PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

JEWEL A. FARLOW, 

Plaintiff-Appellant,

v.  No. 00-2251

WACHOVIA BANK OF NORTH

CAROLINA, N.A.,

Defendant-Appellee. 

Appeal from the United States District Court

for the Middle District of North Carolina, at Greensboro.

N. Carlton Tilley, Jr., Chief District Judge.

(CA-98-479-1)

Argued: April 5, 2001

Decided: August 6, 2001

Before WIDENER and LUTTIG, Circuit Judges, and

Rebecca Beach SMITH, United States District Judge for the

Eastern District of Virginia, sitting by designation.

Affirmed in part, vacated in part, and remanded by published opinion.

Judge Widener wrote the opinion, in which Judge Luttig and Judge

Smith joined. 

COUNSEL

ARGUED: Nancy Pulliam Quinn, THE QUINN LAW FIRM,

Greensboro, North Carolina, for Appellant. Mack Sperling,

BROOKS, PIERCE, MCLENDON, HUMPHREY & LEONARD,
L.L.P., Greensboro, North Carolina, for Appellee. ON BRIEF: James

P. Hutcherson, Vice President and Counsel, Legal Department,

WACHOVIA BANK OF NORTH CAROLINA, N.A., WinstonSalem, North Carolina, for Appellee. 

OPINION

WIDENER, Circuit Judge: 

Jewel A. Farlow (Farlow) appeals the district court’s dismissal of

her discrimination claims under Title VII of the Civil Rights Act of

1964, 42 U.S.C. 2000e et seq. (1994 & 2000 Supp.), because she was

not an employee of Wachovia Bank of North Carolina (Wachovia).

We affirm the judgment of the district court as to Title VII, and we

remand to the district court with directions Farlow’s state-law claims.

I.

Farlow graduated from law school in 1988. Wachovia subsequently

employed her to represent it, while she was an associate in a Greensboro, North Carolina law firm. In February 1991, Farlow went into

private practice in Greensboro, and she continued to keep Wachovia

as a client. In 1993, Farlow and Wachovia discussed the possibility

of Farlow working as in-house counsel for Wachovia to handle recovery and bankruptcy cases. 

On October 5, 1993, Farlow completed a Wachovia employee

application form in which she disclosed that she was convicted of two

counts of misdemeanor larceny in 1982. Those convictions made it

unlawful for her to become an employee of Wachovia without Federal

Deposit Insurance Corporation (FDIC) approval.1 Farlow was aware

1

12 U.S.C. § 1829 (a)(1) (1989 & 2000 Supp.) states: 

(a) Prohibition 

(1) In general 

Except with the prior written consent of the Corporation— 

2 FARLOW v. WACHOVIA BANK OF NORTH CAROLINA
of this statute and knew that she could not become an employee

unless Wachovia received a waiver from the FDIC.2

The parties nonetheless proceeded with their working relationship,

and Farlow moved on-site with Wachovia in Winston-Salem where

she worked from March 1994 to December 1994. When she moved

on-site, Farlow closed her private office in Greensboro in March

1994. The parties subsequently entered into a written contract executed on September 19, 19943

 for legal services for Wachovia in

(A) any person who has been convicted of any criminal

offense involving dishonesty or a breach of trust, or money

laundering or has agreed to enter into a pretrial diversion or

similar program in connection with a prosecution for such

offense, may not— 

(i) become, or continue as, an institution-affiliated party

with respect to any insured depository institution; 

(ii) own or control, directly or indirectly, any insured

depository institution; or 

(iii) otherwise participate, directly or indirectly, in the

conduct of the affairs of any insured depository institution; and 

(B) any insured depository institution may not permit any

person referred to in subparagraph (A) to engage in any conduct or continue any relationship prohibited under such subparagraph. 

2Farlow specifically stated: 

They could not officially, quote, put me on the payroll or officially give me any benefits until that FDIC waiver. They could

not do that . . . . I mean, they couldn’t make it on their record

that I was an employee until the FDIC waiver. 

Wachovia could not officially put me on the books or have it

known that I was an employee there until that waiver came

through. 

