New Jersey Employment Lawyer Blog

Late last month, a Federal Judge in the Southern District of New York ruled that a job candidate can continue with his age discrimination claim against a prospective employer based on a discriminatory hiring decision made by independent contractors who had the apparent authority to make hiring decisions on the employer's behalf. Apparent authority is when a company's actions lead someone else to incorrectly believe that he or she is an employee or agent of the company. This decision follows an earlier decision by the Second Circuit Court of Appeals in the same case, which recognized that Employers Can Be Held Liable for Discriminatory Hiring Decisions Made By Independent Contractors.

The case, Halpert v. Manhattan Apartments, Inc., involves Michael Halpert, who was applying for a position as a "shower" for Manhattan Apartments, Inc. He was interviewed by Robert Brooks, a salesperson who worked for Manhattan Apartments as an independent contractor. Mr. Brooks did not have the authority to hire employees on behalf of Manhattan Apartments.

During Mr. Halpert's job interview, Mr. Brooks indicated that Mr. Halpert was "too old" for the job. Several days later, Manhattan Apartments' receptionist said the company was not hiring Mr. Halpert because "we were looking for someone younger." Mr. Brooks then repeated that Mr. Halpert was not qualified for the job because of his age.

Mr. Halpert sued Manhattan Apartments, claiming it failed to hire him because of his age in violation of the Age Discrimination in Employment Act (ADEA). After the Second Circuit ruled that an employer could potentially be held liable for the actions of an independent contractor, Manhattan Apartments filed a motion for summary judgment, arguing that Mr. Halpert was not its employee or agent, and there was not enough evidence to prove Mr. Brooks had the apparent authority to hire employees on its behalf.

However, the District Court disagreed. It found there was enough evidence for a jury to conclude that Manhattan Apartments had the apparent authority to hire Mr. Halpert. This evidence includes the fact that Manhattan Apartments allowed Mr. Brooks to use its offices, to answer his phones by saying "Manhattan Apartments, Inc.," and to use business card that identify himself as a "Licensed Assc. Broker" for "Manhattan Apartments Inc." It also included the fact that Manhattan Apartments' receptionist explained the decision not to hire Mr. Halpert by saying that "we were looking for someone younger." It therefore denied Manhattan Apartments' motion for summary judgment to potentially give Mr. Brooks an opportunity to prove his case at a trial.

Continue reading "Job Candidate Can Pursue Age Discrimination Claim Based on Decision by Independent Contractor" »

The Second Circuit Court of Appeals recently ruled that employers can be held liable for discriminatory hiring decisions of independent contractors who are authorized to make hiring decision on the employer's behalf. The Second Circuit is the federal appellate court that handles appeals from District Courts in New York, Connecticut and Vermont.

The case, Halpert v. Manhattan Apartments Inc., involves an individual, Michael Halpert, who applied for a job showing rental apartments for Manhattan Apartments. When he was seeking the job, Mr. Halpert was interviewed by Robert Brooks. According to Mr. Halpert, during the interview, Mr. Brooks told him he was "too old" for the position.

Mr. Halpert then sued Manhattan Apartments for age discrimination under the Age Discrimination in Employment Act (ADEA). The ADEA is a federal anti-discrimination law which prohibits employers from using age as a basis not to hire, to fire, or otherwise discriminate against employees.

Prior to the appeal, the United States District Court for the Southern District of New York had dismissed Mr. Halpert's claim. It ruled that Mr. Brooks was an independent contractor, rather than an employee of Manhattan Apartments. It also found that Mr. Halpert did not have enough evidence to prove that Mr. Brooks had actual or apparent authority to interview Mr. Halpert on behalf of Manhattan Apartments.

The Second Circuit disagreed. It ruled that even though the ADEA only prohibits employers from discriminating against employees on the basis of age, an employer can be held liable if an independent contractor discriminates on its behalf. The appellate court was careful to recognize that companies are not liable for hiring decisions made by independent contractors who are hiring on their own behalf.

Under the Second Circuit's decision, to successfully sue an employer for a discriminatory hiring decision made by an independent contractor, an employee must prove that either (1) the independent contractor was hiring on behalf of the potential employer, or (2) the potential employee reasonably believed the independent contractor was hiring on behalf of the potential employer.

The Second Circuit found there was a dispute whether Mr. Brooks had actual or apparent authority to make hiring decisions for Manhattan Apartment. Accordingly, it sent the case back to the District Court to give Mr. Halpert a chance to try to prove his age discrimination claim.

On January 6, 2010, the New Jersey Appellate Division ruled that J.T. Tire Service can proceed with its sexual harassment lawsuit against United Rentals North under the New Jersey Law Against Discrimination. In the case, J.T. Tire alleges that United Rentals terminated its contract with United Rentals because the owner of J.T. Tire, Eileen Totorello, rejected the sexual advances of one of United Rentals' branch managers, Harold Hinkes.

