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On April 29, 2013, the Third Circuit Court of Appeals rendered a decision in Mariotti v. Mariotti Building Products, Inc.  which concludes that a company can discriminate against its employees based on their religion, in certain circumstances. The plaintiff in the case, Robert Mariotti, was the vice-president and secretary of the company his father founded. Not only was he a corporate officer, but Mariotti also served as a member of the board of directors, and was a shareholder who could only be fired for cause.

As the basis for his lawsuit, Marriotti claimed that, in 1995, he had a spiritual awakening, which resulted in “a systematic pattern of antagonism” toward him in the form of “negative, hostile and/or humiliating statements” about him and his religious affiliation. Mariotti’s spiritual enthusiasm came to a head in 2009 when the family patriarch and founder of Mariotti Building Products, Inc. died. During the funeral Mariotti delivered a eulogy which emphasized his faith; a faith that members of his family -i.e.- other members of the board of directors did not share. A mere two days later, the shareholders of the closely held family business convened in Mariotti’s absence and decided to terminate his employment as the company’s vice president.

Thereafter, he sued his former employer for religious discrimination. The company moved to dismiss the claim on the basis that a shareholder-director-officer is not an “employee” under Title VII of the Civil Rights Act of 1964 (“Title VII”) and, thus, has no standing to assert a claim for religious discrimination. As one might expect from the title of this blog, the Third Circuit agreed.

The Court based its decision on the Supreme Court’s precedent, in Clackamas Gastroenterology Associates, P.C. v. Wells, which determined that shareholder-directors of a professional corporation should not be counted as employees in determining whether the business entity met the threshold number of employees, and thereby qualified as an employer under the Americans with Disabilities Act (“ADA”). In Clackamas, the Supreme Court concluded that a six factor test should be used to determine whether an individual qualifies as an employee under the ADA, and the Third Circuit concluded that the same factors are determinative as to whether an individual is qualified as an employee under Title VII. The six factors are:

Whether and, if so, to what extent the organization supervises the individual’s work;

Whether the individual reports to someone higher in the organization;

Whether and, if so, to what extent the individual is able to influence the organization;

Whether the parties intended that the individual be an employee, as expressed in written agreements or contracts; and

Whether the individual shares in the profits, losses, and liabilities of the organization.

Applying the Clackamas test to the Mariotti facts, the Third Circuit easily determined that Mr. Mariotti was not an employee, and this determination is particularly interesting for employment attorneys, as the Court further held that the Clackamas test was not limited to cases involving professional corporations. Rather, the “nature of the business entity is simply an attribute of the employment relationship that must be considered in applying the Clackamas test to determine whether an individual is an employee or an employer.”

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As such, regardless of the type of business at issue, employment lawyers must be careful to examine the influence, power, and potential ownership each and every potential plaintiff has in a particular company before determining whether the individual can actually maintain a lawsuit based upon unlawful discrimination, under the ADA and/or Title VII.

If you even think that your employment rights have been violated or that you might need an employment lawyer, then call the right attorney to schedule a free and confidential consultation at (216) 273-3742. The Spitz Law Firm is dedicated to protecting employees’ rights and solving employment disputes.

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