David Henry is a board-certified general and bariatric surgeon licensed to practice medicine in Hawaii. Dr. Henry joined the staff of Adventist Health Castle Medical Center (Castle) in 2015 and performed surgeries there.
During his time at Castle, Dr. Henry signed two agreements with the medical center. Under the first agreement, Dr. Henry agreed to operate a full-time private practice of medicine. The second agreement required Dr. Henry to be on-call in Castle’s emergency department for five days each month. Both agreements indicated that Dr. Henry “shall at all times be an independent contractor.”
While on call, Dr. Henry was not required to be present at Castle’s facility unless there was an emergency. When performing surgeries for Castle, Castle decided which surgical assistants would support him, supervised their performance and pay, and determined which medical record system would be used for care provided at the facility. Castle required Henry to comply with its Code of Conduct and bylaws, and it paid Henry $100 per 24-hour on-call shift if there was no emergency intervention and $500 for each emergency he handled. Castle issued Dr. Henry a 1099 tax form, and it did not provide any employee benefits. Dr. Henry also leased space from Castle for elective surgeries on non-Castle patients and performed some surgeries at a competing hospital where he had clinical privileges.
While working at Castle, Dr. Henry complained about discrimination. Dr. Henry’s complaint initiated a review of his past surgeries, which led to his precautionary suspension and eventually the recommendation that his clinical privileges be revoked until he completed additional training and demonstrated competency in various areas of concern. Dr. Henry then sued Castle, alleging violations of Title VII of the Civil Rights Act of 1964 for racial discrimination and retaliation.
Castle moved to dismiss the case. Castle argued that because Dr. Henry was an independent contractor and not an employee, he was not entitled to Title VII protections. The district court agreed and found in favor of Castle. Dr. Henry appealed to the U.S. Court of Appeals for the Ninth Circuit.
In deciding whether an individual is an employee under Title VII, courts evaluate “the hiring party’s right to control the manner and means by which the product is accomplished.” Courts make this determination considering a number of factors including: (1) the skill required; (2) the source of the instrumentalities and tools; (3) the location of the work; (4) the duration of the relationship between the parties; (5) whether the hiring party has to right to assign additional projects to the hired party; (6) the extent of the hired party’s discretion of when and how long to work; (7) the method of payment; (8) the hired party’s role in hiring and paying assistants; (9) whether the work is part of the regular business of the hiring party; (10) whether the hiring party is in business; (11) the provision of employee benefits; and (12) the tax treatment of the hired party.
Applying these factors to this case, the Ninth Circuit concluded that the district court properly determined Dr. Henry was an independent contractor and not an employee. First, the court considered Dr. Henry’s compensation. The court reasoned Castle only paid Dr. Henry for on-call time –$100 per shift or $500 per emergency intervention—which accounted for 10% of his earnings. Castle did not provide any employee benefits. Dr. Henry and Castle also reported his earnings to the IRS as if Dr. Henry were an independent contractor. The court noted that these factors weighed in favor of Dr. Henry’s independent contractor status.
Second, the court found that Dr. Henry’s limited obligations to Castle also indicated an independent contractor relationship. Dr. Henry had the freedom to run his own private practice, was only required to be on call in Castle’s emergency department five days per month, and was free to be elsewhere during his on-call shifts unless an emergency arose. Dr. Henry also leased Castle space for elective surgeries on his own patients and performed general surgeries at a competing hospital. The court noted that employees generally do not have this level of work freedom and that Castle did not have the level of control present in employment relationships.
Finally, the court emphasized that both contracts between Dr. Henry and Castle called him an independent contractor. Dr. Henry argued that the high skill level that surgeries require, Castle’s provision of assistants and medical equipment, and Castle’s mandatory professional standards weighed in favor of an employment relationship. The court concluded these factors did not outweigh the evidence suggesting he was an independent contractor.
Thus, the Ninth Circuit found that Dr. Henry was not entitled to Title VII protections as an independent contractor.
Henry v. Adventist Health Castle Med. Ctr., 2020 WL 4726540 (9th Cir. Aug. 14, 2020).
Note:
This case demonstrates that an independent contractor or employee status depends on an analysis of many factors. LCW attorneys regularly help public agencies determine whether individuals are properly classified as independent contractors under the federal standard discussed in this case and under California’s more pro-employee standard.