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State Leadership On Anti-Discrimination Protections For Independent Contractors

State Leadership on Anti-Discrimination Protections for Independent Contractors

By Meghan Racklin, Molly Weston Williamson, and Dina Bakst

Imagine a plumber who has just received a call from a potential customer who needs work done immediately. The plumber drives over to the potential customer’s house with his tools, ready to work. When he arrives, the customer realizes that the plumber is Muslim, and refuses to hire him because of his religion. Because the plumber is an independent contractor, he may have no legal recourse.

Now imagine a rideshare driver. She is frequently sexually harassed by customers, and has made the rideshare company aware of the situation, but they have done nothing. Yet the rideshare company has misclassified the driver as an independent contractor, even though she should be considered an employee. The company’s misclassification creates additional hurdles to pursuing a sexual harassment claim, enabling the rideshare company to skirt its legal obligations.

As the way we work continues to evolve, the number of people working in ways that do not fit within traditional employer/employee frameworks is likely to grow. Yet our laws have not caught up. Though legislation has been introduced to extend additional coverage, the leading federal employment antidiscrimination law, Title VII, does not apply to independent contractors. This disparity in coverage has a dual impact, leaving true independent contractors without needed protections and giving employers further incentive to misclassify employees to avoid legal responsibility for discrimination.

States have stepped up to fill this gap, paving a path for future federal action while ensuring protection in the present for independent workers. A Better Balance’s forthcoming analysis surveys state antidiscrimination laws across the country to determine their current treatment of independent contractors. While most states tend to follow the federal definition of who is and is not covered under Title VII, we identify nine states that provide at least some clear protections against discrimination for independent contractors. These states can offer models for further research and policy development at the local, state, and federal level.

Different states have taken different routes to protecting independent workers. Independent contractors are protected on the same basis as employees in New York and in Maryland. Both states extend the exact same protections under their anti-discrimination laws to independent contractors as to employees, treating independent contractors effectively as employees for purposes of the state’s anti-discrimination law. In Maryland, the definition of “employee” under the anti-discrimination law explicitly includes a person acting as an independent contractor for an employer. New York reaches a similar result by barring unlawful discrimination against “non-employees,” including independent contractors, which guidance has emphasized includes “all discrimination.” Of particular relevance, New York recently amended its law to remove the minimum employer size requirement, meaning that anti-discrimination protections could apply even to contractors working with entities with no (or very few) employees.

Independent contractors also enjoy broad statutory protections in Minnesota and Rhode Island, through a somewhat different approach. Instead of covering contractors under the anti-discrimination laws that apply to employees, these states have separate statutes that prohibit discrimination in contracting.  In Minnesota, state law prohibits a variety of forms of discrimination in making or executing contracts, for example by prohibiting a refusal to contract with someone on the basis of their race, sex, or other protected categories except for a legitimate business purpose.  Similarly, Rhode Island guarantees the right to contract “regardless of race, color, religion, sex, disability, age, or country of ancestral origin.” These laws provide contractors with protection against a range of forms of discrimination, without tying those rights directly to those of employees.

Some states protect independent contractors against only some forms of discrimination, whether by specific statutory text or the interpretation of broader legal provisions. California specifically includes independent contractors in the definition of “employee” only for purposes of the prohibition on discriminatory harassment, not for purposes of other forms of discrimination. In the absence of explicit protection, courts have found that independent contractors are not protected from non-harassment forms of discrimination. Thus, while independent contractors can bring actions for workplace sexual harassment, they cannot do so for wrongful termination based on race or sex. As of January 2020, Illinois’s Human Rights Act prohibits discriminatory harassment of nonemployees, including contractors, in the workplace, and also prohibits sexual harassment of nonemployees, including contractors, in the workplace. The Illinois Human Rights Commission has previously held that, in general, independent contractors are not protected by the provisions of the Human Rights Act that cover employees.

Similarly, New Jersey’s Law Against Discrimination prohibits any person from discriminating against another person in doing business or making contracts. However, this provision has been held to protect independent contractors against discriminatory refusals to do business, but generally not from discrimination during the ongoing execution of a contract. Thus, in New Jersey, independent contractors may have narrower protection against discrimination than employees as a result of this statutory approach.

In Washington State, the state’s Supreme Court has held that portions of the state’s anti-discrimination law sweep broadly enough to cover contractors. The law contains a provision establishing a right to freedom from discrimination that includes not only freedom from discrimination in employment but also prohibitions on discrimination in other areas, such as public accommodations and real estate transactions. While this provision does not specifically mention independent contracting relationships, the Washington State Supreme Court has held that, since this law’s protections are not limited to discrimination in employment, it protects independent contractors from discrimination based on the protected categories listed in that provision (specifically sex, race, creed, national origin, or disability). However, Washington State extends additional protections against discrimination to employees through other provisions of law that are not extended to independent contractors (for example, prohibiting discrimination on the basis of age).

Additionally, Michigan courts have held that nonemployees can bring actions under the state’s antidiscrimination law, but only where the hiring entity controls a term, condition, or privilege of their employment or potential employment. This raises questions worthy of further exploration about the relationship between this coverage analysis and questions of classification and joint employment.

While some states offer limited protections to all independent contractors, at least two states offer broad protections to only some independent contractors. Pennsylvania’s anti-discrimination law explicitly prohibits discrimination against independent contractors, offering the same protections to covered independent contractors as to covered employees and prohibiting all the same forms of discrimination. However, the law defines independent contractors narrowly, to include only those workers subject to state licensing laws or included in the Fair Housing Act (which covers those whose business is selling or renting dwellings, or financing residential real estate transactions). Independent contractors not covered by this definition are excluded from clear protection under the law.

Similarly, Louisiana specifically includes insurers, with respect to their agents, in their state employment discrimination’s definition of covered employers, regardless of the agents’ employment status. Accordingly, agents of insurers who are independent contractors are protected by the state’s employment discrimination law on the same basis as employees.

In the remaining states, independent contractors are either clearly excluded from protections (as they are written or as they have been interpreted by courts or agencies) or it is unclear whether independent contractors are covered. States can and should go beyond federal law to protect independent contractors. As explained above, several states already extend anti-discrimination protections to independent contractors, but many could do more to ensure that the changing workplace is free from discrimination.

With protections for independent contractors limited in most of the country, action is urgently needed to ensure that independent contractors are protected from discrimination at work, and that employers cannot deny workers protection from discrimination by misclassifying them. To the extent permitted by state law, cities and counties may also be able to extend antidiscrimination protections to independent contractors. For instance, New York City passed legislation in October 2019 ensuring that the provisions of the New York City Human Rights Law that apply to employees also apply to independent contractors.

By and large, our nation’s anti-discrimination laws were not written with the needs of independent contractors in mind. Building the future of work we need means providing protection against discrimination for independent contractors, both so employers cannot use misclassification as a way to avoid legal obligations and to ensure that workers can choose to work independently without sacrificing their right to a workplace free from discrimination. As the employment landscape changes, states (and cities) are beginning to change that, re-writing their laws to protect independent contractors against discrimination. It is time for more jurisdictions and the federal government to follow their lead in ensuring that all workers, regardless of classification, have the protections they need.

The Urban InstituteThe Aspen Institute Future of Work Initiative, and A Better Balance are collaborating on an initiative to strengthen protections for workers in nontraditional jobs. This post is part of that ongoing collaboration.

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