A federal court has considered whether a real estate broker could bring a Title VII lawsuit for sexual discrimination against brokerage firm.
Alexandra Kakides ("Broker") began working at the King Davis Agency, Inc. ("Brokerage") in 1960. In 1976, the Broker became a vice president of the Brokerage and entered into a written employment agreement. In 1995, the Broker wrote to Kingsbury Davis, owner of the Brokerage ("Owner"), complaining that she was compensated less than other brokers because she was a woman. The Owner responded, stating that in 1990, the Brokerage had reclassified all of its salespeople as independent contractors, meaning that salespeople now had to pay all of their own expenses and they would not be covered under various insurance programs which the Brokerage had formerly provided to the salespeople. The Owner had allowed a few of the Brokerage's officers to remain employees, and the Broker had chosen to remain an employee. As part of the arrangement, the accepting officers would receive commissions in accordance with an earlier commission schedule. This schedule called for lower commission payments than the independent contractors now received from the Brokerage.
In 1996, the Broker wrote to the Owner, stating that she would like to be compensated as an independent contractor. The Owner responded by stating the Broker would now be compensated as an independent contractor but that she would also receive additional "management income" for her role as a company vice president.
In 1999, the Brokerage merged with another brokerage ("Merged Firm"). On December 1, 1999, the Broker entered into an "Independent Contractor Agreement" with the Merged Firm. Following her signing of this agreement, the Broker no longer received additional income, with all her compensation coming in the form of commissions. She was also responsible for paying for all of her expenses such as insurance, advertising, and licensing fees.
Over the course of the years, the Broker alleged that the Owner had made a number of inappropriate comments to her containing sexual innuendos. The Broker also alleged that the Owner had struck her on the buttocks on at least two occasions. In November 2000, the Broker complained to the Owner about the alleged sexual harassment. Thereafter, the Broker claimed that the Owner and others at the Merged Firm snubbed her, eventually causing her to resign. In December 2000, she filed a complaint with the Massachusetts Commission against Discrimination ("Commission") and then filed a lawsuit in December 2001, naming the Owner, the Brokerage, the Merged Firm, and other individuals affiliated with the brokerage firms (collectively, the "Defendants"). The lawsuit alleged violations of Title VII, a federal statute which bars discrimination in the workplace based on race, color, religion, sex, or national origin. The Defendants filed a motion for judgment in their favor.
The United States District Court, District of Massachusetts, ruled in favor of the Defendants. The Defendants argued that all allegations made by the Broker after December 1, 1999 are not covered under Title VII, as Title VII only covers claims made by employees and not those of independent contractors. Further, the Defendants argued that the Broker's earlier claims were barred by the Title VII statute of limitations.
The court first looked at whether the Broker was covered under Title VII. While Title VII only protects employees, the statute defines an "employee" as "any individual employed by an employer." Courts have interpreted this vague statutory language as directing the courts to use the common law tests for determining whether an individual is an employee or independent contractor. Courts look at a number of factors in making this determination, such as: the party's right to control the "manner and means" of the other party's work; source of instrumentalities and tools for performing the work; duration of the relationship between the parties; method of payment; and tax treatment of hired party. Click here for a complete list of the relevant factors listed by the Internal Revenue Service.
The Broker argued that she was an employee and thus covered by the Act. Even though the Broker acknowledged signing the "Independent Contractor Agreement", the Broker argued that she was hired as an employee by the Brokerage and she remained an employee even after signing the Agreement. The Broker argued that the Merged Firm had exercised control over her consistent with that of an employer in an employer/employee relationship, such as requiring the Broker to schedule "floor time" in the office and also by providing her with an office and office support.
The court rejected the Broker's argument, finding that prior case law as well as an overwhelming number of factors supported the finding of independent contractor status. The Broker paid all of her own expenses, was paid by commission, conducted her own marketing efforts, and had little control exercised over her day-to-day activities by the Merged Firm, even though the Merged Firm did require her to spend a small amount of time in the office. Thus, the court ruled that the Broker was not an "employee" under Title VII and so dismissed all of her post-1999 claims.
Next, the court considered the Defendants argument that the Broker's remaining claims were barred by the statute of limitations. Title VII states that a discrimination charge "shall be filed within one hundred and eighty days after the alleged unlawful employment practice occurred." This period is extended to 300 days when the initial filing is made with a state agency like the Commission. Since all the remaining allegations were from 1999 and earlier, these allegations were outside of the time periods required by Title VII and so the court ruled these claims were barred by the statute of limitations. Therefore, judgment was entered by the court in favor of the Defendants.
Kakides v. King Davis Agency, Inc., 283 F. Supp. 2d 411 (D. Mass. 2003).