New York’s highest court also ruled that entities – including those where an indirect employment cannot be shown – can be held liable, but only for aiding and abetting a violation of the law.

The NYSHRL states that it is an unlawful discriminatory practice to deny employment based on past criminal offenses without first conducting a multifactor, case-specific analysis to determine whether there is a direct relationship between the applicant’s prior criminal history and the position sought, as required by Article 23-A of the New York Corrections Law.

In the case – Griffin v. Sirva, Inc. – the plaintiffs, worked for Astro Moving and Storage Co., which was an independent contractor for Allied Van Lines, and Allied’s parent company, Sirva, Inc.

Astro terminated the plaintiffs after they were disqualified from working with Allied due to previous criminal convictions without first taking into account the aforementioned factors enumerated in Article 23-A of New York Corrections Law. The plaintiffs sued Astro, Allied and Sirva alleging discrimination based on their criminal histories as prohibited by Section 296(15) of the NYSHRL.

On appeal following a grant of summary judgment in favor of Allied and its parent, the Second Circuit certified three questions to the New York Court Appeals:  

1. Is Section 296(15) of the NYSHRL, which prohibits discrimination against individuals with prior criminal convictions, limited to a party's "employer";
2. If so, is an "employer" only a "direct employer," or can the coverage extend to other related entities; and
3. Does Section 296(6), which provides for aiding and abetting liability, apply to Section 296(15) to impose liability on out-of-state entities that may have a connection to an in-state employer?

Answering the first question, the court held that Section 296(15) is limited to direct employers. But in answering the second question, the court clarified that four factors are relevant in determining whether coverage can extend to other related entities. Those factors are "(1) the selection and engagement of the servant; (2) the payment of salary or wages; (3) the power of dismissal; and (4) the power of control of the servant's conduct." Of these factors, the court stated that the greatest emphasis should be placed on “the alleged employer’s power to order and control the employee in his or her performance of work.”

Lastly, the Court of Appeals indicated that a third party who was not a direct employer could only be liable for aiding and abetting discrimination under the law. This also applies to out-of-state entities if their acts have an impact within the state of New York.

This ruling is significant as instances of companies requiring their subcontractors, vendors, etc., to run checks on their respective employees become more common. With these types of background checks becoming more common, companies need to remain cognizant of both the federal laws and state-specific laws that govern background checks.

Source: Seyfarth Shaw, 5/10/2017