Quirky Question # 238, No Laughing Matter – Company Found Liable for Wrongfully Terminating Independent Contractor’s Agreement

Question:

My company relies on independent contractors, over whom we don’t exert control. They often joke around with each other. I’m not liable for employment discrimination if I terminate one of them after they complain about another, right?

Answer:  By Mike Droke  and Ieva Aubin

Mike Droke

Ivea Aubin

Companies using independent contractors should beware of increased enforcement efforts from federal and state labor and tax authorities over misclassification of workers under wage and hour and tax laws. In Washington, this threat now includes anti-discrimination claims brought by independent contractors, even though many state and federal employment discrimination statutes apply only to “employees.” As the recent Washington Court of Appeals decision illustrates, the non-employee status of a worker does not necessarily protect companies from discrimination-based claims arising out of the independent-contractor/principle relationship.

In Currier v. Northland Services, Inc., No. 70128-2-1 (Wash. Ct. App., Aug. 4, 2014), the Washington Court of Appeals considered whether the anti-retaliatory provisions of the Washington Law Against Discrimination (“WLAD”), chapter 49.60 RCW, protect independent contractors who oppose discriminatory practices of the contracting principle. Currier, a contract truck driver for Northland Services Inc. (“NSI”), reported to an NSI employee racially discriminatory comment directed at a Latino driver by another contractor driver. NSI terminated Currier’s contract two days later, and Currier sued NSI for retaliatory discharge.

NSI argued that Currier’s complaint fell outside the scope of the employment discrimination statute because (a) Currier was not an “employee” of the company, and (b) Currier did not oppose a specific employment practice of his employer but rather complained about the racially derogatory statement of another independent contractor. The Court of Appeals disagreed and affirmed the trial court’s decision holding that independent contractors may bring an action for discrimination under WLAD. The Court further held that Currier’s complaint about the treatment of others was a statutorily protected activity, and that the timing of the termination decision and other circumstantial evidence supported the trial court’s conclusion that there was a causal link between Currier’s complaint and contract termination.

As the Court itself pointedly noted, the Currier decision does not imply that employer is automatically liable for all discriminatory conduct or statements of its independent contractors. Rather, this case demonstrates that employer’s own discriminatory conduct (in this instance, retaliatory discharge) may result in liability irrespective of the status of the worker towards whom such conduct in directed. In other words, independent contractor status of the claimant is not a shield from employment discrimination suits under Washington law.

The practical implication for employers is therefore clear: it is in an employer’s best interest to comply with anti-discrimination laws in the treatment of its entire workforce.

Please contact Dorsey & Whitney LLP employment attorneys to seek guidance on compliance issues or receive information regarding management training programs.