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Scott v. Massachusetts Mut. Life Ins. Co., 86 N.Y.2d 429 (October 19, 1995).







Defendant G. James Blatt runs a "general agency" through which he sells the insurance products of defendant Massachusetts Mutual Life Insurance Company ("Mass. Mutual"). In 1979, Blatt hired plaintiff Marilyn G. Scott as an insurance agent. The parties subsequently executed a Career Contract stating that "[n]othing in this contract shall be construed as creating the relationship of employer and employee between" Defendants and Plaintiff. In 1987, Plaintiff became a District Manager pursuant to a District Manager contract. Both the Career Contract and the District Manager contract were terminable at will by either party. In June 1992, defendant Blatt terminated Plaintiff's Career Contract and Series 6 license to sell certain mutual funds and annuities.

Plaintiff brought this action against Blatt for termination of her agency contract and Series 6 license, allegedly on the basis of her gender, age, and marital status. Plaintiff contended that Mass. Mutual was liable as Blatt's employer for his acts, which it ratified. Defendants moved for summary judgment and claimed that as an independent contractor, Plaintiff was not entitled to bring a claim under the Human Rights Law. The Supreme Court granted Defendants' motion, ruling that Plaintiff was an independent contractor not eligible for protection under Executive Law § 296(1)(a) and had failed to raise a triable issue of fact concerning her claimed status as an "employee." The Supreme Court also rejected Plaintiff's claim under § 296(13), ruling that section is designed to curb discrimination in commercial boycotts and blacklisting. The Appellate Division affirmed.



1. Whether an insurance agent who financed her own operating expenses and support staff, paid based on performance rather than salary, did not have federal, state, or local taxes withheld from her pay, could sell competitors' products, and had agreed by contract to operate as an independent contractor is protected as an "employee" under Executive Law § 296(a)(1).

2. Whether a claim of general discriminatory conduct against an individual falls under Executive Law § 296(13), which prohibits employers from engaging in certain boycotts and blacklists.


A unanimous court affirmed the Appellate Division on both issues, holding that plaintiff could not avail herself of the protections of either Executive Law Sects. 296(a)(1) or 296(13) under the circumstances of the case.


  • Harvey v. NYRAC, Inc., 813 F. Supp. 206 (E.D.N.Y. 1993).
  • In re Ted is Back Corp., 64 N.Y.2d 725 (N.Y. 1984).
  • In re 12 Cornelia St., 56 N.Y.2d 895 (N.Y. 1982).
  • City of Schenectady v. State Div. of Human Rights, 37 N.Y.2d 421 (N.Y. 1975).
  • West v. Mohawk Commercial Carpets, 589 N.Y.S.2d 218 (N.Y. App. Div. 1992).
  • Mehtani v. N.Y. Life Ins. Co., 537 N.Y.S. 800 (N.Y. App. Div. 1989).
  • Holly v. Pennysaver Corp., 471 N.Y.S.2d 611 (N.Y. App. Div. 1984).



1. Executive Law § 296(1)(a)

A. Distinguishing "Employers" from "Independent Contractors" Under Executive Law § 296(1)(a).

Pre-Scott case law had not directly addressed the meaning of "employee" under Executive Law § 296(a)(1). The Scott court held that 296(1)(a) only extends its protection to "traditional employer/employee relationships," and not to independent contractors.

B. Qualifying as an Employee Under Executive Law § 296(1)(a).

The Scott court held there was no triable issue of fact as to whether plaintiff was defendants' employee and not an independent contractor. The Scott court looked to existing case law to determine if plaintiff was an employee or an independent contractor. See, e.g., 3 N.Y. Jur. 2d Agency § 325. One New York court held that although both employees and independent contractors are subject to employer control over the end result of employment, an employee "accept[s] the directions of his employer as to the manner in which the result shall be accomplished," while an independent contractor "is not subject to the orders of the employer as to the means which are used." In re Morton, 284 N.Y. 167, 174 (1940) (holding that a seamstress was an employee when, among other things, respondent employer set hours, provided tools and supplies, set prices, provided calling card imprinted with employee's name together with that of the employer and provided customers with deposit receipts bearing the name of respondent). Referring to a more recent decision, the Scott Court adopted the test that "[m]inimal or incidental control over one's work product without the employer's direct supervision or input over the means used to complete it is insufficient to establish a traditional employment relationship." Ted is Back, 64 N.Y.2d 725, 726 (1984) (finding no employer-employee relationship where salespeople worked at their own convenience, were free to hold outside employment, were not limited to any particular territory, were not reimbursed for expenses, received no salary or drawing account, and were paid strictly on commission basis, despite the facts that the corporation provided leads and retained right to approve contract price and supplied form contracts for salesperson use).

