Steffen v. St. Paul Eye Clinic, P.A.

Background

St. Paul Eye Clinic, P.A. hired Eric Steffen as an ophthalmologist and glaucoma specialist in 2004. Steffen became a shareholder in 2008 by purchasing shares and signing an employment agreement. The agreement gave each shareholder an equal vote on the clinic’s Board of Directors and prevented the clinic from terminating Steffen’s position without an 80% Board vote. Steffen also shared in the clinic’s profits and received earnings from related corporations.

After injuring his back in 2017, Steffen took medical leave, underwent two surgeries, and requested workplace accommodations. His requests included limits on the number of patients per clinic session, a later start time, a particular ratio of complete to follow-up examinations, an assigned technician, and ergonomic chairs. Steffen returned to work in March 2018 but remained dissatisfied with the clinic’s response. He resigned in April 2018 after accepting a job offer from another organization.

Steffen later sued the clinic, asserting seven employment-discrimination claims under the Minnesota Human Rights Act, the Americans with Disabilities Act, and the Family and Medical Leave Act, as well as a breach-of-contract claim concerning compensation and vacation pay when he left.

Summary-judgment standard

The court explained that summary judgment is appropriate when the evidence shows no genuine dispute about any fact that could affect the outcome and the moving party is entitled to judgment under the law. The party opposing summary judgment must identify specific evidence supporting a factual dispute; allegations and unsupported assertions are not enough.

Employment-status issue

The clinic argued that Steffen could not pursue the statutory employment claims because he was not an “employee” covered by the Minnesota Human Rights Act, the Americans with Disabilities Act, or the Family and Medical Leave Act. Steffen argued that he was an employee despite being a shareholder.

The court applied the six-factor test from Clackamas Gastroenterology Associates, P.C. v. Wells for determining whether a shareholder-worker is an employee. The factors examine whether the organization can hire or fire the person or set work rules; the extent of supervision; whether the person reports to someone higher in the organization; the person’s ability to influence the organization; the parties’ intent as reflected in agreements; and whether the person shares in profits, losses, and liabilities.

The court found that the undisputed facts favored treating Steffen as a non-employee under the first factor because he obtained his shareholder position by purchasing shares, rather than through the clinic’s ordinary hiring process, and could be terminated only by an 80% Board vote. The court also found that the clinic did not have complete authority to set Steffen’s work rules without his participation because he was a Board member with the ability to influence the clinic’s committees and policies.

Under the second and third factors, the court found that no individual supervised Steffen, that he exercised substantial autonomy over his medical practice, and that he did not report to a higher-ranking person. Under the fourth factor, the court found that Steffen had an equal Board vote, participated in clinic governance, had access to governance documents, and had opportunities to participate in hiring and leadership decisions.

The fifth factor was neutral. The employment agreement used both “employee” and “owner” terminology, but the court explained that the agreement’s title or use of the word “employee” did not determine Steffen’s legal status. Under the sixth factor, the court found that Steffen shared in the clinic’s profits, losses, and liabilities because he was a shareholder and received profit-based income, even though he also received W-2 income.

The court concluded that at least five of the six factors supported finding that Steffen was not an employee. It held that Steffen was not an employee under the Minnesota Human Rights Act, the Americans with Disabilities Act, or the Family and Medical Leave Act. As a result, his employment-discrimination claims failed as a matter of law.

Breach-of-contract claim

The remaining claim alleged that the clinic failed to fully pay Steffen for his final workdays and vacation payout. The clinic responded that Steffen’s account was so overdrawn that he owed the clinic money even after considering the alleged omissions. The parties had litigated related shareholder-compensation issues in state court, which determined that Steffen owed the clinic $40,249 in overdrawn partnership funds when he departed.

Because the federal claims were resolved, the court had discretion over whether to exercise supplemental jurisdiction—the authority to hear a related state-law claim in the same case. The court declined to exercise that jurisdiction because the contract claim depended solely on state law and concerned matters already addressed in state court. The court dismissed the contract claim without prejudice.

Disposition

The order granted in part and denied in part the clinic’s motion for summary judgment. The court granted the motion as to Counts I–VII, denied it as to Count VIII, and dismissed Count VIII without prejudice.