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Indep. Contractor Gets No ADA, ADEA, FMLA, SDHRA Protection

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By William Peacock, Esq. on October 01, 2014 2:48 PM

Dr. Larry Alexander's case was obvious, yet unfortunate. And it's a great reminder of why independent contractor relationships are risky for the not-quite-employee.

From 1991 to 2011, Dr. Alexander was associated with Avera St. Luke's, a non-profit organization running St. Luke's Hospital in Aberdeen, South Dakota. Avera terminated its relationship with Dr. Alexander after he suffered from a series of health issues from 2008 to 2011 -- a heart attack, a heart transplant, and a hospitalization for bipolar disorder.

What is his recourse? Absolutely nothing, since he was providing services under an obvious independent contractor relationship.

District Court: ADA, ADEA, FMLA, SDHRA Are N/A

Dr. Alexander brought suit under every statute imaginable, alleging violations of the Americans with Disabilities Act (ADA), 42 U.S.C. § 12102 et seq.; the Age Discrimination in Employment Act (ADEA), 29 U.S.C. § 621 et seq.; the Family and Medical Leave Act (FMLA), 29 U.S.C. § 2617 et seq.; and the South Dakota Human Relations Act (SDHRA), S.D. Codified Laws § 20-13-1 et seq.

The district court granted summary judgment in favor of the hospital, finding that the undisputed material facts indicated that Dr. Alexander was an independent contractor, and as a result, none of the four statutes protected him. On Tuesday, the Eighth Circuit affirmed in a quick opinion.

Long Relationship, Always Independent

Much of the Eighth Circuit's opinion recounts Dr. Alexander's long relationship with the hospital, first as a sort of subcontractor under Dr. Roy Burt, the hospital's previous director of pathology. In 1994, Dr. Alexander took over the head spot, but did so under a second contract, this time directly with the hospital, signing two more contracts in 2002 and 2008.

All of these contracts specifically stated that he was an independent contractor and not an employee. There was no minimum hour requirement, no non-compete, and Dr. Alexander was paid via a Form 1099, rather than a W-2. He was allowed to subcontract and hire assistants (including, as the court notes, his wife at a "substantial salary" from 2008 to 2010).

In short, all of the agreements left the day-to-day operations to Dr. Alexander and only specified a few minimum constraints, such as having a pathologist on hand at all times during surgeries.

The agreements also gave either party the right to terminate the agreement without cause, which Avera exercised after Dr. Burt announced that he would be leaving the hospital because of an acrimonious relationship with Dr. Alexander. Notably, the two doctors' replacements were hired explicitly as employees, with a wholly different contract than the ones that Drs. Alexander and Burt signed.

ADA? FMLA? SDHRA? I-N-D-E-P-E-N-D-E-N-T

Though the proper test varied by statute, the answer always came back to this: There was little to no control exercised over Dr. Alexander during his tenure at the hospital.

For the ADA and ADEA, the Darden factors are instructive. Of course, the most important is "the hiring party's right to control the manner and means by which the [work] is accomplished," a factor that weighs in the hospital's favor here. Other Darden factors (lack of benefits or malpractice insurance, no taxes withheld from pay, and Dr. Alexander's self-reporting compensation as income of an independent contractor) also weigh in the hospital's favor.

For the FMLA and SDHRA, other tests applied, but both also pointed to the very loose relationship, with little to no control on the doctor's day-to-day duties, as determinative of the independent contractor issue.

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