Whistleblower Claims Failed Because ER Doctor Was an Independent Contractor

By Rosemarie Lally, J.D. March 8, 2022

Takeaway: This case serves as a reminder of the classic approach taken by courts in determining whether an individual is an employee or an independent contractor. In most cases, claims for discrimination or retaliation, including this one brought under a state whistleblower statute, may be filed only by employees. Businesses should keep in mind that courts, in determining employment status, usually identify the party who controls the means and manner of performance as the employer. 

​An emergency room physician's claim alleging retaliation for reporting a violation of law failed because she was an independent contractor rather than an employee of the defendant and thus not protected under the Minnesota Whistleblower Act. Her breach of contract claims also failed because they were unsupported by the language in her employment contract.

The plaintiff is an emergency room (ER) physician who was employed under a physician employment agreement with Mayo Clinic Health System (MCHS) to work as a clinical associate. The full-time employment agreement allowed physicians to work 80 percent of the time at an MCHS site and 20 percent at Mayo Clinic in Rochester, Minn.

Clinical associate appointment recommendations are made jointly by MCHS and Mayo Clinic. Nonetheless, the agreement provides that "primary appointment, oversight and accountability will reside at the MCHS site." MCHS paid the associates' salaries for their work at MCHS and the Mayo Clinic; Mayo Clinic then reimbursed MCHS for salary earned for Mayo Clinic work.

As an MCHS employee, the plaintiff was eligible for an educational loan reimbursement of $15,000 per year, with the understanding that if she terminated the employment agreement "except for a breach by the medical center" she would have to repay the prior two reimbursements.

The plaintiff had a miscarriage in 2015 and spoke to her director about the need to miss some shifts. Although MCHS provides short-term disability (STD) benefits, the plaintiff did not submit a benefits claim in 2015 and did not receive benefits. When MCHS became aware in 2017 that the plaintiff might have been entitled to STD benefits for the miscarriage, it gave her five days of STD benefits.

In 2016, the plaintiff took a 12-week maternity leave. She used STD benefits for the first six weeks of leave and used vacation time for the last six weeks of leave.

The plaintiff's clinical appointment at Mayo Clinic was terminated unilaterally by Mayo Clinic in 2016. She resigned from MCHS in 2017. The plaintiff filed suit against Mayo Clinic in 2018, alleging breach of contract and retaliation for reporting a violation of law. The district court granted summary judgment in favor of the defendants, and the plaintiff appealed.

Considering the plaintiff's retaliation claim under the Minnesota Whistleblower Act, the court first examined whether the plaintiff was an employee of Mayo Clinic, as the state law prohibits an employer from retaliating against an employee when the employee "in good faith reports a violation … to an employer." The law does not cover independent contractors.

The appeals court focused on the right of the employer to control the means and manner of performance as the most important factor in determining whether someone is an employee or an independent contractor. Although Mayo Clinic approved clinical associate appointments, scheduled the plaintiff, decided her compensation rate, supervised her and gave her performance reviews, the court noted that MCHS retained "primary appointment, oversight and accountability;" jointly made clinical associate appointment recommendations with Mayo Clinic; and set up the assessment process for Mayo Clinic's performance reviews. These facts suggest that Mayo Clinic did not control the plaintiff, the court said.

Further, the plaintiff was paid only by MCHS, and the right of termination was expressly given only to MCHS in the employment contract. "In sum, no factors weigh in favor of employee status, … so we conclude the plaintiff was an independent contractor and not an employee of Mayo Clinic," the court said, holding that the district court properly granted summary judgment on the whistleblowing claim.

Turning to the first breach of contract claim based on failure to provide STD benefits for the plaintiff's miscarriage, the court noted that the statute of limitations for claims involving the payment of wages is two years unless nonpayment is willful, in which case it is three years. In this case, the plaintiff had not specifically requested STD benefits. Rather, MCHS paid her five days of benefits in 2017 when it found out about her 2015 claim. Because no reasonable jury could find the plaintiff had shown that MCHS "intentionally and deliberately" breached the contractual agreement by failing to pay her 2015 benefits, the court said, this claim is barred by the statute of limitations.

On the second claim for breach of contract—STD benefits for maternity leave allegedly paid at a lower rate than was required—the court found no contractual provision entitling her to benefits calculated at her "actual" rounded-up rate of pay, which sometimes included an extra half-shift per quarter, rather than her assigned rate of pay.

Examining the third claim for breach of contract based on failing to recognize half of the plaintiff's maternity leave as paid rather than unpaid vacation time, the court found the plaintiff was not entitled to any paid vacation time under her employment agreement or any other policy. Although some MCHS policies referred to paid vacation, none of them stated that the plaintiff had paid vacation time as an ER physician. "The policy does not state that ER physicians have paid vacation days," the court found, holding that the district court properly granted summary judgment on the breach of contract claims.

Finally, the Minnesota Payment of Wages Act claim, which mandates not what an employer must pay a discharged employee but when an employer must pay a discharged employee, fails because the plaintiff is not entitled to payment for breach of contract, the court said. The educational loan reimbursement must be repaid.

Placzek v. Mayo Clinic, 8th Cir., No. 21-1678 (Nov. 30, 2021).

Rosemarie Lally, J.D., is a freelance legal writer based in Washington, D.C.



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