## Facts

- Mariotti Building Products, Inc. (MBP) was a closely held, family-owned corporation founded by the plaintiff’s father; the business grew substantially after the sons, including the plaintiff, joined.
- Robert A. Mariotti, Sr. helped found MBP and held multiple roles: shareholder, board director, and corporate officer (vice-president and secretary) under a written shareholder agreement.
- Mariotti alleged significant responsibility for developing business divisions that produced substantial profits in the years before his separation from the company.
- After a personal religious change, Mariotti increasingly expressed his faith, which he alleged caused conflict with family members involved in MBP.
- Shortly after Mariotti spoke about his faith at his father’s funeral, MBP sent a letter stating his “employment” was terminated and certain benefits would end, but that his share of corporate draws would continue.
- Mariotti remained on MBP’s board for several months after termination of his employment, but was not re-elected as a director.
- Mariotti filed a discrimination charge and then sued MBP for religious discrimination and hostile work environment under Title VII, plus state-law claims.
- The district court dismissed the Title VII claims under Rule 12(b)(6) for lack of “employee” status and declined supplemental jurisdiction over the state-law claims.

## Issues

1. How to determine whether a shareholder-director/officer of a closely held, non-professional corporation qualifies as an “employee” under Title VII.
2. Whether the control-based test from *Clackamas Gastroenterology Assocs., P.C. v. Wells* applies in Title VII cases involving non-professional corporations.
3. Whether, under that test, Mariotti plausibly alleged he was a Title VII “employee” entitled to sue MBP.

## Decision

- The Third Circuit affirmed dismissal of the Title VII claims.
- The court held the *Clackamas* common-law control test applies to Title VII and is not limited to professional corporations.
- Applying the control factors to the complaint’s allegations, the court concluded Mariotti functioned as an owner-manager and corporate governor, not a subordinate employee.
- Because Mariotti was not a Title VII “employee,” his federal discrimination and hostile work environment claims were properly dismissed at the pleading stage.
- The court found no error in the district court’s decision to decline supplemental jurisdiction over the remaining state-law claims.

## Legal Principles

- Title VII “employee” status for shareholder-directors/officers is determined by common-law agency control: whether the person manages independently and participates in governance, or is subject to organizational control.
- The *Clackamas* factors guide the inquiry, including whether the organization can hire/fire or set work rules, supervises the work, requires reporting to higher authority, the individual’s influence, the parties’ written intent, and sharing of profits/losses/liabilities.
- Formal labels (e.g., “employee,” “officer”) are not dispositive; courts look to actual governance authority, economic reality, and control.
- Individuals who are founders, shareholders, directors, and officers with meaningful influence and profit participation may fall outside Title VII because they are treated more like owners than employees.

## Conclusion

The Third Circuit held that the *Clackamas* control-factor analysis governs whether shareholder-directors/officers are “employees” under Title VII, and concluded that MBP’s founder-shareholder-director/officer was not an employee; his Title VII claims were therefore dismissed, and the federal court properly declined to retain the state-law claims.


Mariotti v. Mariotti Bldg. Prods., Inc., 714 F.3d 761 (3d Cir. 2013)