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Misclassification of Independent Contractor in Disability Discrimination Lawsuit leads to $10M+ Verdict – Woolf v. Mary Kay

Female.Business.Person.jpgHave you properly classified your workforce? Are you sure? If not, the wrong answer could turn out to be a very costly mistake. Just ask Mary Kay Cosmetics, which was hit with a jury verdict for over ten million dollars. The Mary Kay case is discussed below. If you are not sure about your workplace practices, you should speak with an experienced employment lawyer to ensure your business is in compliance before any action is commenced against you. The issue of whether a worker is an independent contractor or an employee is a hot area for investigation and litigation. Cases are on the rise. The ramifications can be significant. This is an area where proactive steps are much better than reactive steps once you are in litigation and the alleged damage has already occurred.

Claudine Woolf v. Mary Kay Cosmetics, Inc.

Ms. Woolf sued Mary Kay for disability discrimination. In short, Ms. Woolf alleged that she was one of the Company’s top sales directors and was denied a reasonable accommodation after she learned that she had breast cancer during her pregnancy. Mary Kay argued that Ms. Woolf was an independent contractor and not an employee and thereby not entitled to protections under the Americans with Disabilities Act (ADA) and the state human rights law.

The Company relied on an independent contractor agreement that Ms. Woolf signed when she started working for the Company. The Company also argued that Ms. Woolf filed her tax returns as a self-employed individual. The jury was not persuaded by the Company’s arguments and found that Ms. Woolf was an employee and, as such, an interactive dialogue regarding a reasonable accommodation should have occurred. The jury awarded Ms. Woolf $11.247 million dollars. While it is possible that the case may get appealed or reversed on appeal, it should serve as a wake up call for all businesses.

In addition to a discrimination claim, companies could be investigated by the IRS and the Department of Labor or sued by workers for employee benefits and tax consequences. While the tests for independent contractors vary by agency and forum, there are some factors that a company should consider:

1. Direction and Control: This is a critical factor. Does the Company direct and control the worker? A company typically supervises an employee’s work while an independent contractor’s work is specialized and not supervised.

2. Specialized Skill: An independent contractor typically has a specialized skill and works on a finite project. An employee does not necessarily have a specialized skill set but the employee generally works for an indefinite duration.

3. Equipment, Tools and Training: An employee is generally provided with a work space, computer and training materials. On the other hand, an independent contractor should provide his or her own materials, equipment and work space. Moreover, in general, contractors should not be trained because they are supposed to have a specialized skill set.

Know.Your.Rights.Dollar.Photo.Club.3.9.15.jpgThese are just a few of the factors to consider. There are many more. It is important to remember that none of the factors is controlling alone. A balancing test is typically used. Contact our Award-Winning New York Employment Law Attorney to learn best practices, your options and potential exposure before any adverse action is taken. Proactive steps taken can be valuable as shown by the case described above.

Disclaimer: Thank you for visiting our Blog. This blog provides general information and thoughts about various employment law issues primarily in the New York Tri-State area and occasionally in other areas. You are welcome to read the posts. However, do not construe any content on this blog as legal advice or the creation of an attorney-client relationship. Again, we provide the content only for informational purposes. You should not make decisions based information on our blog since the application of the law depends on the facts and each situation may be different. In addition, the law in most jurisdictions is different and changes constantly and we make no representations that any information on our blog has been updated. The Blog should not be used as a substitute for competent legal advice from an experienced attorney in your state or jurisdiction. From time to time, a blog post may discuss a legal case – please note that the post may not contain the most to update information on the case as developments may have occurred after it was created.