Farlow v. Wachovia Bank of N. Carolina

• Decision Date: 05 April 2001
• Docket Number: No. 00-2251,00-2251
• Citation: 259 F.3d 309
• Parties: (4th Cir. 2001) JEWEL A. FARLOW,Plaintiff-Appellant, v. WACHOVIA BANK OF NORTH CAROLINA, N.A., Defendant-Appellee. Argued:
• Court: U.S. Court of Appeals — Fourth Circuit

Page 309

259 F.3d 309 (4th Cir. 2001)

JEWEL A. FARLOW,Plaintiff-Appellant, v. WACHOVIA BANK OF NORTH CAROLINA, N.A., Defendant-Appellee.

No. 00-2251

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

Argued: April 5, 2001

Decided: August 6, 2001

Appeal from the United States District Court for the Middle District of North Carolina, at Greensboro. N. Carlton Tilley, Jr., Chief District Judge. (CA-98-479-1)

COUNSEL ARGUED: Nancy Pulliam Quinn, THE QUINN LAW FIRM, Greensboro, North Carolina, for Appellant. Mack Sperling, BROOKS, PIERCE, MCLENDON, HUMPHREY & LEONARD, L.L.P., Greensboro, North Carolina, for Appellee. ON BRIEF: James P. Hutcherson, Vice President and Counsel, Legal Department, WACHOVIA BANK OF NORTH CAROLINA, N.A., WinstonSalem, North Carolina, for Appellee.

Before WIDENER and LUTTIG, Circuit Judges, and Rebecca Beach SMITH, United States District Judge for the Eastern District of Virginia, sitting by designation.

Affirmed in part, vacated in part, and remanded by published opinion. Judge Widener wrote the opinion, in which Judge Luttig and Judge Smith joined.

OPINION

WIDENER, Circuit Judge:

Jewel A. Farlow (Farlow) appeals the district court's dismissal of her discrimination claims under Title VII of the Civil Rights Act of 1964, 42 U.S.C. 2000e et seq. (1994 & 2000 Supp.), because she was not an employee of Wachovia Bank of North Carolina (Wachovia). We affirm the judgment of the district court as to Title VII, and we remand to the district court with directions Farlow's state-law claims.

I.

Farlow graduated from law school in 1988. Wachovia subsequently employed her to represent it, while she was an associate in a Greensboro, North Carolina law firm. In February 1991, Farlow went into private practice in Greensboro, and she continued to keep Wachovia as a client. In 1993, Farlow and Wachovia discussed the possibility of Farlow working as in-house counsel for Wachovia to handle recovery and bankruptcy cases.

On October 5, 1993, Farlow completed a Wachovia employee application form in which she disclosed that she was convicted of two counts of misdemeanor larceny in 1982. Those convictions made it unlawful for her to become an employee of Wachovia without Federal Deposit Insurance Corporation (FDIC) approval.¹ Farlow was aware of this statute and knew that she could not become an employee unless Wachovia received a waiver from the FDIC. ²

The parties nonetheless proceeded with their working relationship, and Farlow moved on-site with Wachovia in Winston-Salem where she worked from March 1994 to December 1994. When she moved on-site, Farlow closed her private office in Greensboro in March 1994. The parties subsequently entered into a written contract executed on September 19, 1994³ for legal services for Wachovia in bankruptcy, debt collection and such matters that provided that Farlow was an independent contractor.⁴ It was the intent of the parties that Farlow would not be considered an employee unless the FDIC waiver was obtained. At oral argument, we were told without refutation that a waiver was never sought for Farlow. Wachovia never sent her an official offer letter detailing her position, salary, and benefits. Wachovia did not keep a personnel file on her, and Farlow never completed federal and state withholding forms, a fidelity bond application, the Form I-9 (an immigration status form), a form acknowledging receipt of Wachovia's Code of Conduct, or the supplemental personal data form listing contact and other information that all Wachovia employees complete and that would be contained in the personnel file. Additionally, during that 10-month relationship with Wachovia, she continued to work with clients obtained from her sole practice as well as to take on new, non-Wachovia clients.

The money paid to Farlow by Wachovia was reported to the Internal Revenue Service (IRS) with a 1099 form rather than a W-2 form.⁵ She was never paid a salary during her 10 months there; while employees are paid twice monthly, she was paid for the bills she submitted. She did not receive business cards, and the letterhead she used designated that she was merely an Attorney-at-Law. Farlow was, however, provided with on-site office space, support staff, equipment, the use of company vehicles, and was paid for continuing education matters. Wachovia also exercised control over the hours that she had access to her office. Farlow did not receive benefits such as paid vacation, long-term disability insurance, business travel and accident insurance, life insurance; nor did she partake in Wachovia's retirement savings and profit-sharing plan, or its common stock purchase plan.

