538 U.S. 440 (U.S. Supreme Court 2003)
Clackamas Gastroenterology Associates, P.C. v.
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.
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.