Specifically, Ms. Totorello alleges that Mr. Hinkes attempted to extort sexual favors from her. She claims that when she initially refused his sexual advances, Mr. Hinkes' branch temporarily stopped buying tires from J.T. Tire. He only resumed doing business with J.T. Tires after Ms. Totorello agreed to have lunch with him.

Ms. Totorello futher claims that, several years later, Mr. Hinkes kissed her and groped her against her will. When she refused his advances, Mr. Hinkes told her she was making a "very poor business decision." One month later, United completely stopped doing business with J.T. Tire.

J.T. Tire and Ms. Totorello then sued United Rentals and Mr. Hinkes for sexual harassment and retaliation in violation of the New Jersey Law Against Discrimination. On a motion to dismiss, United Rentals argued that the case should be thrown out because Ms. Totorello was not an employee of United Rental. The trial judge apparently agreed, since he dismissed all of the claims.

However, the Appellate Division reversed that decision and sent the case back to the trial court. It did so based on a provision of the Law Against Discrimination which makes it unlawful to refuse to buy from, contract with, or otherwise do business with any person on the basis of their sex. The appellate court explained that if Ms. Totorello's allegations are true, United violated that section of the Law Against Discrimination since sexual harassment is discrimination because of sex. That provision is separate from the portion of the Law Against Discrimination that prohibits employment discrimination.

The Appellate Division further indicated that Ms. Totorello is claiming "quid pro quo" sexual harassment. Quid pro quo sexual harassment occurs when an individual or a company makes sexual favors or a sexual relationship a condition of employment or a contract.

The appellate court explained that if companies engage in the type of conduct alleged by Ms. Totorello, it would "stand as a barrier to women's ability to do business on an equal footing with men." The court also indicated that its interpretation of the law would help further an important social policy protected by the New Jersey Law Against Discrimination, which is to "eradicate the cancer of discrimination."

Independent Contractors Protected by New Jersey's Conscientious Employee Protection Act

On July 25, 2007, the New Jersey Supreme Court decided two employment law cases that clarified that the Conscientious Employee Protection Act ("CEPA") applies to many individuals who have traditionally been considered independent contractors: D'Annunzio v. Prudential Insurance Company of America, 192 N.J. 110 (2007) and Stomel v. City of Camden, 192 N.J. 137 (2007). CEPA, which is often referred to as a whistleblower law, is a New Jersey statute that prohibits employers from retaliating against employees who object or refuse to participate in activities that they reasonably believe are illegal, fraudulent, criminal, or violate a clear mandate of New Jersey's public policy relating to public health, safety or welfare.

In D'Annunzio, the New Jersey Supreme Court adopted a test that the Appellate Division established to determine whether an individual is an "employee" for purposes of another employment law statute, the New Jersey Law Against Discrimination. Those factors are: 1. the employer's right to control the means and manner of the worker's performance; 2. the kind of occupation-supervised or unsupervised; 3. skill; 4. who furnishes the equipment and workplace; 5. the length of time in which the individual has worked; 6. the method of payment; 7. the manner of termination of the work relationship; 8. whether there is annual leave; 9. whether the work is an integral part of the business of the "employer;" 10. whether the worker accrues retirement benefits; 11. whether the "employer" pays social security taxes; and 12. the intention of the parties.

D'Annunzio holds that Courts should primarily focus on three of those factors: 1. the degree of employer control; 2. the worker's economic dependence on the relationship; and 3. whether the work is an integral part of the business. In its opinion, the Court notes that an individual is more likely to be considered an employee if he/she is a "cog" in the employer's business, his/her work is continuously required by the employer's business, his/her services are regularly at the employer's disposal, or he/she performs routine or administrative activities.

Decided on the same day as D'Annunzio, Stomel repeats that courts should focus on the three factors discussed in D'Annunzio to determine whether an individual is a employee protected by CEPA. However, the decision appears to focus on whether the employee's work was an integral part of the employer's business over the other two factors. Specifically, the New Jersey Supreme Court concluded that the plaintiff, a public defender, was an "employee" of the City of Camden and therefore covered by CEPA because his services were integrated into the City's delivery of services to its residents. The Court reached this conclusion even though Mr. Stomel worked through a private law firm and exercised substantial independent judgment regarding his clients which the City did not have any right to control. In other words, the Court found that he was an employee for purposes of CEPA based on the presence of only one of the three primary factors, his integration into the employer's business.

Thus, both D'Annunzio and Stomel apply broad definitions of "employee," which include many individuals who are otherwise treated as independent contractors. While many other factors are relevant, the primary focus appears to be on the extent to which the individual's work is an integral part of the employer's business.