Understanding State Anti-Discrimination Statutes

State anti-discrimination statutes have a surprisingly wide reach.

March 1, 2014 | Debra Steiner Friedman

In today’s mobile workforce, it’s not uncommon for employees to commute from one state to another or to work remotely for an employer in a different state. Thus, it’s important for employers to be able to navigate which state’s anti-discrimination statutes apply. It’s a challenge that is compounded for employers that operate in multiple states.

Federal vs. State Limits

While both federal and state governments can regulate certain types of conduct, they generally don’t have the right to reach beyond their borders to do so. Both the courts and Congress have grappled with the authority of federal anti-discrimination statutes.

In EEOC v. Arabian Oil Co., 499 U.S. 244 (1991), the U.S. Supreme Court determined that Title VII of the Civil Rights Act of 1964, which prohibits race, sex, national-origin and religious discrimination, did not apply to U.S. citizens working abroad for U.S. employers. The court reasoned that, unless a federal statute indicates an intent that it be applied outside the United States, the courts will not extend the reach.

Congress responded promptly by amending Title VII, as well as the Americans with Disabilities Act, which prohibits disability discrimination. The amendments expressly extend the protection of these laws to citizens working abroad for U.S. employers or for foreign entities controlled by them. Similarly, the federal Age Discrimination in Employment Act was amended in 1984 to provide for the application of that statute to U.S. citizens working overseas for U.S. employers.

Each of these statutes provides a defense for U.S. employers if they take actions that violate U.S. law but are mandated by foreign law or are protected by a treaty or international agreement between the U.S. and another country.

While the extraterritorial application of federal anti-discrimination statutes is well-established, the reach of state laws is inconsistent. Indeed, courts analyzing them have taken different approaches, leading to varying results.

The states all start with the same premise, namely recognizing the general principle against extraterritorial application of laws. The divergence appears when the courts formulate standards for determining the reach of their anti-discrimination statutes.

California Requirements

California courts have been reluctant to apply the state’s Fair Employment and Housing Act (FEHA) beyond its borders but have kept the door open. In Campbell v. Arco Marine Inc., 42 Cal. App. 4th 1850 (1996), the California Court of Appeal stated that FEHA was not intended to apply to nonresidents where the conduct constituting a tort took place outside the state.

In Campbell, the plaintiff was a Washington state resident who worked aboard a ship transporting oil from Alaska to various points in Washington and California, with brief stopovers in California and elsewhere. The plaintiff alleged that harassment occurred while she worked on the ship at sea and in Washington state.

The plaintiff made a sexual harassment claim against her employer under California law, since the company’s headquarters were in California. Because the plaintiff did not allege that anyone at the headquarters participated in or ratified the allegedly unlawful conduct, the court found an insufficient nexus with California and dismissed the FEHA claim.

In Gonsalves v. Infosys Technologies Ltd., No. C09-04112 (N.D. Cal. May 6, 2010), the federal district court for the Northern District of California was faced with a closer call than in Campbell but ultimately dismissed a FEHA claim by a nonresident.

The plaintiff, an executive at an information services and consulting company, was an Ohio resident claiming age discrimination and retaliation. Unlike the plaintiff in Campbell, he traveled to California several times during his employment and managed clients based there. He also made general allegations that the decision to terminate his employment was made and approved in California. The court nevertheless found that such allegations did not demonstrate a sufficient nexus to California to warrant the extraterritorial application of FEHA.

In Roger-Vasselin v. Marriott International, No. C04-4027 (N.D. Cal. July 19, 2006), however, a federal district court in California permitted an employee working and living outside the state to take his FEHA claim to trial where his manager, who was based in California, testified that he may have had input into the decisions at issue in the case.

Likewise, in Sims v. Worldpac Inc., No. C12-05275 (N.D. Cal. Feb. 22, 2013) (unpublished), the federal district court denied the employer’s motion to dismiss, noting that, if the decision to terminate the plaintiff was made in California, that may provide a sufficient nexus to apply FEHA.