The Scott court held that the following factors were significant in its holding that plaintiff was an independent contractor: (1) financing of projects by plaintiff; (2) paying plaintiff on a performance and not a salaried basis, (3) not withholding taxes from plaintiff's pay, (4) allowing plaintiff to sell products for employer's competitors and (5) plaintiff's agreement to operate as an independent contractor. See Peer v. Babcock, 230 N.Y. 106, 114-15 (1920) (holding a truckman hauling coal for coal dealers and using his own team and wagon in making deliveries on his own time to be a carrier for hire, not an employee); Liberman v. Gallman, 41 N.Y.2d 774, 778-779 (1977) (holding an independent sales representative who was directly responsible for paying his own office rent and clerical help, had his name alongside the manufacturer's on the door to the common office, was reimbursed by manufacturer for some office-related expenses, and had both social security and disability benefits taxes, but not income taxes, deducted by manufacturer, not be an employee); Ted is Back at 726; In re 12 Cornelia St., 56 N.Y.2d 895, 897-898 (1982) (holding salespersons were not employees where they are paid through commissions upon gross sales without deduction for taxes, not entitled to draw against commissions, are permitted to work whatever hours they choose, free to engage in outside employment, bear their own expenses outside of the limited facilities and supplies provided for them, not required to attend periodic sales meetings, have the option to attend training sessions, must pay the premiums on the group health insurance plan provided, and provide the majority of leads); 64 N.Y.S. Bar J. 35 (Feb. 1992). The Scott court viewed as non-determinative the fact that plaintiff was required to recruit and train agents according to Mass. Mutual's guidelines. The court also said that Mass. Mutual's requiring plaintiff to draw up her own job description was merely evidence of "minimal control over plaintiff's daily work product."

Scott explicitly extends to Executive Law § 296(1)(a) the well-established common law definition of "employee." The case provides an important clarification of the scope of 296(1)(a).

C. Comparison of Executive Law § 296(a)(1) to Suits Brought Under Title VII of the 1964 Civil Rights Act.

Like New York Executive Law § 296(1)(a), the scope of Title VII of the 1964 Civil Rights Act is limited to the common law definition of "employee," predicated on the degree of control that the employer has over the means of reaching a particular result. See 42 U.S.C. § 2000e(A) (1989). The factors involved in this definition for purposes of Federal employment discrimination law are the same. See Cobb v. Sun Papers, 673 F.2d 337, 340 (11th Cir. 1982) (en banc) (holding janitor plaintiff was an independent contractor and not an employee where he did not set work hours, but rather performed specific tasks, defendant did not tell him how to perform his job, plaintiff was responsible for paying the salaries and withholding taxes of any additional workers that he might use in performing a job, defendant treated plaintiff as an independent contractor in its accounting procedures, paying him differently than its employees and defendant did not withhold any taxes from plaintiff, as it did for its employees) (followed in Frishberg v. Esprit de Corp., Inc., 778 F. Supp. 793, 798 (2d Cir. 1991); Wilde v. County of Kandiyoh, 811 F. Supp. 446, 451 (D.C. Minn. 1993); Holloman v. Northeast Georgia Dev. Comm'n, 740 F. Supp. 1571, 1576 (11th Cir. 1990); distinguished in Wheeler v. Hardman, 825 F.2d 257, 272 (10th Cir. 1987); Pardazi v. Cullman Med. Ctr., 838 F.2d 1155, 1156 (11th Cir. 1988)); Mack A. Player, Employment Discrimination Law 206 (1988).

The remedies available under federal law provide no incentive for a plaintiff to sue in a federal forum under Title VII with a supplementary New York state claim instead of simply bringing the New York claim alone in state court. Under Title VII, only "remedial" recoveries are available: a plaintiff may win an injunction against further discriminatory practices by the defendant and back pay. 42 U.S.C. § 2000e-5(g) (1989). See Player at 445. However, the "legal" awards broadly available through suits under § 297(9) of the New York Human Rights Law -- compensatory damages (Thoreson v. Penthouse Int'l, 563 N.Y.S.2d 968 (Sup. Ct., N.Y. Cty. 1990) (coercing employee to participate in sexual activity with business associate of employer's chairman in order to advance chairman's business was sexual harassment entitling employee to compensatory damages)); mental anguish, pain and suffering (Cullen v. Nassau County Civil Serv. Comm'n, 53 N.Y.2d 492 (1981) (noting that although mental anguish and humiliation awards may be given as part of a compensatory damages award, plaintiff in this case provided no evidence showing that she suffered mental anguish or humiliation)); and expenses as a result of discrimination (State Div. of Human Rights v. Gillotte, 342 N.Y.S.2d 879 (1973)) -- are unavailable under Title VII. Player at 445. Thus, a plaintiff suing under both Title VII and the New York Human Rights Law can win no monetary remedies unavailable to a plaintiff who simply sues under New York law.

