Independent Contractor or Employee - Sometimes A Million Dollar Question

Posted 7:50 AM by Michael Fox

As a Mary Kay Sales Director found out last week, when another large verdict went down the tubes at the hands of a Texas Court of Appeals. Although it is not clear from the opinion what the amount of the judgment was, the original jury verdict was over $11 million. Woolf, a very successful Mary Kay Sales Director was recovering from cancer and claimed she had been discriminated against for lack of accommodation under the California Fair Employment and Housing Act. (Although it is not clear I assume the case was in Dallas because of a venue provision in the contract.) In my initial post I noted this was a trial lawyer's nightmare, strong legal point, bad facts.

Mary Kay toughed it out for what looks like a relatively easy determination that a Mary Kay representative is an independent contractor not an employee. Mary Kay, Inc. v. Woolf (Tex. App. - Dallas, 10/20/04). The Court followed the roadmap from the recent Supreme Court decision on the distinction between employees and independent contractors, Limestone Prods. Distribution, Inc. v. McNamara, 71 S.W.3d 308 (Tex. 2002). Unlike the plaintiff who was losing a million dollar judgment in the San Antonio Court of Appeals on the same day, see prior post, Woolf's only hope is a motion for rehearing or being bailed out by the Supreme Court. Either of those seems highly unlikely.

For future reference, those interested in the choice of law question in employment law related cases may want to check out the court's discussion of DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 677 (Tex. 1990). Woolf had contended that under California law she was an employee, not an independent contractor. Unfortunately for her, the agreement specified that Texas law was applicable and the court found nothing in California law that makes the classification of workers as employees or independent contractors a "fundamental policy." For Woolf to have won on the choice of law question, she would have had to convince the court that California had a materially greater interest and the choice of law conflicted with a fundamental policy of California.

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