3This contract was placed in the record with an affidavit of Kenneth

W. McAllister, a senior vice president and general counsel of Wachovia.

The affidavit stated that McAllister had personal knowledge of the matFARLOW v. WACHOVIA BANK OF NORTH CAROLINA 3
bankruptcy, debt collection and such matters that provided that Farlow was an independent contractor.4

 It was the intent of the parties

that Farlow would not be considered an employee unless the FDIC

waiver was obtained. At oral argument, we were told without refutation that a waiver was never sought for Farlow. Wachovia never sent

her an official offer letter detailing her position, salary, and benefits.

Wachovia did not keep a personnel file on her, and Farlow never

completed federal and state withholding forms, a fidelity bond application, the Form I-9 (an immigration status form), a form acknowledging receipt of Wachovia’s Code of Conduct, or the supplemental

personal data form listing contact and other information that all

Wachovia employees complete and that would be contained in the

personnel file. Additionally, during that 10-month relationship with

Wachovia, she continued to work with clients obtained from her sole

practice as well as to take on new, non-Wachovia clients. 

The money paid to Farlow by Wachovia was reported to the Internal Revenue Service (IRS) with a 1099 form rather than a W-2 form.5

ters contained in the affidavit, which would make it comply with Fed. R.

Civ. P. 56(e). The contract is signed by one G. Jerry Venable, an officer

of the bank, and by the plaintiff, Farlow, and is dated September 19,

1994, some months after Farlow moved her office into the bank building.

In her deposition, Farlow freely admits signing the contract but then,

remarkably, states that "To the best of my knowledge" the bank did not

execute the contract until after she was "no longer employed by Defendant," this in an apparent effort to avoid the consequences of the contract. Because Rule 56(e) requires supporting and opposing affidavits to

be "made on personal knowledge," as the record stands in this case, the

contract was signed by Wachovia and Farlow on September 19, 1994, as

it shows on its face. 

4This contract for legal services recites that "Wachovia desires to

retain the services of the Attorney as an independent, professional contractor . . . ." Article I states that "Wachovia hereby engages the Attorney

as an independent professional." Article 2(F) states that "The Attorney

shall in no way be considered or act in such manner so that she might

be considered to be an employee or an agent of Wachovia. . . ." Article

6 states that "The Attorney will not be considered an employee of

Wachovia or any of its subsidiary companies for any purpose." 

5Form 1099 is used for reporting the income of non-employees, and

the W-2 form is used for reporting the income of employees. 

4 FARLOW v. WACHOVIA BANK OF NORTH CAROLINA
She was never paid a salary during her 10 months there; while

employees are paid twice monthly, she was paid for the bills she submitted. She did not receive business cards, and the letterhead she used

designated that she was merely an Attorney-at-Law. Farlow was,

however, provided with on-site office space, support staff, equipment,

the use of company vehicles, and was paid for continuing education

matters. Wachovia also exercised control over the hours that she had

access to her office. Farlow did not receive benefits such as paid

vacation, long-term disability insurance, business travel and accident

insurance, life insurance; nor did she partake in Wachovia’s retirement savings and profit-sharing plan, or its common stock purchase

plan. 

After working at Wachovia for a period of months, Farlow complained about a sexually and racially hostile work environment. She

was terminated, effective December 21, 1994. Upon termination, Farlow submitted a request for payment for her services while employed

there. Wachovia paid part of the request. 

Farlow subsequently filed suit in North Carolina state court on May

1, 1998. The Complaint alleged four causes of action: 1) under Title

VII of the Civil Rights Act of 1964, the creation of a racially and sexually hostile work environment and Title VII retaliation; 2) failure to

pay wages due; 3) punitive damages; and 4) a request for injunctive

relief. Wachovia removed the case to the Middle District of North

Carolina based on federal question jurisdiction. Wachovia filed an

answer, which denied that Farlow was an employee, and counterclaimed for a return of money paid to her. Farlow filed an answer to

the counterclaim. Discovery was bifurcated to address initially Farlow’s employment status. At the close of discovery, Wachovia filed

a Motion for Summary Judgment, and on August 31, 2000, the district

court dismissed her claims in entirety because she was not an

employee. Farlow timely appealed. 

II.

We exercise jurisdiction pursuant to 28 U.S.C. § 1291 and review

a district court’s grant of summary judgment de novo. See United

States v. Kanasco, Ltd., 123 F.3d 209, 210 (4th Cir. 1997). The moving party must demonstrate the absence of a genuine issue of material

FARLOW v. WACHOVIA BANK OF NORTH CAROLINA 5
fact and that it is entitled to judgment as a matter of law. See Fed. R.

