Source: http://www.williamgoren.com/blog/tag/revenue-ruling-87-41/
Timestamp: 2019-04-25 22:55:18+00:00

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Before getting started on the blog of the week, would be hard to not mention what happened in Pittsburgh. At our synagogue over the weekend during family minyan, which is a small service that takes place before people go to community/Hebrew/religious school (I am never sure what to call it), we said mourners Kaddish and lit a yizkor candle for our brethren in Pittsburgh. In my class ( I teach seventh grade), we discussed the story of Samson which focuses on revenge v. justice. That led to a spirited discussion over what penalty might be in order for the shooter. My thoughts and prayers go out to Pittsburgh. Far as I know, it is uncertain what security measures out own synagogue may be taking. I do know that many synagogues all over Atlanta have memorial services/vigils planned, including my own. For some excellent thoughts on anti-Semitism and why you need to watch out for in your workplace, I commend you to Jon Hyman’s blog entry on the subject, which can be found here. I also saw in the Atlanta paper today that since 2016, 54% of hate crimes involve Jewish animus. My original idea before Jon’s blog entry hit me like a ton of bricks was to talk about some sporting events in the last week. For example, congratulations to the Boston Red Sox on winning the World Series. I was able to catch some of the games. Absolutely remarkable how they won three in a row in Los Angeles. Congratulations to Red Sox nation. I think one of the reason people enjoy sports so much, especially spectator sports, is because for the most part they offer an escape. Again, my thoughts and prayers are with Pittsburgh and with the Jewish community all over America. My parents always said that it could happen here, but I never wanted to believe it….
Turning to the blog entry for the week, back in July 2016, I blogged on a 10th Circuit case that held a plasma center was a place of public accommodation under title III. Now, two years later the Fifth Circuit was faced with the exact same issue and decided the opposite. So, we now have a Circuit Court split. As usual, the blog entry is divided into categories and they are: facts; court’s reasoning; Texas Human Resources Code claim; could a blood donor really be an employee; and takeaways. The reader is free to concentrate on any or all of the categories.
If anything, the facts in the case we are blogging on today, Silguero v. CSL Plasma, Inc., are even more egregious than the one we blogged about in July, 2016. Levorsen involved a schizophrenic person wanting to donate blood. Here, one plaintiff used a service dog for anxiety, and the other one had an unsteady gait. What this plasma center does is exactly the same as what we discussed in my July, 2016, blog entry. The only other difference between the two cases is that the plaintiffs also sued under the Texas Human Resources Code, §121.001 et. seq., claiming that they suffered discrimination by a public facility.
In a footnote, the Fifth Circuit noted that the Department of Justice filed an amicus brief expressing its view that plasma collection centers are service establishments under title III.
The word, “service” according to both Marion-Webster Collegiate Dictionary and Webster New World Collegiate Dictionary generally denotes some helpful act or an act giving assistance or advantage to another.
“Helpful,” implies that someone receives help from the act.
The verb “giving,” and the preposition “to,” indicate that the assistance or advantage is conveyed from the act to the individual.
Congress’s use of the word “service,” suggests not only that the establishment perform some action but also that the action helps or benefits the recipient. So, in the case of a “service establishment,” the establishments serve the members of the public who are helped or benefited by the service. Therefore, a “service establishment” is an establishment performing some act or work for an individual benefiting from the act or work. This construction of what is a service establishment, is essentially the same as what the 10th Circuit came up with in Levorsen.
The word “service,” implies that the customer benefits by the act, and no such benefit occurs in the case of a customer donating blood at a plasma center.
The list of public accommodations appearing before the phrase “other service establishment,” does not include any establishment providing a service without a detectable benefit to the customer.
The structure of the ADA itself indicates that an establishment typically does not pay a customer for services it provides.
When it comes to a service provided by a service establishment, customarily, the service flows from the establishment to an individual. In this situation, donors receive no obvious benefit or help that makes the plasma collection center’s act a service. For example, donors do not have the plasma earmarked for themselves or to a specific third party for whom they are concerned. Rather, the plasma becomes the property of the plasma collection center to do with whatever it wants.
The labor furnished when donating blood is not useful to the donor, it is useful to the establishment, and the payment of money to the donor is wholly collateral to the act of plasma collection.
The canon of construction ejusdem generis says that a catchall phrase should be read in light of the preceding list. So, while the ADA itself says that the statute is to be liberally construed, that does not mean a court can come up with a construction that is untethered from its text.
If Congress wanted to cover all establishments, it could have done so by omitting the word service.
