Accordingly, Demski was not a "hired party" of I & M.
[Page 5]
Since we agree with the ALJ and the respondent that Demski was not an individual who was a "hired party," it is unnecessary – indeed inappropriate – to examine her relationship with I & M under the twelve Darden factors, see Darden , 503 U.S. at 322-23, which federal courts and the Board employ to determine whether a hired individual is an independent contractor or an employee. E.g., Alberty-Velez v. Corporacion de Puerto Rico Para La Difusion Publica , __ F.3d __, No 02-2187, slip op. at 5 (1st Cir. Mar. 2, 2004); Boschuk v. ALJ & L Testing, Inc. , ALJ No. 96-ERA-16, ARB No. 97-020, slip op. at 2 (ARB Sept. 23, 1997).
The Complainant contends that summary decision is improper, because the facts concerning some of the Darden factors are disputed, e.g., the amount of control I & M exercised over her employees and how much time Demski spent at the Cook plant. However, she does not create a genuine issue of material fact. The Darden test is inapplicable where, as here, the business relation is between one corporate employer and another. And even if we were to apply the Darden factors, reviewing the facts in the light most favorable to Demski as the non-moving party, we agree with the ALJ and the Respondent that Demski would be deemed to be an outside contractor, not a protected employee under the ERA. R. D. & O. at 12; Respondent's Brief at 27.
In sum, we hold that Demski was not an employee of I & M entitled to whistleblower protection under the ERA.
2. Demski is not an employee of ANR/Scope
We now address Demski's other argument that I & M, as employer, discriminated against her as an employee of her own corporations, ANR/Scope. Demski argues that as a common-law employee of ANR/Scope, which was a contractor to NRC licensee I & M, she has standing to file a whistleblower discrimination claim under the ERA. Complainant's Initial Brief at 14-12. For the reasons that follow, we disagree.
The ERA protects employees against the discriminatory acts of employers. 42 U.S.C.A. § 5851(a)(1). Nothing in the Act or its interpretive history, though, suggests that someone who is defined as an employer under the Act can also claim employee protection under it. The employer-employee relationship is essentially hierarchical; the employer, the master, has power over the employee, the servant. Restatement (Second) of Agency § 220(1) (1958). By definition, an employer has authority or power over those individuals he or she employs, that is, the "right to control the manner and means by which the work is accomplished." Darden , 503 U.S. at 323. As the ALJ stated, for an individual to be an employee, there must be some higher supervisory authority to which that individual may be held accountable. R. D. & O. at 13.
We find that Demski's uncontested status as sole shareholder of her two companies, ANR/Scope, precludes her from being an employee of those companies for ERA purposes. Demski cannot be both master and servant simultaneously. She is not a hired party subject to the Darden factors because her companies never hired her. As president and owner of ANR/Scope, only Demski could set the terms of her own employment, discipline herself for poor performance, or exercise the attributes of a traditional employer-employee relationship. She was beholden to no one in her companies except herself. She could not rationally take discriminatory action against herself. The fact that she issued herself a paycheck, standing by itself, would not, under the ERA, make her an employee of the corporations she directed.
Under the circumstances of this case, therefore, Demski could not have an employer-employee relationship, direct or not, with herself. Accordingly, we agree with the ALJ and the Respondent that Demski's status as a corporate employer and contractor was fundamentally at odds with her claim of protected employee status. R. D. & O. at 13; Respondent's Brief at 11.
[Page 6]
In an effort to establish herself as an employee of her own companies, Demski cites us to cases giving ERA protection to employees of subsidiaries whose employment has been affected by the holding company; extending the ERA to individuals who are outside contractors under control of the respondent; finding that corporate principals can be employees of the corporation for the purpose of participating in retirement programs; and considering minority shareholders employees of professional corporations. These cases do not alter the outcome here, and we distinguish them.
The ARB has recognized the right of an employee of a subsidiary or subcontractor to bring a claim against the holding company or contractor if either retaliates against the employee because of protected activity by encouraging his or her immediate employer to take adverse action, such as discharge or discrimination with respect to compensation, terms, conditions, or privileges of employment. For example, relying on Stephenson v. National Aeronautics and Space Admin. , ALJ No. 94-TSC-5, ARB No. 98-025 (ARB July 18, 2000), Demski argues that that she is an employee of I & M, and thus protected under the ERA, because I & M acted "in the capacity of an employer by establishing, modifying or otherwise interfering with an employee of a subordinate company [i.e., with her as an ANR/Scope employee] regarding the employee's compensation, terms, conditions or privileges of employment." Slip op. at 11.