After working at Wachovia for a period of months, Farlow complained about a sexually and racially hostile work environment. She was terminated, effective December 21, 1994. Upon termination, Farlow submitted a request for payment for her services while employed there. Wachovia paid part of the request.

Farlow subsequently filed suit in North Carolina state court on May 1, 1998. The Complaint alleged four causes of action: 1) under Title VII of the Civil Rights Act of 1964, the creation of a racially and sexually hostile work environment and Title VII retaliation; 2) failure to pay wages due; 3) punitive damages; and 4) a request for injunctive relief. Wachovia removed the case to the Middle District of North Carolina based on federal question jurisdiction. Wachovia filed an answer, which denied that Farlow was an employee, and counterclaimed for a return of money paid to her. Farlow filed an answer to the counterclaim. Discovery was bifurcated to address initially Farlow's employment status. At the close of discovery, Wachovia filed a Motion for Summary Judgment, and on August 31, 2000, the district court dismissed her claims in entirety because she was not an employee. Farlow timely appealed.

II.

We exercise jurisdiction pursuant to 28 U.S.C. S 1291 and review a district court's grant of summary judgment de novo. See United States v. Kanasco, Ltd., 123 F.3d 209, 210 (4th Cir. 1997). The moving party must demonstrate the absence of a genuine issue of material fact and that it is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56; see also Celotex Corp. v. Catrett , 477 U.S. 317 322-23 (1986). We consider the facts in the light most favorable to the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). The facts with respect to the employment relationship are not materially in conflict. Resolution of factors as"to whether an employment relationship or an independent contractor relationship was created" is "a question of law." Cilecek v. Inova Health Systems Servs., 115 F.3d 256, 261 (4th Cir. 1997). Merely because employee and independent contractor status is each supported by certain factors does not bar entry of summary judgment. Whether a person is an employee depends on the common law of agency definition of employee. Cilecek, 115 F.3d at 259, 261-63.

Farlow appeals the district court's grant of summary judgment to Wachovia on her Title VII claim and argues she was employed by Wachovia. Wachovia argues that Farlow was merely an independent contractor and thus Title VII is not applicable. Each side concedes that Title VII only applies if Farlow was an employee of Wachovia.⁶ See 42 U.S.C. S 2000e(f) (defining "employee" as "an individual employed by an employer"); Cilecek, 115 F.3d at 263. The Supreme Court has outlined several factors that a court should consider to determine whether a party is an employee or independent contractor:

In determining whether a hired party is an employee under the general common law of agency, we consider the hiring party's right to control the manner and means by which the product is accomplished. Among the other factors relevant to this inquiry are the skill required; the source of the instrumentalities and tools; the location of the work; the duration of the relationship between the parties; whether the hiring party has the right to assign additional projects to the hired party; the extent of the hired party's discretion over when and how long to work; the method of payment; the hired party's role in hiring and paying assistants; whether the work is part of the regular business of the hiring party; whether the hiring party is in business; the provision of employee benefits; and the tax treatment of the hired party. No one of these factors is determinative.

Community for Creative Non-Violence v. Reid, 490 U.S. 730, 751-52 (1989) (citations and footnotes omitted). We recently applied these factors in Cilecek and added that the parties' beliefs regarding the nature of the employment relationship are significant. See 115 F.3d at 259-63.

The district court methodically addressed each of the Reid factors and counted factors in favor of Farlow when they were unclear. For our purposes here, we highlight several of the more pertinent factors implicated by the facts of this case. The touchstone inquiry enunciated in Reid addresses the degree of the"hiring party's right to control the manner and means by which the product is accomplished." Reid, 490 U.S. at 751. The degree of control considers the degree of control of the professional services rendered rather than"`peripheral, administrative details which were incidental to the rendering of . . . services.'" Robb v. United States, 80 F.3d 884, 889 (4th Cir. 1996) (quotations omitted). In this case, Farlow has not presented evidence suggesting that she was under the direct control of any Wachovia supervisor regarding the performance of her professional services. Farlow stated that her non-lawyer supervisor, Jerry Venable, "did not tell me what the law was." Indeed, this conduct was consistent with the language of the contract for legal services Farlow signed, "Wachovia shall not exert any control, direction, or supervision over the Attorney with regard to the manner, details, or means through which she...