As we explained in our case summary, the question in this case was whether an individual owner of a corporate entity could be liable as an “employer” under the New York City Human Rights Law (NYCHRL) for the alleged illegal discrimination of the corporate employer. In a 6-1 decision, the Court (Garcia, J.) held that an individual owner was not an employer under the NYCHRL; Judge Rivera dissented.
The Court began by dispensing with each approach outlined in the decision below. Taking on the Appellate Division majority, the Court explained that the relevant question was not whether the owner encouraged, condoned, or approved of the allegedly illegal conduct. That test, drawn from Matter of Totem Taxi v. New York State Human Rights Appeal Board, governed when an employer could be vicariously liable for discrimination under the New York State Human Rights Law (NYSHRL). But the NYCHRL separately established employer vicarious liability as a matter of statute. Thus, the Totem standard “for determining whether an employer is liable under the [NYSHRL] has no application in determining who is an employer for purposes of the [NYCHRL].”
The Appellate Division dissent was equally mistaken in concluding that an employer was anyone with an ownership interest or who had the power to do more than carry out personnel decisions made by others. That test was drawn Patrowich v. Chemical Bank, which courts had understood to mean that a person is an employer under the NYSHRL if she had an ownership interest or the power to do more than carry out personnel decisions made by others. But that was a misunderstanding, the Court explained: Patrowich held that an individual owner was not an employer under the NYSHRL; the portion of the decision discussing ownership interest and the power to do more than carry out personnel decisions was discussing the definition of employer under federal employment statutes, not the NYSHRL.
Having clarified Patrowich and the definition of “employer” under the NYSHRL, the Court adopted that definition for the NYCHRL: an owner is not an employer; he can be liable only for his “own discriminatory conduct, for aiding and abetting such conduct by others, or for retaliation against protected conduct.” This rule was consistent with provisions of the statute that, in the Court’s view, indicated a legislative intent that owners and employees were distinct from employers. And the rule was consistent with the underlying legal distinction between shareholders and the corporation, which generally shielded corporate owners from vicarious liability for the corporation’s wrongdoing. In the Court’s view, the NYCHRL’s liberal-construction rule did not require a different result. True, courts were required to construe the NYCHRL “broadly in favor of discrimination plaintiffs.” But the Court explained that any such construction still “must be reasonable and grounded in the language of the [statute].”
Based on its interpretation, the Court concluded that Bloomberg was not an employer under the NYCHRL. The Court did not foreclose the possibility of other avenues—e.g., aiding-and-abetting liability—for holding Bloomberg liable for discrimination by his company and its employees. The Court held, however, that those bases for liability were “not advanced in this appeal.”
The dissent would have concluded that Bloomberg’s “relationship to the business” rendered him an employer under the NYCHRL. For the dissent, a party should qualify as an employer under the NYCHRL based on his “relationship to the plaintiff and the workplace.” Specifically, drawing on the common law, the dissent would have held that an individual is an employer if his relationship to the business is such that he has the “power to order and control the employee in the employee’s performance of work.” The dissent explained that this approach was consistent with the way courts and the City Council had for years understood Patrowich. Even if that understanding of Patrowich was wrong (something the dissent did not concede), its persistent application established at least, in the dissent’s view, that there was a reasonable broader alternative to the Court’s approach. And that broader approach was required, the dissent explained, by the rule requiring courts to give the NYCHRL the “broadest possible reading.”