Pryor Cashman Labor and Employment Partner Richard Betheil recently spoke to Lawcast for its Volume XVII Number 1 article “Supreme Ct. rules medical residents are employees for tax purposes.”

 The article discusses the Court’s 8-0 ruling in Mayo Foundation v. United States that medical residents may be considered employees rather than students, and that the Treasury Department acted reasonably in promulgating a rule that distinguished “between workers who study and students who work.”

The petitioners argued that medical students working as residents should not have to pay Social Security taxes under a FICA exemption. However, in 2004 the Treasury Department revoked the student exemption for those working more than 40 hours per week. 

The Court’s January 11, 2011 opinion means the IRS does not have to repay tax funds collected by the Mayo Foundation and the University of Minnesota from medical residents. Had the government lost the case, the IRS could have been forced to refund more than $2.1 billion already collected.

Betheil, who filed a brief in the case in support of the government’s position on behalf of the Doctors Council S.E.I.U., told Lawcast: “It seemed crystal clear to us that the residents are employees as they've been held to be by the National Labor Relations Board and most other administrative agencies that have considered issues like this." Betheil adds that the ruling could have ramifications for graduate assistants as well as other classes of employees.

To read the article, please click here.