Scarinci Hollenbeck, LLC, LLCScarinci Hollenbeck, LLC, LLC

Firm Insights

NY Court Rules Business Owners Not Vicariously Liable Under NYCHRL

Author: Michael J. Sheppeard

Date: April 28, 2021

Key Contacts

Back
NY Court Rules Business Owners Not Vicariously Liable Under NYCHRL

Unanticipated liability can lead to costly legal liability for New York businesses...

Unanticipated liability can lead to costly legal liability for New York businesses. Recently, the New York Court of Appeals ruled that the individual owners of a company can’t be held vicariously liable as “employers” under the New York City Human Rights Law (NYCHRL).

Allegations under the New York City Human Rights Law

In Margaret Doe v. Bloomberg, L.P., Plaintiff, an employee of Bloomberg L.P. using the pseudonym “Margaret Doe,” brought suit against defendants Bloomberg L.P., her supervisor Nicholas Ferris, and Michael Bloomberg, asserting several causes of action arising from alleged discrimination, sexual harassment, and sexual abuse.

Plaintiff alleged that Bloomberg, in addition to Bloomberg L.P., was her “employer” and as a result was subject to vicarious liability under the NYCHRL. Plaintiff asserted that “[a]t all relevant times” Bloomberg was the “Co-Founder, Chief Executive Officer, and President of Bloomberg[ L.P.],” and that he had fostered an environment that accepted and encouraged “sexist and sexually-charged behavior.” She did not claim that Bloomberg had any “personal participation” in the specific offending conduct.

The NYCHRL, which makes it unlawful for “an employer or an employee or agent thereof” to discriminate on the basis of gender, imposes vicarious liability on employers in the following circumstances: 

An 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; or 

(2) the employer knew of the employee’s or agent’s discriminatory conduct, and acquiesced in such conduct or failed to take immediate and appropriate corrective action; an employer shall be deemed to have knowledge of an employee’s or agent’s discriminatory conduct where that conduct was known by another employee or agent who exercised managerial or supervisory responsibility; or 

(3) the employer should have known of the employee’s or agent’s discriminatory conduct and failed to exercise reasonable diligence to prevent such discriminatory conduct.

Bloomberg moved to dismiss the claims against him. The New York Supreme Court denied the motion, holding that because the complaint alleged that Bloomberg was the owner and CEO of Bloomberg, L.P., he was vicariously liable for the alleged harassment. In support, the court cited a line of cases that implied that individuals could be held personally liable under the NYCHRL if they had an ownership interest in the business or the authority to make significant personnel decisions. The Appellate Division, with two Justices dissenting, reversed and dismissed the causes of action against Bloomberg.

NY Court of Appeals Declines to Expand Vicarious Liability

The New York Court of Appeals affirmed the dismissal of complaints against Bloomberg. “We hold that Bloomberg is not an ‘employer’ within the meaning of the City HRL and accordingly, we affirm the dismissal of plaintiff’s claims that seek to hold Bloomberg vicariously liable for Ferris’s offending conduct,” Judge Michael Garcia wrote on behalf of the court.

In concluding that Bloomberg was not an “employer” under the NYCHRL, the court acknowledged that the term is not well defined under the statute, and that lower courts have struggled to fill the void. It went on to reject the test applied by the Appellate Division, under which “some participation in the specific conduct committed against the plaintiff is required to hold an individual owner or officer of a corporate employer personally liable in his or her capacity as an employer.”

According to the New York Court of Appeals, [w]here a plaintiff’s employer is a business entity, the shareholders, agents, limited partners, and employees of that entity are not employers within the meaning of the City HRL.” Rather, those individuals may be held liable only for their own violations of the NYCHRL, such as “their own discriminatory conduct, for aiding and abetting such conduct by others, or for retaliation against protected conduct.” 

After establishing the new test, the New York Court of Appeals concluded that the allegations that Bloomberg “fostered a culture of discrimination and sexual harassment at Bloomberg L.P., based primarily on news articles and reports of a deposition in an unrelated case,” were insufficient to support a claim against him under the NYCHRL.

Key Takeaway

While the court limited potential liability, the court’s decision in Doe v. Bloomberg L.P. does not absolve all possible liability. Owners, shareholders, partners, and agents may still be held liable if they actively engage in violations of the NYCHRL or aid or abet such unlawful activity. 

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Michael Sheppeard, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Scarinci Hollenbeck, LLC, LLC

Related Posts

See all
Corporate Transactions: Best Practices for Successful Deals post image

Corporate Transactions: Best Practices for Successful Deals

Corporate transactions can have significant implications for a corporation and its stakeholders. For deals to be successful, companies must act strategically to maximize value and minimize risk. It is also important to fully understand the legal and financial ramifications of corporate transactions, both in the near and long term. Understanding Corporate Transactions The term “corporate […]

Author: Dan Brecher

Link to post with title - "Corporate Transactions: Best Practices for Successful Deals"
How to Conduct a Fair and Legal Employee Termination in 2025 post image

How to Conduct a Fair and Legal Employee Termination in 2025

Ongoing economic uncertainty is forcing many companies to make tough decisions, which includes lowering staff levels. The legal landscape on both the state and federal level also continues to evolve, especially with significant changes to the priorities of the Equal Employment Opportunity Commission (“EEOC”) under the Trump Administration. Terminating an employee is one of the […]

Author: Angela A. Turiano

Link to post with title - "How to Conduct a Fair and Legal Employee Termination in 2025"
Admin Dissolution for Annual Report: What You Need to Know post image

Admin Dissolution for Annual Report: What You Need to Know

While filing annual reports may seem like a nuisance, failing to do so can have significant ramifications. These include fines, reputational harm, and interruption of your business operations. In basic terms, “admin dissolution for annual report” means that a company is dissolved by the government. This happens because it failed to submit its annual report […]

Author: Dan Brecher

Link to post with title - "Admin Dissolution for Annual Report: What You Need to Know"
What Is Antitrust Litigation Law? post image

What Is Antitrust Litigation Law?

Antitrust laws are designed to ensure that businesses compete fairly. There are three federal antitrust laws that businesses must navigate. These include the Sherman Act, the Federal Trade Commission Act, and the Clayton Act. States also have their own antitrust regimes. These may vary from federal regulations. Understanding antitrust litigation helps businesses navigate these complex […]

Author: Robert E. Levy

Link to post with title - "What Is Antitrust Litigation Law?"
Dissolving Your Business: Essential Legal Steps to Protect Your Interests post image

Dissolving Your Business: Essential Legal Steps to Protect Your Interests

If you’re considering closing your business, it’s crucial to understand that simply shutting your doors does not end your legal obligations. Unless you formally dissolve your business, it continues to exist in the eyes of the law—leaving you exposed to ongoing liabilities such as taxes, compliance violations, and potential lawsuits. Dissolving a business can seem […]

Author: Christopher D. Warren

Link to post with title - "Dissolving Your Business: Essential Legal Steps to Protect Your Interests"
The Role of Corporate Restructuring in Mergers & Acquisitions post image

The Role of Corporate Restructuring in Mergers & Acquisitions

Contrary to what many people think, corporate restructuring isn’t all doom and gloom. Revamping a company’s organizational structure, corporate hierarchy, or operations procedures can help keep your business competitive. This is particularly true during challenging times. Corporate restructuring plays a critical role in modern business strategy. It helps companies adapt quickly to market changes. Following […]

Author: Dan Brecher

Link to post with title - "The Role of Corporate Restructuring in Mergers & Acquisitions"

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Sign up to get the latest from our attorneys!

Explore What Matters Most to You.

Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.

Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.

Let`s get in touch!

* The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!