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Making employee a ‘corporation’ doesn’t make her an independent contractor

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in Compensation and Benefits,Human Resources

A court has dismissed a company’s assertion that a former employee now working and being paid as a corporation means the employee was no longer an employee.

Recent case: Dena worked in apartment leasing for My Space, a real estate management firm. Its president hired her and assigned her general duties like opening and closing the office, meeting tenants and landlords, attending staff meetings, training and evaluating agents and compiling reports.

Dena would later allege he controlled “every aspect” of how she completed her work, as well as her schedule. Dena even needed the president’s approval to take time off.

In her second year, Dena formed a corporation that was contracted to perform the same services she had performed as an individual employee.

Later, she sued My Space, alleging Title VII discrimination. Her corporation’s services were terminated the next day.

Once the case reached court, My Space moved for dismissal. It argued Dena couldn’t sue over either discrimination or her termination because she wasn’t an employee. It cited her operation as a corporation as the only proof she wasn’t an employee.

The court said My Space’s argument “borders on frivolous” and said that corporate structure doesn’t determine whether someone is an employee. Other factors, like control, do. The court said Dena was an employee, and that her case can continue. (Kology v. My Space, No. 15-CV-3061, ED NY, 2016)

Advice: Get expert legal help before changing an employee’s status.

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