District Court Finds LAD Hostile Work Environment Claims are Unavailable to Independent Contractors

The Third Circuit has long held that the provisions of Title VII only protect “employees” and not independent contractors from unlawful discrimination in the workplace. On the state side, New Jersey courts have similarly found that the employment discrimination provisions of the New Jersey Law Against Discrimination (LAD) extend only to those individuals deemed “employees”, and not to individuals properly classified as independent contractors.

However, unlike Title VII, the LAD also includes a provision that prohibits discrimination in the creation or termination of contracts, which makes it unlawful for any person to refuse to “contract with . . . or otherwise do business with any other person” on the basis of any individual characteristic (e.g., race, gender, age) protected under the LAD. In J.T.’s Tire Serv., Inc. v. United Rentals, N.A., Inc., the court recognized that this provision permitted a cause of action for quid pro quo sexual harassment where the defendant was alleged to have refused to do business with the independent contractor plaintiff unless she succumbed to his sexual demands.

In Axakowsky v. NFL Productions, the plaintiff independent contractor asserted a claim for hostile work environment harassment against the defendants for ongoing harassment while performing services for the defendant NFL. The Unites States District Court rejected Axakowsky’s claim that the holding in J.T.’s Tire Service – recognizing a quid pro quo sexual harassment claim for independent contractors under the LAD – should be extended to her hostile work environment claim. The court observed that while the LAD protects against refusals to do business with an individual because of their sex or other protected characteristic, it does not extend to hostile work environment harassment claims that may arise during the ongoing execution of the contractual relationship. In addition, the court noted that the plaintiff’s complaint did not expressly assert a quid pro quo sexual harassment claim.

The Axakowsky case illustrates that independent contractors can only pursue sexual harassment claims under the LAD if they allege quid pro quo harassment – e.g., that they were refused a contract, or their contract was terminated because they rejected a sexual advance (or alternatively, they would not have been awarded the contract or retained had they not submitted to the advance). New Jersey courts continue to reject efforts by independent contractors to advance hostile work environment LAD claims based upon allegations that they were subject to sexually offensive conduct in the workplace while performing services as an independent contractor.