In Stephenson, NASA induced a contractor to take action against one of the contractor's employees. The employee was permitted to advance a whistleblower complaint against NASA, even though NASA was not the direct employer. Slip op. at 13. Likewise, Hill v. Tennessee Valley Auth. , ALJ 87-ERA-23 (Sec'y May 24, 1989), held that an NRC licensee who took adverse action against an employee of its contractor while acting in the capacity of an employer toward that employee was subject to a claim under the ERA. Slip op. at 2.
The present situation is not analogous to either Stephenson or Hill because Demski was not an employee of contractors, ANR/Scope, and because I & M did not direct those companies as her putative employer to take action against her that terminated her employment with ANR/Scope, or otherwise affected the compensation, terms, conditions or privileges of her relations with those companies. She remained a sole shareholder; her overall status with those companies was unchanged.
In Samodurov v. General Physics Corp. , ALJ No. 89-ERA-20 (Sec'y Nov. 16, 1993), the Secretary dismissed a complaint alleging discriminatory refusal to hire an individual who was an independent contractor, but noted that an individual who was an independent contractor might qualify for ERA protection if the respondent employer exercised a requisite degree of control and supervision over the individual. Slip op. at 7. For Samodurov to apply, Demski would have to establish that she individually had a business relationship with I & M. However, it is undisputed that the relationship was solely with Demski's corporations.
Under Richter v. Baldwin Assoc. , ALJ No. 84-ERA-9-12 (Sec'y Mar. 12, 1986), the ERA affords whistleblower protection to a respondent's supervisory or managerial employees. Slip op. at 12, n.5, 14. Although Demski may have had a supervisory or managerial role in her companies, that does not establish her as a supervisory or managerial employee with standing under the ERA. Until Demski demonstrates that she was an employee of ANR/Scope, Richter does not apply. Demski was not an employee of those companies for the reasons we have explained.
[Page 7]
Citing Madonia v. Blue Cross & Blue Shield , 11 F.3d 444 (4th Cir. 1993), Sipma v. Massachusetts Cas. Ins. Co. , 256 F.3d 1006 (10th Cir. 2001), and Vega v. National Life Ins. Serv., Inc. , 188 F.3d 287 (5th Cir. 1999), Demski argues that a sole shareholder can be an employee of the owned corporation under the Employee Retirement Income Security Act (ERISA), 29 U.S.C.A § 1002(6) (West 1999). However, as I & M points out, there is strong support for the conclusion that the sole owner or shareholder of a corporation cannot be considered an employee under ERISA. See Watson v. Proctor , 161 F.3d 593, 597 n.6 (9th Cir. 1998) and cases cited therein. Regardless, we decline to enter the debate. Whether or not Demski could be considered an employee of her corporations under the special statutory and regulatory provisions of ERISA is not determinative of her employment status under the ERA.
Finally, citing Hyland v. New Haven Radiology Assoc. , 794 F.2d 793 (2d Cir. 1986) and Wells v. Clackamas Gastroenterology Assoc. , 271 F.3d 903 (9th Cir. 2001), Demski also contends that shareholder/managers of small professional corporations may be employees. Hyland and Wells are not controlling. Demski was not a minority shareholder of a professional corporation whose relationship was terminated by other shareholders. She was a sole shareholder whose companies took no action against her.
Thus, on the uncontested facts, Demski was not an employee of ANR/Scope.
CONCLUSION
The undisputed facts are that I & M contracted with Demski's companies and that she was herself an employer. Corporate employers do not have whistleblower protection under the ERA. Based on this record, we find that Demski, as the non-moving party, has failed to establish an element essential to her claim – that under the ERA she is a covered employee of I & M or ANR/Scope. Because there is no genuine issue of material fact, I & M is entitled to summary decision as a matter of law. Therefore, we dismiss Demski's complaint.
SO ORDERED.
WAYNE C. BEYER
Administrative Appeals Judge
M. CYNTHIA DOUGLASS
Chief Administrative Appeals Judge
[ENDNOTES]
1 The following abbreviations shall be used: Complainant's exhibit, CX; Respondent's exhibit, RX, Recommended Order of Dismissal, R. D. & O.
2 The incorporation of ANR/Scope under Subchapter S, 26 U.S.C.A. § 1361 et seq. , which allows for direct pass-through of tax consequences to the shareholder(s), does not affect our determination that Demski was not an employee of I & M.
3 Demski uses the term "sole proprietor" incorrectly throughout, disregarding her corporate structure as a "hyper-technicality." A sole proprietor is an individual owner of a business who does not operate in a corporate form. A sole proprietorship has no stockholders, officers, or directors, can sue or be sued, or contract in his/her own name or using a trade name (i.e., d/b/a), and is personally obligated for the business' debts. See 18A Am. Jur. 2d Corporations (1985), especially § 154. Although Demski was a sole stockholder of her corporations, she was not a sole proprietor.