Legislative history is of no help to the plaintiffs. In a footnote, the court noted that it was essentially doing what the legislative history called for by trying to figure out what the overall category meant rather than whether particular places were service establishments.
Each of the items listed in 42 U.S.C. §12181(7)(F) involves an establishment acting in some way that benefit individuals. That is: dry cleaners press customer shirts; lawyers file pleadings; hospitals mend patients broken bones, etc. In each of these situations, the establishment performs an action directly benefiting the individual. A plasma collection center does not provide any such benefits to its donors.
While it is true that lawyers may work on a pro bono basis, that doesn’t change the fact that lawyers are working unambiguously to benefit clients, and therefore are performing a service.
While it is true that banks may pay customers through interest on savings, any payment they receive is not a result of the customer’s labor, but rather is the result of the act the bank performs to serve the customer. That is simply not the case with plasma centers where the plasma belongs to the plasma collection center, and the plasma collection center does not manage or oversee the plasma on behalf of the donor.
Paying for plasma donation is governed by other provisions of the ADA. In particular, that is more akin to employment or contract work, not to the provision of services to a customer.
Customers are purchasers of goods and services, while an employee is a person working for an employer for wage or salary. So, whether a person is being paid is relevant because it can indicate whether an individual was a customer or is instead an employee or other hired laborer.
With respect to the ADA, it is title I that applies to employment relationships, while it is title III that applies to places of public accommodations, which includes service establishments.
Interpreting service establishments and title III extremely broadly so that it includes employment and employment like relationships, risks overrunning Congress’s legislative choices in coming up with title I. In fact, it would make title I largely redundant by turning virtually every employer and entrepreneur into a service establishment.
Payment to or by the establishment is highly relevant for determining whether an establishment provides a service to a customer, and is therefore a service establishment.
The Texas Human Resources Code differs significantly from the ADA. For example, it was enacted before the ADA and was not split into various titles covering distinctly different activities.
The Texas Human Resources Code use a different term to define its scope. For instance, instead of applying to public accommodations, 121.003(a) applies to public facilities. Further, the term, “public facility” per §121.002(5), is defined in an entirely different manner than “public accommodation,” under the ADA.
The Supreme Court of Texas has said that because the differences are so stark, it will not look to federal court interpretations of public accommodations when interpreting the term “public facility,” under the Texas Human Resources Code. So, it simply cannot be assumed that because CSL Plasma is not a place of public accommodation under the ADA, that it isn’t a public facility under the Texas Human Resources Code.
Texas courts have not interpreted the term, “public facility” often, apparently only once in a completely different context.
The Texas Constitution grants the Supreme Court of Texas the power to answer questions of state law certified by a federal appellate court. In deciding whether such certification is proper the following factors are considered: 1) the closeness of the question and the existence of sufficient sources of State law; 2) the degree to which considerations of comity are relevant in light of the particular issue and the case to be decided; and 3) practical limitations of the certification process: significant delay and possible inability to frame the issue so as to produce a helpful response on the part of the State court. When all of these factors are applied, certification is appropriate because: no State law guidance exists, and the federal analogue is not analogous; the answer to just what is a service establishment under Texas law could either impose future liability on many Texas businesses or preclude Texans from relying on an important antidiscrimination statute; and there is no hardship in certifying the question since it is possible to formulate discrete issues for consideration by the Supreme Court of Texas. Finally, neither party presented any reasons not to certify the relevant questions as to the Supreme Court of Texas.
With respect to what questions are certified to the Supreme Court of Texas, they are: 1) is a plasma collection center a “public facility,” under §121.002(5) of the Texas Human Resources Code?; 2) if so, does Texas law allow the plasma collection center to reject a person with a disability based upon the center’s concern for the individual’s health stemming from the disability? Further, what standard applies for determining whether the plasma collection center properly rejected the person rather than committed impermissible discrimination under §121.003(a) of the Texas Human Resources Code. Finally, the Supreme Court of Texas may certainly not confine its reply to the precise questions certified by the Fifth Circuit.
Could a Donor of Blood Really Be an Employee?
Instructions: is the worker required to comply with other persons instructions about when, where, and how he or she is to work? If so, you have an employee. This factor seems to cut against employee status because the person donating blood can show up to the plasma center whenever they feel like it.
Training: training a worker by requiring an experienced employee to work with the worker, by corresponding with the worker, by requiring the worker to attend meeting, or by using other methods, indicates that the person for whom the services are performed want the services performed in a particular method or manner. This factor cuts against employee status because nothing of this kind is going on when donating plasma.