Other States’ Approaches

The U.S. Circuit Court of Appeals for the District of Columbia takes a similar approach to the California courts, focusing on the nexus between the alleged discriminatory conduct and the District of Columbia.

In Monteilh v. AFSCME, AFL-CIO, 982 A.2d 301 (D.C. Cir. 2009), the plaintiff worked as a union organizer and field representative but never performed any work or applied for any positions within the District of Columbia. The plaintiff sued his employer (the union) for age and race discrimination, as well as retaliation, under the District of Columbia Human Rights Act (DCHRA).

The plaintiff pointed out that the union was headquartered in D.C. and did business there, and that the headquarters had oversight of the regional offices where the plaintiff worked. The D.C. Circuit in Monteilh found that the "critical factual issue" was whether the alleged discrimination occurred in the District of Columbia. The court explained that this requires that either the relevant decisions were made there or their effects were felt there (or both). Because the court did not have enough factual information to make this determination, it remanded the case to the trial court for further proceedings.

New York courts have articulated a slightly different approach than California or the District of Columbia. They focus on whether the alleged discriminatory conduct had an impact within the state, or within the city, as a basis for applying the state’s New York Human Rights Law (NYHRL) or the New York City Human Rights Law (NYCHRL) to nonresidents.

In Hoffman v. Parade Publications, 15 N.Y.3d 285 (2010), the Court of Appeals, New York’s highest court, set forth this impact standard after addressing the situation of an employee who lived and worked in Georgia for an employer headquartered in New York City. The Georgia employee claimed that he attended quarterly meetings in New York City and that the decision to terminate his employment was made there. He sued his employer under both the state and city anti-discrimination laws, claiming unlawful age discrimination.

The New York Court of Appeals rejected his claim, finding that the impact requirement for nonresidents must be limited to those who work in the state and/or city. The court reasoned that the requirement was simple to apply, while focusing on an employee’s contacts with the state and/or city would be impractical and would lead to inconsistent and arbitrary results.

Pennsylvania and Kentucky, like New York, will not apply state anti-discrimination laws to individuals who neither work nor reside in the state. See, for example, Blackman v. Lincoln Nat. Corp., 2012 WL 6151732, Civ. Action No. 10-6946 (E.D. Pa. Dec. 10, 2012); Union Underwear Co., Inc. v. Barnhart, 50 S.W.3d 188, 190 (Ky. 2001).

In these states, the courts have rejected attempts to focus on other contacts with the state, such as the location of an employer’s headquarters in the state. Along the same lines, the federal district court deciding the Blackman case pointed out that an employee working and living outside the state who attended quarterly meetings in Pennsylvania and had regular contact with Pennsylvania employees at the company did not justify application of the state’s anti-discrimination statute.

New Jersey takes an even narrower approach. The courts there consistently have found that the New Jersey Law Against Discrimination (NJLAD) applies to employees who work in the state, but it does not apply to New Jersey residents employed outside the state or to employees working outside the state for employers with headquarters in New Jersey. See, for example, Brunner v. AlliedSignal Inc., 198 F.R.D. 612 (D.N.J. 2001); Buccilli v. Timby, Brown & Timby, 283 N.J. Super. 6 (App. Div. 1995).

Limit Liability

The complexity of determining what state anti-discrimination statutes may apply to an employer’s workforce makes it difficult for employers to fully assess possible legal risks.

The bottom line is that employers may be subject to discrimination claims under various state statutes depending on where the employee works, where the employer does business and/or where the employee resides.

Fortunately, there are steps employers can take to reduce their liability exposure. Employers that learn the law and how to limit their risk will better understand the rules on the playing field of the modern workplace, in which both companies and employees are extending their reach beyond state and federal borders.

Debra Steiner Friedman is an attorney at Cozen O’Connor in Philadelphia.