Ruling may increase businesses’ exposure to discrimination suits

1866 civil rights law protects independent contractors, court decides.A precedent-setting court ruling could increase businesses’ exposure to discrimination lawsuits, according to one expert.

The appeals court for the U.S. Third Circuit reached back more than a century to craft a decision that gave an independent contractor the right to sue Craftmatic Beds for employment discrimination under a federal Civil Rights Act.

The court’s jurisdiction includes New Jersey, Delaware, Pennsylvania and the U.S. Virgin Islands.

“Clearly, the court now recognizes racial discrimination as a cause of action for a lawsuit under the Civil Rights Act of 1866, so businesses could have more legal exposure as a result,” said John J. Peirano, a partner with the Morristown law firm McElroy, Deutsch, Mulvaney & Carpenter, LLP.

The issue arose when Kimberly Brown, of Cleveland, applied for a sales position at J. Kaz Inc., better known as Craftmatic.

Shortly after her hiring, Brown, who is black, and her supervisor got into a heated argument, according to court papers. The supervisor allegedly made disparaging racial comments about Brown, who was then fired. After a discrimination claim she filed with the federal Equal Employment Opportunity Commission was rebuffed, Brown filed a lawsuit claiming discrimination under the federal Civil Rights Act of 1964, the Civil Rights Act of 1866 and the Pennsylvania Human Relations Act.

But a U.S. District Court dismissed the claim, saying the statutes only addressed employees, not independent contractors. Based on the contracts used by the Pittsburgh-based manufacturer, its salespeople were considered independent contractors, not employees.

Aligning itself with rulings in other district courts, the Third Circuit agreed contractors were outside the scope of the 1964 act and the PHRA, but reversed the lower court’s decision with respect to a section of the 1866 act.

“The text of section 1981 [of the 1866 act] provides that ‘all persons … shall have the same right … to make and enforce contracts,”’ according to the written opinion. “We thus agree with the decisions that hold that an independent contractor.”

E-mail Martin C. Daks at [email protected]