Integration: integration of the worker services into the business operations generally shows that the worker is subject to direction and control. When the success or continuation of a business depends to an appreciable degree upon the performance of certain services, workers performing those services must necessarily be subject to a certain amount of control by the owner of the business. This one is a bit odd in the plasma donation context. Clearly, without the donor, the plasma center has no business at all. On the other hand, in the traditional sense of the term, you would be hard-pressed to say that the plasma center has direction and control over the employee in the way this paragraph would customarily refer to the term.
Services rendered personally: if the services must be rendered personally, normally the person for whom the services are performed are interested in the methods used to accomplish the work as well as in the results. With respect to this factor, services are certainly being rendered personally, but the hiring entity is certainly not interested in the methods used to accomplish the work. They are interested in the results.
Hiring, supervising, and paying assistants: if the person for whom the services are performed hire, supervise, and pay assistants, that factor generally shows control over the workers on the job. This factor is not applicable to the person donating blood at a plasma center and certainly cuts against an employment relationship.
Continuing relationship: a continuing relationship between the worker and the person for whom the services are performed indicates that an employer employee relationship exists. A continuing relationship may exist where work is performed at frequently recurring although irregular intervals. This factor works in favor of the employment relationship.
Hours of work: the establishment of set hours of work by the hiring entity from the services are performed as a factor indicating control. This factor cuts against an employment relationship because there are no set hours of work.
Full time required: if the worker must devote substantially full-time to the business that restricts the worker from doing other gainful work. This factor also cuts against an employment relationship as donors of blood are not working full time in that capacity nor could they be.
Doing work on employer’s premises: if the work is performed on the premises of the person or person for whom the services are performed, that factor shows control over the worker, especially if the work could be done elsewhere. Control over the place of work is indicated when the person for whom the services are performed, such as the right to compel the worker to travel a designated route, to canvas a territory within a certain time, or to work at specific places as required. With respect to this factor, the work must be performed on the premises, but it can’t be done elsewhere except at another plasma center. Further, this is not a situation where the donor of blood is having to travel designated routes, canvas a territory, or work at specific places.
Order or sequence set: if a worker must perform services in the order or sequence set by the person for whom the services are performed, that factor shows that the worker is not free to follow the worker’s own pattern of work but must follow the established routines and schedules of the person for whom the services are performed. Taken literally, this factor cuts in favor of the employment relationship.
Oral or written reports: a requirement that the worker submit regular written reports to the person for whom the services are performed indicate a degree of control. This factor cuts against an employment relationship because no written reports or oral reports are occurring.
Payment by hour, week, month: payment by the hour, week, or month generally point to an employer-employee relationship. With respect to this factor, the person is being paid every time they donate blood. So, this factor also cuts against the employment relationship.
Payment of business and/or traveling expenses: if the person for whom the services are performed ordinarily the worker’s business and/or traveling expenses, the worker is ordinarily an employee. That is simply not what is going on here with respect to someone who would donating blood, and therefore, this factor cuts against the employment relationship.
Furnishing of tools and materials: the fact that the person for whom the services are performed furnishes significant tools, materials, and other equipment tends to show the existence of an employer-employee relationship. This factor works in favor of an employment relationship because the donator of the blood is not furnishing any tools or materials him or herself.
Significant investment: if the worker invests in facilities used by the worker in performing services and are not typically maintained by employees, that factor tends to indicate that the worker is an independent contractor. On the other hand, lack of investment in facilities indicates dependence on the person for whom the services are performed for such facility and thereby indicate the existence of an employer employee relationship. This factor cuts in favor of an employment relationship.
Realization of profit or loss: a worker who can realize a profit or suffer a loss as a result of the worker’s services is generally an independent contractor, but the worker who cannot is an employee. This factor also cuts in favor of an employment relationship because the person donating blood is receiving a take it or leave fee for the donation.
Working for more than one firm at a time: if a worker performs more than de minimis services for multiple unrelated persons or firms at the same time, that factor generally indicate the worker is an independent contractor. That said, it is possible that such a worker could be an employee of more than one person. This factor doesn’t cut either way.
Making service available to general public: the fact that a worker makes his or her services available to the general public on a regular and consistent basis indicates an independent contractor relationship. This factor cuts in favor of the employment relationship as services are not being made available to the general public.
Right to discharge: the right to discharge a worker is a factor indicating that the worker is an employee in the person possessing the right is an employer. An employer exercises control through the threat of dismissal, which causes the worker to obey the employer’s instructions. An independent contractor cannot be fired so long as the independent contractor produces a result that meet the contract specifications. Here, a plasma center might refuse to provide its services to a person wanting to donate blood. So, you might argue that the person is being fired, but each time a person wants to donate blood, it starts another relationship. So, my view is that this factor cuts against an employment relationship.
