Over 200 years after his death, Shakespeare’s works continue to be an touchstone for legal analysis and critique. A fool’s errand it would be to attempt to catalog the legal issues in each of his 37 plays. Indeed, so popular is the Bard’s legal acumen that he is the single most-quoted literary author in Supreme Court decisions.
Once again, a single line from one of Shakespeare’s plays explains a critical legal development:
And you that do abet him in this kind Cherish rebellion, and are rebels all.
Richard II, Act II, Scene 3.
Like the non-discrimination laws in a number of other states, including California, New Jersey, and Illinois, New York State’s Human Rights Law (“NYSHRL”) contains a provision extending liability to those who aid and abet discrimination or retaliation. A recent federal appellate decision, Griffin v. Sirva, Inc., 858 F.3d 69 (2d Cir. 2017), reveals that such aiding and abetting provisions may apply even outside those states.
The facts of that case are simple, and not uncommon. Sirva is the parent of Allied Van Lines, which had a contractual relationship with Astro, a New York warehouse and transportation company. Allied’s standard contract requires its contractors (like Astro) to run criminal background checks and eliminate any individuals convicted of certain crimes from working on Allied jobs. Astro, accordingly, terminated the employment of two New York drivers – Messrs. Godwin and Griffin (perfect Shakespearean names), who then sued Astro, Allied and Sirva because the NYSHRL limits the use of criminal convictions in employment decisions.
Let’s leave aside the issue of whether this might be a permissible decision by Astro (in fact, a jury cleared Astro of discrimination prior to our curtain call) and go where the Duke of York did in Richard II: is Allied (which is not the employer and not based in New York) potentially culpable? The District Court said no; the Second Circuit initially certified questions to the New York Court of Appeals and now – based on the Court of Appeals answers to those questions in Griffin v. Sirva, Inc., 29 N.Y.3d 174 (2017) – has vacated and remanded.
No one contended that Allied was the direct employer, and the Court of Appeals confirmed that liability under the criminal conviction discrimination provisions of the NYSHRL (Section 296(15)), is limited to an aggrieved party’s “employer.” The Court of Appeals did acknowledge that a joint employer could be liable under the law but set a test for that which effectively excludes Allied: “common-law principles … determine who may be liable as an employer under [S]ection 296(15) of the Human Rights Law, with greatest emphasis placed on the alleged employer’s power to order and control the employee in his or her performance of work.”
Allied’s true peril (and that of other businesses) lies in the extra-territorial application of the Human Rights Law’s aiding and abetting provision. As the Second Circuit held, “Section 296(6) extends liability to persons and entities beyond joint employers [and] … applies to out-of-state defendants.”
The final curtain has not yet dropped on this play, but the performance so far raises an important reminder. It does not matter if it is in New York or “[i]n fair Verona, where we lay our scene.” Romeo and Juliet, Prologue. Out-of-state companies must be mindful that imposing obligations, by contract or otherwise, on their business counterparties which impact the employees of those counterparties may trigger scrutiny under an aiding and abetting theory.
To reduce this risk, businesses should consider utilizing as many of the following best practices as practicable:
- Eliminate contractual provisions that dictate how a counterparty must act with respect to its own employees;
- Disclaim any control over employment decisions impacting the counterparty’s personnel;
- Require the counterparty to covenant to comply with applicable federal, state and local employment laws;
- Demand indemnification from any suits by employees, agents, or contractors of the counterparty; and
- Demand to be named on the counterparty’s EPLI insurance as “a separate named insured.”
Every expansion of potential employer liability admittedly also leads to the temptation to follow the advice of Dick the Butcher: “The first thing we do, let’s kill all the lawyers.” Henry VI, Part 2, Act IV, Scene 2.