The key question regarding the mandatory retirement of law firm partners is whether those partners are “employees” protected by the Age Discrimination in Employment Act or genuine “partners” outside of the protection of ADEA as “employers”.
In Clackamas Gastroenterology Assocs. vs. Wells (2003), the United States Supreme Court reviewed the test for determining whether an individual qualifies as an employee and found it to be the common law element of control. The court held that “control” must be analyzed in terms of the following six factors:
- “Whether the organization can hire or fire the individual or set the rules for the individual’s work;
- If, and if so, to what extent the organization supervises the work of the individual;
- If the person reports to someone more senior in the organization;
- If, and if so, to what extent the individual is able to influence the organization;
- Whether the parties intended the individual to be an employee, as expressed in written agreements or contracts; and
- Whether the individual shares the profits, losses and liabilities of the organization.
Whereas Clackamas was decided under the American With Disabilities Act of 1990, subsequent court rulings have made it clear that the Clackamas the test also applies under other anti-discrimination laws.
With respect to law firms, an income partner is less likely than a shareholder partner to respect the Clackamas factors, especially the influence factor. Thus, an income partner is more likely to be considered an “employee” and protected by ADEA and unable to be compulsorily retired.
More than a decade ago I wrote about Clackamas and other issues related to the mandatory retirement of law firm partners. The question since then has been whether courts have found that partners so labeled constitute “employees” protected by anti-discrimination laws? The answer is, generally, no.
While the cases since 2010 are not necessarily about mandatory retirement, they do speak out on the “control” factors that would apply to mandatory retirement. If an individual is considered an “employee” under the Clackamas test was judged as a factual investigation.
Three notable cases after 2010
The first is Von Kaenel v Armstrong Teasdale LLP, a case of mandatory retirement. In deciding that a partner was not an employee, the Eighth Circuit did not even mention that the defendant was a large law firm, of about 700 lawyers and professionals.
Second, contrary to the trend, the Southern District of New York in Campbell v. Chadbourne & Parke LLP denied summary judgment, ordering discovery on the Clackamas The factors.
Thirdly, in Bluestein v. Hundred. Wisconsin Anesthesiology SCthe Seventh Circuit upheld the summary judgment, ruling that the plaintiff was not an employee under various anti-discrimination statutes even though the contract the plaintiff signed qualified her as an employee and she was issued a Form W -2 every year about him. wages.
As for the contract and the W-2, the court held that the application of the Clackamas The factors “considered as a whole” and the “reality of her position” in the company “exceeded the simple” label of employee.
Clackamas Applied factors
The Seventh Circuit applied the Clackamas The factors find that: (1) hiring and firing decisions as well as rules and regulations governing work were made collectively by board members (plaintiff voted for her own firing and participated in board meetings ); (2) the plaintiff has determined how to perform the specific tasks of her job; (3) each physician shareholder had an equal vote on matters affecting the organization, including delegation to the chairman of the board of directors; (4) the plaintiff was an equal shareholder entitled to vote on all matters before the board and regardless that she was often in a minority position; (5) the realities overcome the labeling of the claimant as an employee; and (6) the plaintiff has failed to raise a genuine issue of material fact as to the division of profits, losses and liabilities.
Notably, the Seventh Circuit also upheld the award of attorney fees to the defendant.
It’s the same circuit that ordered Sidley Austin to comply with a subpoena from the Equal Employment Opportunity Commission so it can be determined whether 32 law firm associates qualified as employees under ADEA.
However, in Bluesteinthe Seventh Circuit specifically mentioned that the facts were “significantly different” from Sidley Austin.
Rather than continuing to apply mandatory retirement policies to lawyers labeled as “partners”, law firms would be well advised to conduct the factual investigation described above of their various categories of partners to determine who qualifies as real “partners” in relation to “employees”. ”
Since the “control” test with its six factors will determine whether “partners” can be compulsorily retired as non-employees, law firms wishing to compulsorily retire should in particular ensure that people subject to mandatory retirement are able to participate in and influence the partnership. issues and questions.
This article does not necessarily reflect the views of the Bureau of National Affairs, Inc., publisher of Bloomberg Law and Bloomberg Tax, or its owners.
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Ned H. Bassen is a shareholder in the Business Litigation practice of Becker & Poliakoff. His extensive labor and employment practice ranges from litigation on behalf of and counsel to defense contractors, financial institutions, universities and other not-for-profit institutions to those accused of wrongdoing related to the ‘use.