Reviewing a working arrangement common in the financial services industry, particularly with respect to experienced professionals, Judge Katherine B. Forrest of the Southern District of New York recently upheld the Royal Bank of Canada’s (RBC) treatment of a “consultant” as an independent contractor under the federal and state wage/hour and anti-discrimination laws.  Sellers v. Royal Bank of Can., 2014 U.S. Dist. LEXIS 4563 (S.D.N.Y. Jan. 8, 2014).

Plaintiff Sellers, an experienced professional in the area of public-finance banking who operated a company named Risk Management Consultant Services (LLC), argued that because he, through that entity, provided services for RBC for an extended period of time (on a series of successively renewed 90 day contracts), kept regular hours and derived the bulk of the revenue to his consulting business from RBC over that period, the Bank should have treated him as an employee.  Pointing to the terms of the consulting agreement, Sellers’ freedom to work for others (including the fact that he did perform work for another bank, Credit Suisse), and e-mails in which plaintiff referred to himself as a “consultant” subject to different working conditions, Judge Forrest upheld the contractor arrangement, holding that “the undisputed facts drive inexorably toward the conclusion that plaintiff was an independent contractor” under the “economic realities” test taken from United States v. Silk, 331 U.S. 704 (1947) and New York law’s similar test.

Businesses must be mindful of the economic realities factors applicable under the Silk test and applicable state law.