In a decision likely to create challenges for employers doing business within New York City, New York's highest court has ruled that an employer faced with a discrimination claim under the New York City Human Rights Law (NYCHRL) cannot defeat liability by invoking the oft-used Faragher-Ellerth affirmative defense. In the unanimous decision of Zakrzewska v. The New School, the New York State Court of Appeals recently held that both the legislative history and the text of the NYCHRL render the Faragher-Ellerth affirmative defense inapplicable to discrimination (including harassment) and retaliation claims.
This ruling deprives employers of a critical tool to defeat NYCHRL-based discrimination claims at the summary judgment stage. Crafted by the United States Supreme Court in Faragher v. City of Boca Raton, 524 U.S. 775 (1998) and Burlington Indus. Inc. v. Ellerth, 524 U.S. 742 (1998), the Faragher-Ellerth defense shields an employer from liability for the acts of a supervisory employee unrelated to a tangible employment action, such as a discharge, demotion, or undesirable transfer. To establish this liability defense, the employer must prove that: (1) the employer exercised reasonable care to prevent and promptly correct any harassing behavior; and (2) the plaintiff-employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer. Employers frequently invoke the Faragher-Ellerth defense in discrimination claims brought under Title VII and even the New York State Human Rights Law (SHRL).
However, it is now clear that this liability defense is unavailable in NYCHRL claims. In barring this defense, the Court focused on the language in the NYCHRL, specifically Section 8-107(13)(b), which imposes strict liability on the employer for the acts of an agent or employee who "exercised managerial or supervisory responsibility." Thus, the Court held, "the plain language of the NYCHRL precludes the Faragher-Ellerth defense" in harassment and retaliation claims predicated on the NYCHRL.
In so holding, the Court rejected the employer's arguments that the strict liability aspect of the NYCHRL conflicted with the New York State Constitution, the SHRL, and public policy. The Court further rejected the employer's argument that Zakrzewska was inconsistent with its prior decision in Forrest v. Jewish Guild for the Blind, 3 N.Y.3d 295 (N.Y. 2004). The Court held that a footnote in Forrest pointing to federal case law as a paradigm for analyzing NYCHRL claims did not establish the applicability of Faragher-Ellerth.
There is, however, a silver lining in Zakrzewska. Although the decision precludes an employer from using Faragher-Ellerth to defeat liability, it can still be used to minimize damages. To that end, the Court noted that under the NYCHRL, "an employer's anti-discrimination policies and procedures" – the core of Faragher-Ellerth – "may be considered in mitigation of the amount of civil penalties or punitive damages recoverable in a civil action."