Civ. P. 56; see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23

(1986). We consider the facts in the light most favorable to the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255

(1986). The facts with respect to the employment relationship are not

materially in conflict. Resolution of factors as "to whether an employment relationship or an independent contractor relationship was created" is "a question of law." Cilecek v. Inova Health Systems Servs.,

115 F.3d 256, 261 (4th Cir. 1997). Merely because employee and

independent contractor status is each supported by certain factors

does not bar entry of summary judgment. Whether a person is an

employee depends on the common law of agency definition of

employee. Cilecek, 115 F.3d at 259, 261-63. 

Farlow appeals the district court’s grant of summary judgment to

Wachovia on her Title VII claim and argues she was employed by

Wachovia. Wachovia argues that Farlow was merely an independent

contractor and thus Title VII is not applicable. Each side concedes

that Title VII only applies if Farlow was an employee of Wachovia.6

See 42 U.S.C. § 2000e(f) (defining "employee" as "an individual

employed by an employer"); Cilecek, 115 F.3d at 263. The Supreme

Court has outlined several factors that a court should consider to

determine whether a party is an employee or independent contractor:

In determining whether a hired party is an employee under

the general common law of agency, we consider the hiring

party’s right to control the manner and means by which the

product is accomplished. Among the other factors relevant

to this inquiry are the skill required; the source of the instrumentalities and tools; the location of the work; the duration

of the relationship between the parties; whether the hiring

party has the right to assign additional projects to the hired

party; the extent of the hired party’s discretion over when

and how long to work; the method of payment; the hired

party’s role in hiring and paying assistants; whether the

work is part of the regular business of the hiring party;

whether the hiring party is in business; the provision of

6Neither party disputes that Wachovia is within the definition of

employer under Title VII. See 42 U.S.C. § 2000e(b). 

6 FARLOW v. WACHOVIA BANK OF NORTH CAROLINA
employee benefits; and the tax treatment of the hired party.

No one of these factors is determinative. 

Community for Creative Non-Violence v. Reid, 490 U.S. 730, 751-52

(1989) (citations and footnotes omitted). We recently applied these

factors in Cilecek and added that the parties’ beliefs regarding the

nature of the employment relationship are significant. See 115 F.3d

at 259-63. 

The district court methodically addressed each of the Reid factors

and counted factors in favor of Farlow when they were unclear. For

our purposes here, we highlight several of the more pertinent factors

implicated by the facts of this case. The touchstone inquiry enunciated in Reid addresses the degree of the "hiring party’s right to control

the manner and means by which the product is accomplished." Reid,

490 U.S. at 751. The degree of control considers the degree of control

of the professional services rendered rather than "‘peripheral, administrative details which were incidental to the rendering of . . . services.’" Robb v. United States, 80 F.3d 884, 889 (4th Cir. 1996)

(quotations omitted). In this case, Farlow has not presented evidence

suggesting that she was under the direct control of any Wachovia

supervisor regarding the performance of her professional services.

Farlow stated that her non-lawyer supervisor, Jerry Venable, "did not

tell me what the law was." Indeed, this conduct was consistent with

the language of the contract for legal services Farlow signed,

"Wachovia shall not exert any control, direction, or supervision over

the Attorney with regard to the manner, details, or means through

which she renders such services." 

Farlow has, however, presented evidence that she was required to

attend staff meetings, comply with a dress code, and told the hours

that her office was available. Although she was required to comply

with these administrative details suggesting she was an employee, the

lack of oversight in the actual rendering of her skilled, professional

services weighs in favor of finding that Farlow was an independent

contractor despite the administrative oversight. See Eyerman v. Mary

Kay Cosmetics, Inc., 967 F.2d 213, 218-19 (6th Cir. 1992). However,

as we noted in Cilecek, if the nature of the profession, such as medicine, or in this case, the law, mandates less control by supervisors,

this lack of control may not be as significant in this context as it

FARLOW v. WACHOVIA BANK OF NORTH CAROLINA 7
would be in other service relationships. See Cilecek, 115 F.3d at 260.

Thus, we also look to other more relevant factors outlined below. 