Right to terminate: if the worker had the right to end his or her relationship with the person for whom the services are performed at any time he or she wishes without incurring liability, that factor indicates an employer employee relationship. This factor cuts in favor of an employment relationship as certainly the person donating blood can end the relationship at any time they want for any reason without incurring liability. All they have to do not show up.
When I was doing this all the time, what I would do is add up the factors and see how many were on each side of the ledger. Keep in mind, it is a holistic question and there are situations were even though you have more factors on one side of the ledger than the other, you may still decide for the side of the ledger having fewer amount of factors. Also, in close calls, you’re probably better off erring on the side of an employment relationship. Adding up the factors here, I get 10 factors indicating that an employment relationship does not exist and 10 factors indicating that an employment relationship may well exist. So, now what? Well, the Fifth Circuit opinion gives an opening for plasma donors to argue that they are entitled to title I of the ADA protections. Will this opinion create lots of litigation over whether plasma donors are employees given our analysis of the 20 factors? It might.
Revenue Ruling 87-41 isn’t the only test out there. The Department of Labor has its own tests. Fascinating that when I applied Revenue Ruling 87-41 tests to this situation, I wound up with roughly an even split. That means, plasma centers may want to have their legal counsel evaluate as to what their tax liability is with respect to paying donors. They may also want to have legal counsel evaluate whether the donors are employees for other purposes. Finally, they may be dealing with title I liability when they deny donors with disabilities the right to donate their blood.
Silguero and Levorsen are in direct conflict with each other and cannot be reconciled. This means it is teed up for the Supreme Court. How will the Supreme Court decide? That is anybody’s guess. As I have mentioned numerous times before, persons with disabilities have been very successful at the Supreme Court outside of the employment context. There are now new Justices on the Supreme Court. Impossible to say how Justice Kavanagh might analyze it. With respect to Justice Gorsuch, also very difficult to say. I do think he as well as Justice Kavanagh may be receptive to eujesdim generis, but as we discussed in this blog entry, Justice Gorsuch is not afraid to use common sense when deciding things. Swing vote is likely to be Justice Roberts with Justice Gorsuch a wild card. Also, it bears noting that the Department of Justice filed an amicus brief in the Fifth Circuit case stating that plasma centers are places of public accommodations. If they maintain that at the Supreme Court level, that may be very persuasive.
While when I applied the 20 factor test, I got an even split, intuitively it would seem that the donor of blood plasma would not be an employee. If they are indeed an employee, that opens up a tremendous can of worms, even more so than the can of worms the Fifth Circuit said it would open if it agreed with Levorsen.
Not covered in the decision was whether even assuming a plasma center is a place of public accommodation, could there be health and safety regulations that would allow the plasma center to prohibit certain people with disabilities from donating? That may or may not be the case.
If a plasma center is not a place of public accommodation and the person donating blood is not an employee, do they have any recourse for disability discrimination? Well, chances are the plasma center takes federal funds. If so, this blog entry might be of help.
Never forget about your own State law.
Where does an independent contractor turn if he or she is terminated on the basis of his or her disability?
Let’s say that you have a client that is an independent contractor. The following day after disclosing that he or she has a disability, the independent contractor relationship is terminated. Where does this person turn for a remedy?
The first possibility is to show that the client was not an independent contractor at all. That is, despite the label in the contract, the hiring authority exercises sufficient control over the independent contractor so that the client was in fact an employee. For this possibility to fly, you want to take a look at two different authorities. First, Revenue Ruling 87-41, which has a 20 part test for determining whether sufficient control is being exercised. Keep in mind, that none of those factors are dispositive in and of themselves. Rather, you have to look at the whole situation after applying all 20 factors. By googling Revenue Ruling 87-41, you can find all kinds of references to that law, including this one, though not necessarily the actual document unless you have a legal database or you want to write to the IRS. The second authority that you want to look at is Clackamas Gastroenterology Associates, P.C. v. Wells, 538 U.S. 440 (2003), where the United States Supreme Court evaluated whether a physician shareholder was an employee so as to be able to pursue a claim of disability discrimination under title I of the ADA.
