaliation.