Opinion ID: 161335
Heading Depth: 3
Heading Rank: 1

Heading: Mr. Sipma Is an Employee

Text: 16 Mr. Sipma argues that he cannot be both an employer and an employee at the same time. While this argument might have merit where a different business organization is concerned, it is without merit here. Mr. Sipma argues that, simply because he is a shareholder of the corporation, he is also an employer. We disagree. The employer is the corporation, not Mr. Sipma and/or Mr. Byron. 17 Under both Colorado common law and common law generally, a corporation is treated as a legal entity separate from its shareholders. Micciche v. Billings, 727 P.2d 367, 372 (Colo. 1986); accord Yoder v. Honeywell, Inc., 104 F.3d 1215, 1220 (10th Cir. 1997) (applying Colorado law); James D. Cox, et al., Corporations 1.2, at 2 (1997) (A business corporation is . . . a legal unit with a status or capacity of its own separate from the other shareholders or members who own it.); Harry G. Henn & John R. Alexander, Laws of Corporations, 68, at 125 (3d. ed. 1983) (same). The corporation holds property, enters into contracts, executes conveyances, and conducts litigation in a legal capacity separate and distinct from its shareholders. Cox, supra, 1.2, at 3 (emphasis added); accord Henn & Alexander, supra, 68, at 127 (Contracts are made in the corporate name.). Because a corporation enters into contracts in a capacity separate and distinct from its shareholders, the corporation, not the shareholder, is the employing party in an employment relationship. As in the liability and taxation contexts, to equate the shareholder with the corporation requires the piercing of the corporate veil, something courts do only in extraordinary circumstances. Corporate veils exist for a reason and should be pierced only reluctantly and cautiously. Yoder, 104 F.3d at 1220 (internal quotation marks omitted). When self-employed individuals elect to incorporate and the corporation employs others, there is simply no basis in ERISA for disregarding the corporate form. Madonia v. Blue Cross & Blue Shield, 11 F.3d 444, 450 (4th Cir. 1993) (internal quotation marks omitted) (emphasis added); accord Vega v. Nat'l Life Ins. Servs., Inc., 188 F.3d 287, 293-94 (5th Cir. 1999) (en banc). 18 We find that Mr. Sipma is a shareholder, not an employer. There is nothing illogical in concluding that Mr. Sipma can be both a shareholder and an employee of the corporation. Indeed, it is not uncommon for employees to hold or be paid in the stock of the corporation that employs them. 19 Looking to common law agency principles as required by Darden, 3 we find that Mr. Sipma is an employee of the corporation for ERISA purposes. Mr. Sipma received a regular annual salary from the corporation. It is undisputed that the corporation was in business. The record indicates that the equipment used was owned by the corporation. There is no indication in the record that Mr. Sipma's association with the corporation was intended to be of limited duration. To the contrary, the record shows that Mr. Sipma received a regular annual salary from the corporation for at least three consecutive years. Mr. Sipma also supervised other employees of the corporation. His duties supervising excavation and snow removal were central to the regular business of Bob's Excavating and Snow Removal, Inc. Viewing together all of the incidents of the relationship between Mr. Sipma and the corporation, we find that Mr. Sipma is an employee of the corporation for ERISA purposes.