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Sixth Circuit Ruling Highlights When Title VII Does (and Doesn’t) Protect Partners in a Partnership

OphthalmologistTitle VII’s protections are intended to protect employees from impermissible discrimination. In furtherance of that goal, a person must in fact be an employee in order to pursue a Title VII violation case. Some partners in businesses may qualify, but only if they prove that they are only “nominal” partners. In a recent Sixth Circuit Court of Appeals case, an ophthalmologist lost because the proof in her case showed that her standing as a partner was genuine and was much more than just nominal, meaning that she was not an employee under Title VII.

The plaintiff in this case was a Kentucky ophthalmologist named Barbara J. Bowers. In 1999, Bowers began working for The Ophthalmology Group. Three years later, though, she became a partner in the practice, buying in and signing a partnership agreement. Bowers was the only woman among the practice’s six partners. Early in 2010, two weeks after Bowers filed a personal Chapter 7 bankruptcy, the other partners decided to expel her. Bowers then sued the practice, accusing the partners of sex discrimination in violation of Title VII.

Before the dispute ever made it to trial, however, a federal District Court ended the case, issuing a summary judgment in favor of the practice. The problem for Bowers in this case was her employment status. Title VII is a statute designed and intended to protect the rights and interests of employees. To that end, the law does not allow partners to sue under Title VII, since they are not employees.

Initially, Bowers was an employee of the Ophthalmology Group. However, when Bowers bought in and signed a partnership agreement in 2002, she became a Group partner and ceased being a Group employee. Bowers attempted to win her case by arguing that, even though she was a partner “on paper,” she was really only a “nominal” partner and should still be entitled to the employee protections afforded under Title VII.

Bowers’ argument did not persuade the Sixth Circuit, though. She had several key facts working against her. She had bought into the partnership in 2002, and the other partners bought out her partnership interest in 2010 when they decided to expel her. The doctor had also signed a partnership agreement, as well as the partnership’s required registration documents that it filed with the Kentucky Secretary of State. Bowers shared in the Group’s profits. When the Group issued year-end income tax forms to Bowers, it sent her a Form K-1, rather than a W-2. She attended partnership meetings and was allowed to vote regarding the addition of new partners. She also participated in many of the Group’s decision-making processes, such as choosing to purchase new equipment and opting to change the formula by which the Group distributed its profits.

Even though this analysis regarding whether someone is a true partner or is merely a “nominal” partner who is actually more of an employee is a fact-intensive decision that is driven by the specifics of each case, the appeals court rejected Bowers’ argument that she should have been allowed to conduct more discovery. The parties had already submitted to the lower court more than enough evidence to establish conclusively that, given the way the Group carried on its business, Bowers was a partner rather than an employee and was not allowed to pursue a Title VII claim.

If you believe that you have suffered discrimination in violation of Title VII, or you are an employer facing a Title VII action, talk to the experienced Tennessee sex discrimination attorneys at Mays & Kerr. Our attorneys have been helping employers and employees for many years and are ready and equipped to help you with your issue.

To speak with one of our lawyers about your case, call 1-877-986-5529.

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New 11th Circuit Decision Changes the Way Some Discrimination Cases Will Be Decided in Georgia, Atlanta Employment Attorneys Blog, March 10, 2016

Georgia City’s First Female Warden Loses Jail Post, Then Loses Gender Discrimination Case, Atlanta Employment Attorneys Blog, Oct. 21, 2015