When Retaining Independent Contractors, Must My Business In Manhattan Abide By Anti-Discrimination Laws?

A business located in Manhattan,New York City must abide by anti-discrimination laws in refusing to retain or ceasing to retain an independent contractor. By contrast, a company located in New York State, but outside the five boroughs of New York City, need not, in declining to retain or ceasing to retain an independent contractor, conform to laws prohibiting employment discrimination.

The New York City Human Rights Law, N.Y. City Admin. Code §§ 8-101 – 8-131 (the “City Human Rights Law”), bars “employer[s]” with four or more persons in their “employ” from discharging from “employment” or refusing to hire or “employ” an individual, and from discriminating against an individual in compensation or in terms, conditions or privileges of “employment,” because of the individual’s actual or perceived age, race, creed, color, national origin, gender, disability, marital status, partnership status, sexual orientation, alienage, or citizenship status. N.Y. City Admin. Code § 8-107(1)(a); see N.Y. City Admin. Code § 8-102(5).

Under the City Human Rights Law, independent contractors are counted as employees of a company and may maintain employment discrimination claims against that company, if they are “natural persons employed as independent contractors to carry out work in furtherance of an employer’s business enterprise who are not themselves employers.” N.Y.C. Admin. Code § 8-102(5).

As a result, a business within Manhattan, NYC may not refuse to retain or cease to retain an independent contractor because of the independent contractor’s actual or perceived age, race, creed, color, national origin, gender, disability, marital status, partnership status, sexual orientation, alienage, or citizenship status. In other words, a business in Manhattan may not take a retention-related action with regard to an independent contractor because of the independent contractor’s actual or perceived membership in any of the categories protected by the City Human Rights Law.

The New York State Human Rights Law, N.Y. Exec. Law §§ 290-301 (the “State Human Rights Law”) bars “employer[s]” with four or more persons in their “employ” discharging from “employment” or refusing to hire or “employ” an individual, or from discriminating against an individual in compensation or in the terms, conditions or privileges of “employment,” because of the individual’s age, race, creed, color, national origin, sexual orientation, military status, sex, disability, predisposing genetic characteristics, marital status, or domestic violence victim status. N.Y. Exec. Law § 296(1)(a); see N.Y. Exec. Law § 292(5).

In sharp contrast to the City Human Rights Law, the State Human Rights Law, N.Y. Exec. Law § 296(1), “only governs discrimination in the traditional employer-employee relationship and not in the employment of independent contractors.” Murphy v. ERA United Realty, 251 A.D.2d 469, 470, 674 N.Y.S.2d 415 (2d Dep’t 1998); see also Scott v. Massachusetts Mut. Life Ins. Co., 86 N.Y.2d 429, 433, 657 N.E.2d 769, 633 N.Y.S.2d 754 (N.Y. 1995) (affirming the Supreme Court’s order dismissing the plaintiff insurance agent’s complaint alleging that the defendant insurance company terminated her agency contract on the basis of her gender, age and marital status; noting with approval the Supreme Court’s conclusion “that plaintiff was an independent contractor not eligible for protection under Executive Law § 296(1)(a)”).

Consequently, a company located in New York State, but not within the five boroughs of New York City, lawfully may decline to retain or cease to retain an independent contractor because of the independent contractor’s age, race, creed, color, national origin, sexual orientation, military status, sex, disability, predisposing genetic characteristics, marital status, or domestic violence victim status. That is, a company, say, in upstate New York or on Long Island lawfully may take a retention-related action with respect to an independent contractor because of the independent contractor’s membership in any of the classes protected by the State Human Rights Law.

A practical tip for employers in Manhattan is warranted here. Even though a company located in New York State but outside Manhattan, NYC lawfully may discriminate against supposed independent contractors because of the contractors’ membership in a protected class, it is highly risky for a company actually to do so. This is the case because if the business fires or refuses to hire, for a reason prohibited by the State and City Human Rights Laws, an employee whom the business misclassified as an independent contractor, the business may be held liable to the employee under these statutes.

See here for advice on determining whether, for purposes of overtime and the minimum wage, a company’s workers in Manhattan, NYC are employees or independent contractors.

If your company needs assistance or guidance on a labor or employment law issue and your company is located in the Manhattan, NYC area, call Attorney David S. Rich at (347) 941-0760.