Employer May Be Liable for Hiring Done by Independent Contractor

The Age Discrimination in Employment Act (ADEA) makes it unlawful to discriminate against an individual over the age of 40, and specifically includes a prohibition against failing to hiring someone based on his or her age.  The 2d U.S. Circuit Court of Appeals recently pointed out the expansive nature of that prohibition by holding that an employer may be held liable for discrimination by third parties – including an independent contractor who is authorized by the employer to make hiring decisions on its behalf.  Halpert v. Manhattan Apartments, Inc., 2d Cir., No. 07-4074-cv, September 10, 2009. 

In October 2001, Michael Halpert interviewed for a position to show rental apartments for Manhattan Apartments, Inc. (MAI).  The interview was conducted by Robert Brooks, an independent contractor/broker who allegedly told Halpert that Halpert was “too old” to work in the prospective position, and asked why the placement center had not sent a younger applicant.  Halpert was born on September 19, 1957. 

In response to a lawsuit filed by Halpert, MAI filed a motion for summary judgment which was granted by the district court.  The district court found that MAI as not an “employer” under the definition of the ADEA, and dismissed the case against MAI.  That decision was reversed by the Second Circuit, which remanded the case for trial.  The Second Circuit based the reversal on the fact that the ADEA’s prohibitions against discrimination apply to the hiring process, whether a company uses its own employees to interview applicants, or asks an independent contractor to fill that role.  If a company gives someone authority to interview applicants and make hiring decisions on behalf of the company, the company may be held liable if that contractor discriminates against an applicant because of the applicant’s age.

MAI’s potential liability under the ADEA turns on whether Brooks was hiring Halpert to work for him as a fellow independent broker, or was making the hiring decision for MAI as its agent.  The Court pointed out that MAI sponsored a training program for individuals hired to show the apartments, that the successful applicants would earn commissions from MAI, that the interview took place at MAI’s offices, and that the placement person who sent Halpert to the interview testified that she believed that he was being interviewed for a position with MAI.  The Court held that there were disputed issues of material fact that precluded dismissal of the action.

The controversy in this case was not whether MAI was liable for discrimination against an independent contractor (an action typically not protected against under the ADEA), but whether MAI can be held liable for age discrimination by an independent contractor when that person works as an agent for MAI.  The Court found that the answer to this question is an unequivocal Yes. 

This case could have a significant impact on companies who plan to contract out human resource functions to a third party contractor.  Employers who believe that using an independent contractor to conduct interviews will absolve them from compliance with federal anti-discrimination laws should become familiar with this case, and must recognize that the ADEA’s reach extends to a company that uses intermediaries to conduct activities related to employees or applicants.  Such a company’s potential liability does not depend on whether the individual acting for the company is an actual employee or an independent contractor – either individual can be an agent for the company for purposes of the ADEA, regardless of his or her employment status for other purposes.