Source: http://www.williamgoren.com/blog/2016/02/08/applicability-%C2%A7-504-independent-contractors/
Timestamp: 2019-04-18 21:54:49+00:00

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Does § 504 Apply to Independent Contractors?
Previously, I have discussed here whether § 504 applies to employment. Today’s case, Flynn v. Distinctive Home Care, Inc. (you can find my blog entry discussing the District Court opinion here), takes it even further. Today’s case, explores whether § 504, assuming it applies to employment, applies to independent contractors. As is my usual custom, I have divided the blog entries into categories: Facts; Court’s Reasoning; and Takeaways. The reader is free to focus on any or all of the categories.
The plaintiff was a contract pediatrician. Spectrum Healthcare Resources, Inc. contracted with the United States Air Force to provide medical services at Lackland Air Force Base in San Antonio Texas. Spectrum and the plaintiff entered into a contract whereby Flynn agreed to provide clinical pediatric services at the San Antonio military Medical Center for 20 hours per week. The agreement explicitly provided that Flynn was an independent contractor. She subsequently assigned her rights under the contract to a professional company managed by her. When Spectrum’s contract terminated in March 2013, Distinctive Healthcare Staffing took over Spectrum’s duty to provide medical services at Lackland. They retained Spectrum as a subcontractor on the government contract so that Spectrum continued to directly communicate with the independent contractor providing medical services at the base. In April 2013, Distinctive entered into a new contract with the management company controlled by Flynn. Under the contract she was to provide services for at least 936 hours per year. As with the previous contract, the contract specifically said that she was an independent contractor and that distinctive would not have any control or have the right to exercise control over the manner and means in which she performed medical services at the base. On May 15, 2013, Flynn’s psychologist diagnosed her with autism spectrum disorder-mild, what used to be known as Asperger’s syndrome (a disorder characterized by significant difficulties in nonverbal communication and social interaction, as well as restricted and repetitive patterns of behavior and interests). Around that same date, the government officer responsible for overseeing Distinctive’s contract with the Air Force, contacted Distinctive’s president and raised several concerns with her performance, including several complaints from patients and coworkers, failing to report to work on time, and her failure to timely complete patient charts. The government officer stated that it was in the best interest of the government if she was removed from providing services under Distinctive’s contract with the Air Force. On May 16, 2013, a Spectrum employee informed her that the clinic was concerned about her performance. In response, she informed that employee that her psychologist had just diagnosed her the previous day with autism spectrum disorder-mild (Asperger’s). She believed that her condition explained many of the issues of concern to Distinctive and Spectrum. On May 30, 2013 the government contract officer sent distinctive an email containing documentation purportedly substantiating the allegations of performance and patient complaints against Flynn. The government contract officer again requested that she be removed from her duties as an independent contractor. On June 7, 2013, Flynn, Spectrum, and Distinctive held a conference call during which she asked to be reinstated with accommodations. After Distinctive and Spectrum discussed Flynn’s requested accommodation with the Air Force, the government responded that it could not accommodate her request. As a result both Spectrum and Distinctive informed Flynn that they would not retain her as an independent contractor. She then sued Spectrum and Distinctive for employment discrimination under § 504 of the Rehabilitation Act. The District Court granted summary judgment in favor of the defendants because she was an independent contractor and not an employee. Flynn appealed to the Fifth Circuit.
1. The U.S. Courts of Appeals are split on the issue.
2. After citing to the Rehabilitation Act, 29 U.S.C. § 794, the court says that § 504 broadly prohibits discrimination, including employment discrimination, against persons with disabilities in federally assisted programs or activities.
3. Since § 504 of the Rehabilitation Act only applies to discrimination in program receiving federal financial assistance, it does not properly protect persons with disabilities from discrimination in the private sector. That is the reason why title I of the ADA was enacted. However, title I of the ADA only applies to employees. Therefore, Flynn’s only option was to sue under § 504 the Rehabilitation Act.
4. Soon after Congress enacted the ADA, it became concerned about potential inconsistencies between the Rehabilitation Act and the ADA. Therefore, they enacted 29 U.S.C. § 794(d), which provides that the standard used to determine whether § 504 of the Rehabilitation Act has been violated in a complaint alleging employment discrimination shall be the standard applied under title I of the ADA. Senator Harkin explained that the purpose of 29 U.S.C. § 794(d) was to put everyone on notice that the definitions of reasonable accommodation and discrimination under the ADA were the ones that apply. Also, people would know that the standard governing preemployment inquiries and examinations as well as the standard governing inquiries of current employees under the ADA would also apply to Rehabilitation Act.