We next consider the source of the instrumentalities and the location of work under Reid. In general, when equipment is furnished during a working relationship and work is done on-site, these facts tend

to favor an employment rather than independent contractor relationship. See Kirk v. Harter, 188 F.3d 1005, 1009 (8th Cir. 1999). Farlow

contends that she was provided with a car and a Wachovia computer7

on the Wachovia premises to do her work. Wachovia also provided

Farlow with administrative assistants.8 These facts suggest that Farlow was an employee, although we note that independent contractors

at Wachovia often are provided with equipment and office space during their working relationship. On the other hand, Wachovia did not

provide Farlow with other identifying marks that would normally be

provided to employees, such as business cards, letterhead, and malpractice insurance. Despite the ambiguity on this factor, we will count

it toward finding that Farlow was an employee. 

We next address the duration of the working relationship. The

duration of the relationship of the parties, when viewed in the context

of the written contract signed by Farlow in this case, suggests an independent contractor relationship was intended by the parties. See

Cilecek, 115 F.3d at 262 ("[T]hat the relationship was an enduring

one might suggest the regularity inherent in an employment relationship."). Prior to working on-site, Farlow worked remotely for several

years for Wachovia, which clearly suggests an independent contractor

relationship. When she moved on-site, she worked a total of 10

months for Wachovia. This duration, coupled with the move to

Wachovia’s premises, is some indication that an employment relationship was intended. However, in Cilecek, we held that the parties’

7There is a dispute about whether Farlow’s or Wachovia’s computer

was used by Farlow. We assume, for purposes of the motion for summary judgment, that Wachovia provided Farlow with a computer. 

8Wachovia provided temporary assistants to Farlow because she

expressed concerns about Wachovia employees providing services on

matters involving her other non-Wachovia clients. In addition, the contract for legal services stated that she should hire her own assistants. 

8 FARLOW v. WACHOVIA BANK OF NORTH CAROLINA
actual understanding of their working relationship is another factor to

consider in this determination. See 115 F.3d at 261. 

Importantly, the facts of this case suggest that Farlow knew she

could not be an employee of Wachovia without FDIC approval

because of her past criminal history. In this regard, she knew that no

waiver was in fact granted, and she signed a contract for legal services that repeatedly indicated her status as an independent contractor.

Wachovia’s actions upon Farlow’s employment are consistent with

this understanding: no offer letter was sent and no personnel file was

created or maintained for Farlow. Although the intent may have been

to have her ultimately become an employee, the facts show that this

could not occur until an FDIC waiver was obtained. Thus, we place

great weight on the actual understanding between the parties and find

that this factor weighs heavily in favor of treating Farlow as an independent contractor.

We also note, especially, that Wachovia did not preclude Farlow

from representing former clients and from gaining new, nonWachovia clients during her time working with Wachovia. For a lawyer, this clearly signifies the lack of an in-house counsel, or employment, relationship. The contract for legal services Farlow signed

provided that she could represent other clients. Moreover, the record

reflects that Farlow did have an active practice, representing more

than 30 clients, during the time period she worked with Wachovia,

and she admitted that she took on new clients during the 10-month

relationship with Wachovia. Wachovia does not permit its lawyer

employees to represent outside clients. These facts also strongly suggest that Farlow was an independent contractor rather than an

employee. See Cilecek, 115 F.3d at 261 (addressing whether

employer had the right to "preclude the [alleged employee] from

working at other facilities or for competitors"). 

The Reid Court also highlighted several factors relating to the

financial relationship between the parties including the tax treatment

of the worker, employee benefits, and how the worker was paid. We

hold that these financial factors are significant in determining a worker’s status. See Aymes v. Bonelli, 980 F.2d 857, 863 (2d Cir. 1992)

(stating that "every case since Reid that has applied the test has found

the hired party to be an independent contractor where the hiring party

FARLOW v. WACHOVIA BANK OF NORTH CAROLINA 9
failed to extend benefits or pay social security taxes"). The failure of

an employer to extend employment benefits or to pay any payroll

taxes is "highly indicative" that the employee is an independent contractor. Aymes, 980 F.2d at 862. A party’s tax and benefit treatment

can be "virtual admissions" of the party’s status. See Aymes, 980 F.2d

at 862. In addition, the "absence of regular, periodic payments is an

indicia of independent contractor status." Kirk v. Harter, 188 F.3d

1005, 1008 (8th Cir. 1999). 

