Clackamas Gastroenterology Associates, P.C. was an Oregon professional corporation owned by a small group of physician-shareholders who also served as the corporation's directors and exercised governance authority over the practice. Deborah Anne Wells worked for Clackamas in an administrative capacity and alleged that the practice unlawfully discriminated against her in violation of the ADA. Clackamas moved for summary judgment, arguing it was not covered by the ADA because it employed fewer than 15 employees if the physician-shareholder directors were excluded from the headcount. The district court agreed, concluding that the physician-shareholder directors were not employees and granting summary judgment. The Ninth Circuit reversed, reasoning that because the physicians worked within a professional corporation, they were employees as a matter of law for numerosity purposes. The Supreme Court granted certiorari to resolve whether shareholder-directors of a professional corporation must be counted as employees under the ADA.
Are the physician shareholder-directors of a professional corporation automatically considered "employees" for purposes of the ADA's 15-employee coverage threshold, or should courts apply a fact-specific common-law control test to determine their status?
When a federal statute uses the term "employee" with a circular or ambiguous definition, courts apply the common law of agency. The principal guidepost is the common-law element of control—i.e., whether the putative employer controls the manner and means by which the individual works. Consistent with that approach, courts should consider all incidents of the relationship, with no single factor dispositive. The Supreme Court endorsed the EEOC's six nonexclusive factors to evaluate whether an individual is an employee: (1) whether the organization can hire or fire the individual or set the rules and regulations of the individual's work; (2) the extent to which the organization supervises the individual's work; (3) whether the individual reports to someone higher in the organization; (4) the extent to which the individual is able to influence the organization; (5) whether the parties intended that the individual be an employee, as expressed in written agreements or contracts; and (6) whether the individual shares in the profits, losses, and liabilities of the organization.
No. Shareholder-directors of a professional corporation are not automatically employees under the ADA. Courts must apply a common-law control test—guided by the EEOC's factors—to determine whether such individuals are employees. The Ninth Circuit's categorical rule was rejected, and the case was remanded for application of the proper standard.
The Court began by noting that the ADA defines "employee" as "an individual employed by an employer," a circular definition that provides little guidance. Following its precedents interpreting similar statutory language (e.g., Darden), the Court applied the common-law agency framework, focusing on the element of control as the central consideration. Formal labels—such as the use of a professional corporation—do not resolve the question; substance governs over form. The Court expressly found persuasive the EEOC's six-factor test, which operationalizes the control inquiry in contexts where individuals serve as both owners and service providers. If the physicians meaningfully control the enterprise—setting their own terms, lacking supervision, sharing in profits and risks, and holding governance power—they resemble partners or proprietors rather than employees. Conversely, if they are subject to supervision, can be disciplined or terminated by others, must follow imposed policies, report within a hierarchy, and lack significant power over the organization, they may be employees notwithstanding their ownership interests or titles. Rejecting the Ninth Circuit's per se rule, the Court emphasized that Congress did not make liability turn on corporate formality. A categorical approach would either under- or over-include individuals across the diverse structures of professional practices. The appropriate, fact-specific common-law test ensures that coverage turns on the practical realities of control and dependence, preserving uniformity across antidiscrimination statutes and preventing manipulation by entity choice. Because the lower courts had not evaluated the physicians under this functional standard, remand was required.
Clackamas is the leading Supreme Court case on who counts as an "employee" when business owners also perform services for their firms. It shapes ADA coverage determinations and is frequently applied in Title VII and ADEA cases due to similar definitional language. For law students, Clackamas illustrates the Court's default to common-law agency principles when statutory definitions are circular and underscores the primacy of control and functional reality over formal labels. Practically, it affects professional practices nationwide, influencing whether owner-operators are counted toward the 15-employee threshold and thereby whether federal antidiscrimination laws apply.
Clackamas reframed the analysis of who is an employee in professional firms by centering the inquiry on common-law control rather than corporate form. The decision provides a pragmatic, flexible framework that captures the complex realities of modern professional organizations, where individuals may wear both ownership and worker hats. For practitioners and students, the case underscores that coverage under federal antidiscrimination statutes often turns on granular facts about governance, supervision, and economic dependence. The Clackamas factors help courts and counsel evaluate those facts, ensuring that statutory coverage reflects functional realities rather than formal labels.