5. Distinctive admitted that it receives federal financial assistance.
6. Unlike title I of the ADA, § 504 of the Rehabilitation Act is not limited to employment. Rather, § 504 of the Rehabilitation Act prohibits discrimination under any program or activity receiving federal financial assistance. Further, program or activity is defined per 29 U.S.C. § 794(b) to include all of the operations of an entire Corporation, partnership, or other private organization, or entire sole proprietorship. Therefore, a previous case from the Ninth Circuit reasoned that the Rehabilitation Act covers all of the operations of covered entities and not just those related to employment.
It should be noted that the applicability of the Rehabilitation Act to the defendant is actually a little bit more complicated than what the court alludes to. Reviewing, 29 U.S.C. § 794(b)(3)(A) reveals that all of the operations of the Corporation are only involved if they are receiving federal financial assistance to the entire Corporation. Hard to say whether that is the case here. However, all of the operations are involved if the Corporation is principally involved in healthcare, which Distinctive and Spectrum probably are.
7. The conclusion that the Rehabilitation Act does not completely incorporate the terms of the ADA so that the Rehabilitation Act applies beyond employees, is consistent with a prior opinion from the Fifth Circuit where they considered whether the Rehabilitation Act incorporated title I of the ADA’s view of causation in employment discrimination cases. In that case, Soledad v. United States Department of Treasury, the Fifth Circuit concluded that the specific language contained in the Rehabilitation Act referring to causation (29 U.S.C. § 794(a)), prevailed over the more general incorporation language contained in 29 U.S.C. §794(d).
8. 29 U.S.C. § 794(a) contains explicit language authorizing discrimination suits against any program or activity receiving federal financial assistance. Therefore, to incorporate the requirements of title I of the ADA mandating an employee employer relationship would conflict with the plain language of the Rehabilitation Act. That law specifically and broadly authorizes discrimination suits against a wide variety of entities, including non-employers.
9. §504(d) of the Rehabilitation Act does not incorporate title I in its entirety. Instead, it specifies that the ADA’s standards are to be used to determine whether the Rehabilitation Act has been violated. It does not say that the standards of the ADA are to be used to determine when the employer is even subject to the Rehabilitation Act in the first place. Therefore, the Fifth Circuit agrees with the conclusions of the Ninth Circuit and the 10th Circuit stating that Rehabilitation Act adopts only the substantive standard for determining the conduct that violates the Rehabilitation Act and not the definition of who is covered under the Rehabilitation Act.
10. Since the Rehabilitation Act does not incorporate title I of the ADA standards for determining the entities that may be held liable for employment discrimination, it does not incorporate title I of the ADA’s requirement that the defendant must be the plaintiff’s employer. Therefore, the fact that a plaintiff is an independent contractor of the defendant is not fatal to the plaintiff’s Rehabilitation Act claim.
11. Case law from the Eighth Circuit to the contrary is not persuasive for several reasons. First, § 504 the Rehabilitation Act is materially different from title I of the ADA because it specifically defines the entities to which it applies and does not address employers. Second, title I and § 504 do not cover the same entities and so the two statutes are not perfectly interchangeable. Third, that case law specifically mentioned that there was no existing precedent on the question. However, since that time, there is precedent on the question with the Ninth Circuit holding that an independent contractor may sue a defendant for employment discrimination on the Rehabilitation Act. Finally, contrary case law also referred to the definition of a qualified handicapped person in the Rehabilitation Act, but the Fifth Circuit failed to see how that particular provision had any bearing on whether the Rehabilitation Act authorized suits by independent contractors or on the degree to which § 504(d) incorporates title I of the ADA.
12. Another case from the Fifth Circuit also doesn’t work because that case holds that an individual supervisor could not be sued for employment discrimination under § 504 the Rehabilitation Act because that individual supervisor did not herself receive federal financial assistance.
13. There was an unpublished decision from the Fifth Circuit saying that the former employee lacked standing to pursue a discrimination claim involving a terminated benefit because he would not an employee of the Air Force nor an applicant for employment with the Air Force when a disability retirement benefits were terminated. However, the Fifth Circuit because of the reasons mentioned above declined to follow that decision. In a footnote, they also noted that unpublished opinions issued on or after January 1, 1996 are not precedent.
1. Since there is a split among the Circuits (independent contractors are covered in the 9th, 10th, and 5th Circuits but not in 8th), it would seem that this case could go to the United States Supreme Court.
2. This case has potentially huge ramifications because doctors are often independent contractors, and convincing a court (as noted in my blog entry discussing the District Court opinion in this case, mentioned above), to apply title III to the situation is not an easy matter.
3. This case also has ramifications with respect to whether prisons get a get out of jail free card when it comes to disability discrimination against prisoners with respect to prison jobs, which I discussed in this blog entry.
4. Interesting that the U.S. government wasn’t sued as the Rehabilitation Act prohibits them from engaging in discrimination through contracting.

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