New York City Employers Are Strictly Liable for Harassment or Discrimination by Supervisors

June 8, 2010

By: Terry O'Neil

A recent decision by the New York Court of Appeals will significantly impact New York City employers. On May 6, 2010, New York’s highest court held that employers covered by the New York City Human Rights Law ("NYCHRL") can be held strictly liable for discriminatory acts or harassment by an employee who “exercised managerial or supervisory responsibility.”

In Zakrzewska v. The New School, the Plaintiff alleged that her “immediate supervisor” subjected her to sexually harassing e-mails and conduct for over a year. She sued her employer in United States District Court, alleging violations of the NYCHRL. The New School moved for summary judgment arguing that it could not be held liable for the supervisor's actions because it had a strict policy against sexual harassment and the Plaintiff waited more than one year to come forward before making her complaint. The District Court held that the claim would indeed by barred under the affirmative defenses articulated in Faragher v. City of Boca Raton and Burlington Industries, Inc. v. Ellerth, applicable to federal law Title VII claims, if those affirmative defenses applied under the NYCHRL.  In those cases the United States Supreme Court held that an employer is not liable under Title VII for sexual harassment committed by a supervisory employee if it proves that: (1) no tangible employment action was taken as part of the alleged harassment; (2) the employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior; and (3) the employee unreasonably failed to take advantage of preventive or corrective opportunities provided by the employer.

The District Court also concluded, however, that the language of the NYCHRL suggested that these affirmative defenses were not available for NYCHRL claims and so denied the New School’s motion for summary judgment.  The case was then certified for appeal to the United States Court of Appeals for the Second Circuit, which in turn certified the question of whether the defenses were available to the New York Court of Appeals.

The New York Court of Appeals unanimously concluded that the affirmative defenses were not available under the City Law. It noted that the statute provides that: "[a]n employer shall be liable for an unlawful discriminatory practice based upon the conduct of an employee or agent which is in violation of subdivision one or two of this section only where: (1) the employee or agent exercised managerial or supervisory responsibility. ..."  Based on this language, the Court held that “the plain language of the NYCHRL precludes the Faragher-Ellerth defense.” In other words, any discriminatory act by an employee or agent who exercised managerial or supervisory responsibility will result in employer liability.

In reaching its decision, the Court also reviewed more broadly the language of the NYCHRL and found that its “legislative scheme simply does not match up with the Faragher-Ellerth defense.” The Court noted that the statute not only states that there is employer liability for acts of individuals exercising their supervisory responsibility, it also provides that an employer's anti-discrimination policies and procedures may be considered only “in mitigation of the amount of civil penalties or punitive damages” recoverable in a civil action (see NYC Admin Code § 8-107 [e]). The Court also reviewed the legislative history of the statute and concluded that it was the intent of the City Council for employers to be held strictly liable for acts of discrimination by supervisors.

Strict liability for employers is arguably poor public policy because it creates the wrong incentive for employees and is unfair to employers who take their legal responsibilities seriously. For employees, it creates a disincentive to report harassment which can then unnecessarily increase damages and delay the employer’s ability to comply with its non-discrimination obligations. Further, employers who are unaware of such conduct, but have provided training and strictly enforced their non-discrimination policies, will still be liable for random and unauthorized acts committed by someone who “exercised managerial or supervisory responsibility.” The Court recognized these concerns but ultimately concluded that such policy judgments were properly made by the legislature, in this case the City Council.

The decision will surely lead to more, and lengthier, litigation. Cases that could have been dismissed at the summary judgment stage on a motion will now proceed to trial and in some cases, employers may now have summary judgment granted against them based on conduct of even low level supervisors. In addition, employers who have operations both within and outside of New York City will be subject to two different standards of liability in harassment cases.