Okay, so now you have tried that approach and you realize that your client is truly an independent contractor. Is your client out of luck? Where do you turn? There are two places you might turn to. First, if privileges or benefits are involved, you might try pursuing a claim under title III of the ADA, though you would only get injunctive relief and attorneys fees if you do so. A physician at a hospital who did precisely that can be found in this case, Mentkowitz v. Pottstown Memorial Medical Center, 154 F.3d 113 (3rd Cir. 1998). The other thing you could do is try suing under the Rehabilitation Act, which brings us to the case of the week. As usual, I have divided the blog entry into various categories: introduction; facts; issue; court’s reasoning; and takeaways. The reader is free to concentrate on any or all of the sections.
Our case of the week is Flynn v. Distinctive Home Care, Inc., 2015 U.S. Dist. LEXIS 26869 (W.D. Tex. March 5, 2015). In this case, a pediatrician was diagnosed with autism spectrum disorder, used to be called Aspergers syndrome. Shortly after disclosing her condition to the defendants, her independent contractor agreement was terminated. She opted to bring suit under the Rehabilitation Act.
In order for a person to bring in employment claim so to speak under the Rehabilitation Act, must that person be an employee?
The court says yes relying on an unpublished decision from the Fifth Circuit. Nevertheless, the court does go into detail as to how the arguments can go either way and the Circuits are split. It all comes down to whether the Rehabilitation Act adopts title I of the ADA wholesale or whether it only selectively incorporates title I of the ADA.
1. The Sixth and Eighth Circuits have decided that the Rehabilitation Act adopts title I of the ADA in full. The Eighth Circuit noted that they were construing both laws to apply to the employer employee relationship because of the similarity between title I and the Rehabilitation Act in the absence of authority to the contrary. The Sixth Circuit found that the the ADA, ADEA, and Rehabilitation Act all borrow the definition of employer from title VII of the Civil Rights Act. Therefore, an individual not meeting the title VII statutory definition of employer could not be held liable under the Rehabilitation Act.
2. On the other hand, the Flynn court notes that the 9th and 10th circuit have concluded the title I of the ADA is only selectively incorporated into the Rehabilitation Act. The 10th circuit specifically noted that the language of the 1992 amendment to the Rehabilitation Act states that the ADA’s standards are to be used only to determine whether the Rehabilitation Act has been violated. That is not the same thing as saying that the standards of the ADA are used to determine whether an employer is even subject to the Rehabilitation Act in the first place. That is, the reference to the ADA’s employment provisions in the Rehabilitation Act addresses only the substantive standards for determining what conduct violates the Rehabilitation Act and does not go to the definition of who is covered under Rehabilitation Act.
3. In deciding that title I of the ADA was only selectively incorporated into the Rehabilitation Act, the Flynn court noted that the Ninth Circuit reached that conclusion for four different reasons. First, the scope of the Rehabilitation Act is broader than the ADA. Second, Congress did not use language of incorporation when it referred to the ADA and § 504. Third, to decide otherwise would substantially narrow the scope of the Rehabilitation Act. Fourth, complete incorporation of title I of the ADA into the Rehabilitation Act results in substantial duplication between the two laws, perhaps inconsistent duplication, in the definitions of key terms (as we have seen over the course of the discussions had in this blog, the differences between the two laws can be very subtle but at the same time significant).
4. The Flynn court says that since the Fifth Circuit in an unpublished decision had said that employment discrimination claims under the Rehabilitation Act require the existence of an employer employee relationship, they were bound to follow that decision.
1. Since the Fifth Circuit decision on this issue is unpublished, it wouldn’t surprise me in the least to see this case appealed to the Fifth Circuit. It is anybody’s guess as to how the Fifth Circuit would rule in this case. That said, to my mind, the reasoning noted by this court of the 9th and 10th circuit is fairly compelling.
2. Before opting for the possibilities afforded by paragraph 3 below, always figure out first whether the person is truly an independent contractor. For that, as mentioned above, you definitely want to review Revenue Ruling 87-41 and also review Clackamas as well.
3. If you’re on the plaintiff’s side, it would make sense in these kind of situations to sue under both title III of the ADA and the Rehabilitation Act. Expect a vigorous defense to the title III suit on the grounds that title III was not meant to apply to employment situations. With respect to Rehabilitation Act claim, expect the same defenses made in this case. Of course, suing under title III of the ADA only allows for injunctive relief and attorneys fees. With respect to recovering under the Rehabilitation Act, the plaintiff will have two obstacles. First, they will have to show that the discrimination was the sole cause. Second, to get damages, they will have to show deliberate indifference. Nevertheless, a true independent contractor doesn’t have a lot of options available to him or her.
4. Since there is a Circuit split on whether coverage under the Rehabilitation Act demands an employer employee relationship, it is reasonable to expect that this will go to the United States Supreme Court someday.

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