Client Briefing from the Labor and Employment Group - October 2009
EMPLOYERS CAN'T CONTRACT AWAY LIABILITY
FOR DISCRIMINATORY ACTS
Two recent federal court decisions remind employers that they can be held liable for discriminatory acts against their independent contractors as well as for acts taken by their independent contractors against third parties. These cases, and their predecessors, make it clear that employers cannot contract away liability for discriminatory acts.
In the first case, Brown v. J. Kaz, Inc. d/b/a Craftmatic, Craftmatic advertised for applicants for an independent contractor sales position. Brown, an African-American, responded to the ad and attended a three-day training session. During the training session, a heated argument arose between Brown and one of the Caucasian trainers. Brown alleged that a racial slur was directed at her during the incident. Despite the argument, Brown was presented with an independent contractor agreement at the end of the training session, which she signed. Shortly thereafter, however, Craftmatic decided not to use Brown as a sales representative.
Brown sued Craftmatic for violation of Title VII of the Civil Rights Act of 1964, as well as on other federal and state claims based on racial discrimination. Although, the appellate court dismissed a few of Brown's claims for the reason that she was an independent contractor and not an employee, the court upheld Brown's claim under Section 1981 which provides that "all persons... shall have the same right... to make and enforce contracts... as is enjoyed by white citizens." Ultimately, the court found that Brown did present sufficient evidence that her race was a substantial factor in Craftmatic's decision to not continue with the employment relationship with Brown. The court also found that Craftmatic could not adequately justify Brown's termination on any basis other than race. Therefore, Craftmatic was liable for its discriminatory acts.
In the second case, Halpert v. Manhattan Apartments, an independent contractor for Manhattan Apartments interviewed Halpert for a sales position with Manhattan Apartments. The independent contractor told Halpert that he was "too old" for the position, and Manhattan Apartments did not hire Halpert. Halpert filed a lawsuit against Manhattan Apartments alleging age discrimination in violation of the federal Age Discrimination in Employment Act (ADEA), which prohibits employers from discriminating against an individual in hiring, termination, and other employment terms based on the individual's age. Manhattan Apartments argued that they could not be held liable for discriminatory acts taken by their independent contractor against third parties. However, the court disagreed. The court held that if a company gives an individual authority to interview job applicants and make hiring decisions on the company's behalf, the company may be held liable if that individual improperly discriminates against applicants on the basis of age, regardless of whether that individual is an employee or an independent contractor.
These two cases do not set forth new law, but do serve as a reminder to employers that the mere categorization of an employment relationship as that of an independent contractor, rather than a "traditional" employee relationship, does not insulate the employer from legal claims based on discriminatory acts. Employers should educate not only their own employees on state and federal laws barring discriminatory acts, but should also do their due diligence to ensure that the independent contractors acting on their behalf are educated on the law and acting in compliance with it. Failure to do so could end in liability for the employer.
If you have any question regarding this article or want more specific legal advice, please feel free to contact your Walter & Haverfield attorney at 216-781-1212.
The information in this Client Briefing is a summary of often complex legal issues and may not cover all of the "fine points" of a specific situation or court jurisdiction. Accordingly, it is not intended to be legal advice, which should always be obtained in consultation with an attorney. |
