
Michael J. Sheppeard
Partner
212-784-6939 msheppeard@sh-law.comFirm Insights
Author: Michael J. Sheppeard
Date: April 28, 2021
Partner
212-784-6939 msheppeard@sh-law.comUnanticipated 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).
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.
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.
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 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.
The bankruptcy legal landscape presents both challenges and opportunities for businesses navigating financial distress. Understanding current bankruptcy trends can help businesses make more informed and strategic decisions. Corporate Bankruptcy Filings Trending Upwards Bankruptcy filings continued to trend upwards in 2024. According to statistics released by the Administrative Office of the U.S. Courts, personal and business […]
Author: Brian D. Spector
In December, the U.S. Securities and Exchange Commission (SEC) announced charges against two privately held companies for failing to file a Form D notice, which is generally utilized for exempt securities offerings. Here, the SEC’s enforcement sends a strong message: compliance with regulatory requirements is not optional and failure to comply can have significant consequences. […]
Author: Kenneth C. Oh
On February 14, 2025, the Office of General Counsel (OGC) of the National Labor Relations Board (NLRB) under Acting General Counsel William B. Cowen issued Memorandum 25-05, “New Process for More Efficient, Effective, Accessible and Transparent Case handling.” The Memorandum rescinds nearly all of the Memoranda issued by his direct predecessor, Jennifer Abruzzo, setting the […]
Author: Matthew F. Mimnaugh
If you purchase real property from a foreign person or entity, you may be required to withhold taxes from your payment to the seller under the Foreign Investment in Real Property Tax Act (FIRPTA). The federal tax law is designed to ensure that foreign sellers pay any applicable capital gains tax on profits realized from […]
Author: Jesse M. Dimitro
Your home is likely your greatest asset, which is why it is so important to adequately protect it. Homeowners insurance protects you from the financial costs of unforeseen losses, such as theft, fire, and natural disasters, by helping you rebuild and replace possessions that were lost While the definition of “adequate” coverage depends upon a […]
Author: Jesse M. Dimitro
Making a non-contingent offer can dramatically increase your chances of securing a real estate transaction, particularly in competitive markets like New York City. However, buyers should understand that waiving contingencies, including those related to financing, or appraisals, also comes with significant risks. Determining your best strategy requires careful analysis of the property, the market, and […]
Author: Jesse M. Dimitro
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
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!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!