In two recently-issued informal discussion letters dated July 25 and July 29, 2013, the Equal Employment Opportunity Commission (EEOC) explains when an accounting firm’s “partner” is really an “employee” for purposes of the Age Discrimination in Employment Act (ADEA) coverage. According to EEOC Legal Counsel Peggy Mastroianni, “it is well established that in some instances individuals who have the job title of ‘partner’ may qualify as employees for purposes of the EEO laws, including the ADEA.”

Mastroianni explained that whether a partner is an employee for EEO law purposes “depends on the actual working relationship between the individual and the partnership. The relevant question is whether the individual acts independently and participates in managing the organization (not an employee), or whether the individual is subject to the organization’s control (an employee).” Both letters set forth six non-exhaustive factors in making this determination:

  • Whether the organization can hire or fire the individual or set the rules and regulations of the individual’s work;
  • Whether and, if so, to what extent the organization supervises the individual’s work;
  • Whether the individual reports to someone higher in the organization;
  • Whether and, if so, to what extent the individual is able to influence the organization;
  • Whether the parties intended that the individual be an employee, as expressed in written agreements or contracts; and
  • Whether the individual shares in the profits, losses, and liabilities of the organization.

One letter writer, expressed concern that the EEOC might be considering litigation against accounting firms under the ADEA, and would “expand the scope of the [ADEA] by requiring that most partners in the accounting profession be treated as ‘employees’ for purposes of the ADEA.” The writer stated that accounting firm partners typically own and are responsible for the firm as a whole, and that labeling them as employees would “upend the settled business models of the accounting profession.”

The EEOC informal guidance letters are unofficial and nonbinding, but they do indicate how the agency would approach the issue if litigated.