Closing the Discrimination Loophole for Non-Traditional Workers

Posted September 4th, 2019.

As It Appeared On
NY Law Journal

Drawing a bright line between “employees” and other types of workers can allow brazen discrimination to go unchecked.

By Alexandra Harwin

Over the last two years, employment laws have expanded substantially to provide workers with more robust protections against sexual harassment and other forms of discrimination. Multiple states, including New York and California, have mandated that employers take additional action to prevent sexual harassment, and additional protections against pay discrimination are now in place in New Jersey and Massachusetts. But one of the biggest expansions of all could come from a little-publicized provision that New York state just enacted.

A problem with most workplace discrimination laws, including federal laws, is that they leave out an increasingly large number of workers. That is because many of these laws say that they only protect so-called “employees.” In fact, the Equal Employment Opportunity Commission, the government agency charged with enforcing a host of federal anti-discrimination laws, takes the position that “[i]n most circumstances, an individual is only protected if s/he was an ‘employee’ at the time of the alleged discrimination, rather than an independent contractor, partner, or other non-employee.”

But drawing a bright line between “employees” and other types of workers can allow brazen discrimination to go unchecked. A magazine could get away with paying a black freelance journalist less per article than it pays white freelancers. A startup could refuse to hire temp workers over age 40. Accounting firms could persist in paying female partners less than men. A Hispanic management consultant may have no redress if he is subjected to ethnic slurs while working at his client’s job site.

The loophole has gotten a lot of attention in the legal industry, which has been rocked by a flood of discrimination lawsuits that female partners have brought against their own law firms. Many of the law firms defending against these claims have argued, essentially, that the women bringing suit simply rank too high at their firms to be considered employees—even where there is a male-dominated committee that controls all meaningful aspects of their employment.

Weak employment discrimination protections are a particular problem for the gig economy. An industry publication for in-house corporate lawyers boasted that a “good reason” to consider hiring independent contractors was that “[i]ndependent contractors can’t file discrimination claims, sue you for wrongful discharge or argue about labor law violations.” In today’s economy, this is too big a problem to ignore. While estimates vary, research indicates that at least 15.8% of U.S. workers are in alternative work arrangements like independent contracting, freelancing, contract work, temp work, or on-call work.

Now, to be sure, it’s not an ironclad rule that all non-traditional workers fall outside the ambit of employment discrimination laws. There are circumstances where partners, independent contractors, consultants, and other types of workers are considered “employees” entitled to the full protections of discrimination laws. Indeed, the U.S. Supreme Court has recognized that “[t]he mere fact that a person has a particular title” is not determinative. In practice, though, most workers who are not called “employees” face an uphill battle trying to amass evidence showing how much control their employer exercises over their work. Most workers—and most employment lawyers—simply aren’t willing to spend months or years battling over this issue. Instead, many give up their discrimination claims.

It doesn’t have to be this way. These loopholes can be fixed with simple legislation, and New York legislators have shown one way to do it. Just last week, Gov. Andrew Cuomo signed into law a statute that bars employers from permitting workplace discrimination against all non-employees, including contractors, consultants, vendors, subcontractors, and anyone who provides services under a contract. While this provision hasn’t gotten widespread attention, this legislation is a significant improvement for New York’s non-traditional workers, especially the growing number who work in the gig economy.

Lawmakers across the country should build on New York’s efforts. States and municipalities should make clear that their discrimination laws cover any person who performs services for an employer—regardless of whether they hold the title of, or are paid as, an independent contractor, consultant, partner, or something else. While the prospects for bipartisan action at the federal level are dim, presidential candidates who are committed to protecting workers should add this type of legislation to their platforms, talk it up on the campaign trail, and get to work enacting it when a new president is elected.

Most employers in the United States already say that they’re committed to providing workplaces that are free from discrimination. To have any hope of making this rhetoric a reality in our modern economy, we need to expand our discrimination laws beyond traditional employees and cover all workers.

Alexandra Harwin is a partner at Sanford Heisler Sharp in New York and co-chair of the firm’s National Title VII Practice.

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