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Surgeon Is Not Hospital Employee For Title VII Purposes, Seventh Circuit Holds

To build on my colleague Vince Jackson’s recent post about the Department of Labor’s distinction between independent contractors and employees, teasing out whether an individual is (or was) a company’s employee who is generally covered by equal employment opportunity laws, or an independent contractor who is not covered, is an often difficult but critically important issue in handling employment litigation.

This week, a federal court of appeals explored this distinction in the context of a hospital facing a Title VII claim from a surgeon who worked there.  The Seventh Circuit held that, under the circumstances, the surgeon plaintiff was not an employee and affirmed the grant of summary judgment in the hospital’s favor.  Levitin v. Northwest Cmty. Hosp., No. 16-3774 (7th Cir. May 8, 2019).

Yelena Levitin owns and operates her own private medical practice.  Most of her work was performed, however, pursuant to a work agreement between Levitin and Northwest Community Hospital (Northwest), under which Levitin was granted practice privileges.  Levitin was responsible for treatment decisions for her patients, billed her patients directly, and filed taxes as a self-employed physician.  Northwest did not provide her with employment benefits or pay her professional-licensing dues, though it did place certain restrictions on Levitin’s working conditions and subjected her to its standard peer review process, medical-education standards, and reporting requirements.

When Northwest terminated her practice privileges after 13 years of work, Levitin filed what the Court called a “sprawling” 14-count federal lawsuit raising everything from antitrust and Illinois state law claims to a Title VII discrimination claim based on her sex (female), religion (Judaism), and ethnicity (Russian).  Northwest unsuccessfully sought to dismiss the discrimination case on the pleadings but was subsequently awarded summary judgment on the grounds that Levitin was not a covered employee.  Levitin appealed the Title VII claim only.

The Seventh Circuit unanimously affirmed the granting of summary judgment in Northwest’s favor.  As the Court observed, the text of Title VII sheds little light on the subject, because “employee” is defined in a “completely circular” fashion: an employee is “an individual employed by an employer.”  42 U.S.C. § 2000e(f).

Therefore, the Court looked to the common law of agency, focusing on the extent of Northwest’s right to control Levitin’s working conditions based on the economic realities of their relationship.  Under governing precedent, the most relevant factors for consideration are:

  • the extent of the employer’s control and supervision of the worker, including directions on scheduling and performance of work;
  • the kind of occupation and nature of skill required, including whether skills are obtained in the workplace;
  • responsibility for the costs of operation, such as equipment, supplies, fees, licenses, workplace, and maintenance of operations;
  • method and form of payment and benefits; and
  • length of job commitment and/or expectations.

Slip op. at 4-5 (citations omitted).  (Incidentally, the Fourth Circuit – which covers Maryland, North Carolina, South Carolina, Virginia, and West Virginia – uses a slightly longer list of factors that cover the same topics when it comes to hospital-physician relationships.)

Applying those factors to the case at hand, the Court readily concluded that Levitin was an independent contractor with Northwest, rather than a hospital employee.  Acknowledging that the hospital guided Levitin’s day-to-day responsibilities to some extent, the Court nevertheless concluded that Northwest’s right to control Levitin’s working conditions was not “onerous” enough to constitute an employer-employee relationship.

As we shift increasingly toward a gig economy, the employee-versus-independent contractor issue is likely to arise even more frequently than before.  The major takeaway here is that analysis of that issue is often tricky and is handled on a case-by-case basis.  Businesses are well served to focus their attention on the level of autonomy that the individual has when performing their essential responsibilities and when being compensated, and it is similarly essential to keep accurate records to document the working relationship in case issues arise down the road.

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