When an "Owner", "Member" or "Partner" is No Such Thing

02.09.2018

The state and federal discrimination laws prohibiting unequal treatment based on protected categories, such as age, race, sex etc., apply only to employees, and thus not to owners, members or partners of a business. However, in several cases across the country involving law firms, this precept has become much more complicated as courts have begun to consider what type of owner or partner a person is before deciding whether he/she should be covered by the broad definition of employee within the discrimination laws.

The focus of those courts has been on the authority, voting rights on matters of significance and actual say in management of the business. Accordingly, for example, some "income", "junior" and "non-equity" partners of law firms have been found to be employees for purposes of the discrimination laws. Employers outside of the legal field, particularly accounting, engineering and other professional services firms, will have similar issues for owners, members and/or partners who lack significant power or influence in how the firm is operated.

Certainly, employers should be mindful of these cases in setting up its ownership and management structures, and in working to ensure compliance with the discrimination laws. 

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