In Kravis v. Karr Barth Associates, the District Court for the Eastern District of Pennsylvania held that an insurance salesperson for the financial planning firm, Karr Barth Associates, was not an “employee” as required for liability to attach under Title VII and the Age Discrimination in Employment Act (ADEA). 

In Kravis, the salesperson filed suit alleging that she had been discriminated against based upon her gender and age, respectively, in violation of Title VII and the ADEA.  The financial planning firm argued that it was not liable to her as both Title VII and the ADEA only grant redress to “employees”, not independent contractors, and that the plain language of its Agent’s Agreement with her provided that she was a mere independent contractor.  The district court agreed. 

The district court further went on to state that even if the Agent’s Agreement did not establish her status as an independent contractor, the terms and conditions of her employment did.  Among other things, she supplied her own tools and instrumentalities for the job, such as her own computer, telephone equipment, marketing materials, administrative support, and her own car to travel to meet clients; the financial planning firm did not have the right to assign her projects and she was free to accept or reject any client suggestions it made; she enjoyed almost unlimited discretion over where and how long she worked, when and for how long she took vacation and how many clients she pursued; she had discretion as to whether to work from home or at its offices; although she maintained an office at the firm, she paid monthly rent for that space; and she was not paid a salary but rather her compensation was entirely commission-based.

In reaching its decision, the district court pointed out that her tax returns further supported her independent contractor status, since she filed as a sole proprietor and the district court was not persuaded by her being "Vice President of Karr Barth Associates" since titles were freely given out by the firm as a marketing tool.

The dismissal of the federal statutory claims does not mean that independent contractors are foreclosed from initiating legal actions over alleged discrimination.  The Equal Rights Amendment to the Pennsylvania Constitution prohibits gender discrimination and is applicable in workplace situations.  Moreover, independent contractors could always sue under various tort and contract theories.

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