In this case, Wachovia did not withhold taxes from Farlow’s pay

and did not pay Social Security tax thereupon. Significantly, as noted,

it reported her earnings to the IRS on a Form 1099 rather than the W2 form, and Farlow herself candidly admitted that she was selfemployed to the IRS on the relevant tax returns. Moreover, Farlow

did not receive paid vacation, long-term disability insurance, business

travel and accident insurance, life insurance, partake in Wachovia’s

retirement savings and profit-sharing plan, or its common stock purchase plan. She did not even have a checking account at Wachovia,

which Wachovia requires of its employees. Additionally, she was not

paid weekly, bi-weekly, or on any schedule as other employees are

paid; rather, she submitted bills for hours worked based on a $41 perhour-rate after over 10-months of work and was paid in response to

those bills. These facts are quite significant regarding her status as an

independent contractor rather than an employee, and we place great

weight on them. 

Upon review of all of these factors, it is clear that, although some

may weigh in favor of a finding that Farlow was an employee, the

vast majority of them, including the most significant, weigh in favor

of the conclusion that Farlow was an independent contractor. We

place greater weight on: 1) the financial relationship between the parties in which she was paid not a salary but only in response to her

bills, for services actually rendered; 2) the financial relationship

between the parties in which Wachovia did not withhold or pay any

taxes that are incident to an employment relationship; 3) the financial

relationship between the parties in which Farlow did not receive

employee benefits such as medical and life insurance; 4) Farlow’s filing of income tax returns under a self-employed status; 5) the express

intent of the parties as indicated in the contract Farlow signed labeling

her as an independent contractor; 6) that Farlow did not work exclu10 FARLOW v. WACHOVIA BANK OF NORTH CAROLINA
sively for Wachovia during her working relationship with it; and (7)

that Wachovia exercised no control over the manner of her work.

These factors demonstrate that Farlow exercised independence from

Wachovia. Although Wachovia did provide Farlow with instrumentalities such as a computer and did exercise control over some administrative details incident to her on-site work, such as monitoring her

dress code, supplying some support staff, and controlling the hours

she could use her office, when balanced against the clear intent of the

parties and the striking economic realities surrounding the working

relationship in this case, we conclude that the district court was correct, as a matter of law, in holding that Farlow was an independent

contractor for Wachovia, and not its employee. We thus affirm that

aspect of the decision of the district court. 

III.

We next address Farlow’s claim that the district court erred in dismissing her state-law claims. The judgment of the district court dismissed the case in its entirety, which would have included the statelaw claims, and under Rule 41(b) of the Federal Rules of Civil Procedure, such dismissal would have been a decision on the merits. The

district court, however, had not considered the state-law claims, so the

dismissal of them on the merits was error for that reason. 

In United Mine Workers of America v. Gibbs, 383 U.S. 715 (1966),

the predecessor of 28 U.S.C. § 1367, the 1990 statute with respect to

supplemental jurisdiction, the Court, although not denying the right

of the district court to decide pendent claims, stated that "Certainly,

if the federal claims are dismissed before trial, even though not insubstantial in a jurisdictional sense, the state claims should be dismissed

as well." Gibbs, 383 U.S. at 726. Following Gibbs, the Court decided

in Carnegie-Mellon University v. Cohill, 484 U.S. 343, 357 (1988),

that, in a case in which the federal claims had been deleted from the

complaint by the plaintiff, before trial, following a removal from a

state court, the district court had the discretion to remand the pendent

state-law claims to the state court. 

The upshot of applying Gibbs, Cohill and § 1367 to this case is that

on remand, the district court has the discretion either to dismiss the

pendent state-law claims without prejudice, remand the state-law

FARLOW v. WACHOVIA BANK OF NORTH CAROLINA 11
claims to the state court, or decide the merits of the state-law claims

if it believes it should not follow the statement we have quoted from

Gibbs. 

The counterclaim of Wachovia, which was filed after removal,

being based solely on the ground of excessiveness of fees charged, is

a state-law claim. If the district court should elect to decide the pendent or supplemental claims, it should dispose of, in that proceeding,

the counterclaim also. If the district court elects to remand the case

to the state court, it should dismiss the counterclaim without prejudice

prior to the remand so that Wachovia may reassert the same in the

state court should it be so advised. Should the district court elect to

dismiss the state-law claims, that dismissal should be without prejudice.

AFFIRMED IN PART, VACATED IN PART,

AND REMANDED WITH INSTRUCTIONS

12 FARLOW v. WACHOVIA BANK OF NORTH CAROLINA