The question in this case is whether an individual owner of a corporate entity may be held strictly liable as an “employer” under the New York City Human Rights Law (NYCHRL) for the alleged illegal discrimination of the corporate employer.
The NYCHRL makes it unlawful for “an employer or an employee or agent thereof” to discriminate against any person on the basis of the person’s gender (among other things). The statute also states that where the illegal discrimination is by an employee or agent, the employer will be liable only if: (1) the employee or agent “exercised managerial or supervisory responsibility”; (2) the employer knew of the discriminatory conduct but failed to take immediate and appropriate action; or (3) the employer should have known and failed to exercise reasonable diligence to prevent the illegal conduct. The statute does not define “employer.”
This case queries who is an “employer” under the NYCHRL in the context of a large corporate employer, Bloomberg LP. Plaintiff alleges that her direct supervisor repeatedly made unwanted sexual advances toward her and then raped her on two occasions while she was intoxicated. She filed this action alleging illegal discrimination under the NYCHRL, naming as defendants her direct supervisor, the corporate entity Bloomberg LP, and the eponymous owner of the corporate entity and former Mayor of New York Michael Bloomberg. Defendants moved to dismiss the claims against Bloomberg the individual. Supreme Court originally granted the motion and dismissed the claims, finding no allegations that Bloomberg was “even remotely aware” of the alleged discrimination. But Supreme Court reversed its decision on reconsideration, concluding that Bloomberg could be liable because, as CEO of the corporate employer, he exercised “managerial or supervisory responsibility” over plaintiff’s employment.
A divided panel of the First Department reversed. The majority (per Kern, J.) held that an individual owner of a corporate employer may be liable only if two conditions are met: the individual “has an ownership interest or has the power to do more than carry out personnel decisions made by others”; and the individual “encouraged, condoned or approved the specific conduct which gave rise to the claim.” In reaching this conclusion, the majority purported to be interpreting the statutory provision, quoted above, governing when an employer is liable for the conduct of its agents and employees.
The dissenters would have held that an “employer” under the NYCHRL is any person “with an ownership interest” in the corporate employer, as well as any person with “the power to do more than carry out the personnel decisions of others.” The dissenters drew this definition of “employer” from Patrowich v. Chemical Bank, 63 N.Y.2d 541 (1984), where the Court of Appeals adopted it for the purposes of defining “employer” under the New York State Human Rights Law (NYSHRL).
Plaintiff appealed to the Court of Appeals as a matter of right based on the Appellate Division’s two-judge dissent.