Employment & Labor Insider

A federal judge in New York recently dismissed Blake Lively’s federal sexual harassment and retaliation claims against the production entities behind It Ends With Us -- including It Ends With Us Movie, LLC, and Wayfarer Studios.

The basis for the dismissal was not what allegedly happened on the set, but that Ms. Lively was not an “employee.”

According to Judge Lewis Liman, Ms. Lively was an independent contractor rather than an employee. That was fatal to her Title VII claims. (Only “employees” can assert claims under Title VII.)

Background

Blake Lively starred in and worked on the production of It Ends With Us, a film produced by Wayfarer Studios and others. Ms. Lively alleged that during the filming, her co-star Justin Baldoni and Jamey Heath, Wayfarer’s Chief Executive Officer, sexually harassed her and subjected her to a hostile work environment.

She later brought 13 claims against Mr. Baldoni, Mr. Heath, and others, including claims under Title VII, which prohibits workplace harassment and retaliation. Judge Liman dismissed all but three of her claims.

Before the judge could evaluate whether unlawful harassment occurred, he had to answer a threshold question:

Was Ms. Lively even an “employee” under Title VII? The answer was “no.”

Looking beyond her prominence in the project, Judge Liman applied a standard drawn from Nationwide Mutual Insurance Co. v. Darden and Community for Creative Non-Violence v. Reid. Under that standard, courts consider a number of factors, including the hiring party’s control over the manner and means of the work, the skill required, the source of tools and instrumentalities, the duration of the relationship, the method of payment, and the parties’ understanding of their relationship.

• Control over manner and means of work. Judge Liman found that Ms. Lively retained significant control over her performance and broader creative contributions, which weighed against employee status.
• Skill required. The judge noted that Ms. Lively’s work as a lead actress involved a high degree of specialized skill, a factor that typically supports independent contractor status.
• Source of tools and instrumentalities. Judge Liman acknowledged that filming occurred on set using production resources that were not furnished by Ms. Lively. However, he found that those factors were less significant in a creative context, where such arrangements are standard. In any event, he noted that Ms. Lively’s “celebrity and acting skills, for which [one of the corporate entities] paid a large sum,” were “instrumentalities” furnished by Ms. Lively. She also actively participated in providing furnishings for some of the sets and an editorial staff, according to the judge.
• Duration of the relationship. Judge Liman found Ms. Lively’s relationship with the defendants was project-based and limited to production of the film (roughly six weeks), rather than ongoing, which would weigh in favor of finding an employment relationship.
• Method of payment. The method of payment also weighed against Ms. Lively’s status as an “employee.” Her compensation was governed by negotiated agreements through her own personal loan-out company, paid by the project, and based on profitability rather than a traditional salary or wage structure.
• Whether plaintiff’s work was part of the entity’s business. Finally, Judge Liman evaluated whether Ms. Lively’s work as an actress was part of the defendants’ business of producing films. Although he found that acting was central to the business, he found that it did not outweigh the other factors.

Based on all of the above, Judge Liman found that Ms. Lively was an independent contractor and not an “employee,” so he dismissed her federal discrimination and retaliation claims.

It’s not unusual for individuals to try to bring a range of disputes within the scope of employment laws, which often favor employees. But if they are not true “employees,” those laws will not apply. Independent contractors, no matter how integral they are to a business, generally must rely on other legal avenues, such as state laws or contractual protections.

Significance for businesses

Judge Liman's decision has several valuable lessons for businesses:

• Worker classification matters. How the work relationship is structured and the worker is engaged, particularly through formal contractual arrangements and defined business relationships, can determine whether federal employment laws apply.
• Title VII has limits. Independent contractors are typically outside the scope of the law, even in certain high-profile or closely integrated working relationships.
• But dismissal isn’t guaranteed. First, the vast majority of Title VII plaintiffs are true “employees.” And even if a plaintiff is found to be an independent contractor, the business could still face exposure under state law, for breach of contract, or under other legal theories. For example, in the Lively case, although her Title VII retaliation claims were dismissed, the court refused to dismiss retaliation claims that she brought under California state law, as well as two other claims. Indeed, after the dismissal, Ms. Lively was quoted in the media as saying that she looked forward to continuing to pursue her retaliation claim.