Employer Liability for Contractor's Discrimination

Ohio employers should be concerned about a recent decision in the United States Second Circuit Court of Appeals. Even though the Second Circuit does not include Ohio, this case could be persuasive authority for district and common pleas courts in Ohio.

In Halpert v. Manhattan Apartments Inc., Case No. 07-4074, the Second Circuit reversed a summary judgment that the District Court had entered in favor of Manhattan Apartments in an age discrimination claim. Michael Halpert had interviewed with Robert Brooks for a position to show rental apartments. In the interview, Halpert alleged that Brooks told him he was "too old" for the position. Manhattan Apartments maintained that Brooks was an independent contractor and not its employee.

The Court found that an employer could potentially be held liable for discrimination by an independent contractor who acts for the employer. The Age Discrimination in Employment Act (ADEA) prohibits an employer from refusing to hire an individual because of the individual's age. The Court stated: "That prohibition applies regardless of whether an employer uses its employees to interview applicants for open positions, or whether it uses intermediaries, such as independent contractors, to fill that role." Title VII, the ADA, and the Ohio Civil Rights Act include similar prohibitions in regards to other protected traits.

The Court found that there was a factual issue as to whether Brooks was acting as the hiring agent for Manhattan Apartments when he interviewed Halpert or whether Brooks was simply hiring on his own. Even though Brooks and Manhattan Apartments submitted affidavits in which they stated that if Halpert had been hired, Brooks - not Manhattan Apartments - would have been compensating him, Halpert submitted evidence that could have indicated that Manhattan Apartments controlled the manner and means by which Brooks conducted interviews. Therefore, according to the Circuit Court, a jury had to determine whether Brooks was conducting interviews to hire for himself or for Manhattan Apartments. If a jury were to find that Brooks was conducting interviews to hire for Manhattan Apartments, Manhattan Apartments would be an employer under the ADEA and could be held liable under that law.

Halpert demonstrates that employers cannot isolate themselves from discrimination liability by simply using independent contractors who then hire employees for themselves. Employers need to be careful that they are not presenting these independent contractors as employees to prospective hirees. Wise employers should have an attorney review the degree of independence the contractors have and the hiring processes of the contractors.