Until 1992, cases in the Second Circuit and some New York state courts had provided some authority to support the availability of punitive damages under the New York Human Rights Law. This possibility seems to have been recognized first and more broadly in the federal courts. See, e.g., O'Brien v. King World Prods., 669 F. Supp. 639, 642 (S.D.N.Y. 1987) (plaintiff may be awarded compensatory and punitive damages via 296(1)(a) for mental injuries resulting from the discrimination that she suffered); Seitzman v. Hudson River Assocs., 542 N.Y.S.2d 104, 108 (N.Y. County 1989) (noting that willful and malicious discriminatory conduct will, if proven, sustain a punitive damages award under 296(1)(a)). Before 1992, a possible incentive existed for a plaintiff to bring a Title VII suit in federal court and attach a supplemental New York Human Rights Law claim, in the hope of winning punitive damages on the latter. But in 1992, both the New York Court of Appeals and the Second Circuit Court of Appeals unequivocally rejected the awarding of punitive damages under state law (Thoreson v. Penthouse Int'l, 80 N.Y.2d 490, 496-97 (1992) (noting that a statute authorizing damages that will alleviate or rectify the harm done to the injured party is not meant to allow damages as a form of punishment for the discriminating party); Tyler v. Bethlehem Steel, 958 F.2d 1176, 1190-91 (2d Cir. 1992), removing any possible incentive for a plaintiff to choose either of these forums on the basis of a potential punitive damages award.

Title VII falls within exclusive federal jurisdiction, but appellant could have attempted to bring a New York Human Rights Law claim supplementary to a Title VII claim. However, in Lippa v. General Motors, 760 F. Supp. 1062 (W.D.N.Y. 1990) (suit under both Title VII and the New York Human Rights Law for alleged sex and marital status discrimination), the federal district court declined to exercise supplementary jurisdiction over the state law claim because of the possibility of jury confusion over the different remedies -- and hence the different types of proof -- available to the plaintiff under New York and federal law. And as the only advantage that plaintiff in Scott could gain by bringing her state claim pendant to Title VII would be to have an increased possibility of winning punitive damages, dismissal of Scott's state claim would have eliminated any reason for her to bring the Title VII claim.

Under § 292(5) of the New York Human Rights Law, the term employer within the meaning of the statute is limited to those employers with at least four persons in their employ. Title VII is further restricted to those employers with at least fifteen employees for each working day for twenty calender weeks. 42 U.S.C. § 2000e(b) (1989). Thus, employers with between four and fourteen employees are subject to suit under New York but not federal law.

2. Executive Law § 296(13)

The plaintiff based her second claim on subsection 13 of Executive Law § 296. Typically, an analysis under § 296(13) proceeds along three lines: (i) what groups are protected; (ii) what type of business activity is covered and (iii) what type of behavior is circumscribed and what factual allegations are sufficient to allege such behavior.

A. Protected Groups.

The legislature enacted this particular subsection, drafted in 1975 and commonly referred to as the "Arab Boycott" Law, primarily to keep OPEC nations from using their economic strength to discriminate against Jewish businesses. See, e.g., General Elec. Co. v. New York State Assembly, 425 F. Supp. 909 (N.D.N.Y. 1975). However, the language of the subsection and accompanying legislative history make clear that the subsection is intended to outlaw economic discrimination based upon any one of several characteristics, including race, creed, color, national origin, and gender. Subsequent cases have illustrated potential application beyond the Arab Boycott. See, e.g., Holly v. Pennysaver Corp., 471 N.Y.S.2d 611 (N.Y. App. Div. 1984) (applying subsection 13 to African-American plaintiffs), West v. Mohawk Commercial Carpets, 589 N.Y.S.2d 218 (N.Y. App. Div. 1992) (holding that subsection 13 prohibits discrimination based upon gender in commercial activities). The Scott Court's discussion of classes of coverage was entirely consistent with previous decisions acknowledging the broad potential applicability of the law beyond the Arab boycott, to cases such as those involving gender. The Scott Court reiterated that the subsection had been added, "to prohibit. . . [certain] business tactics, utilized in New York State. . . which are driven by. . . [any] prohibited discriminatory animus."

B. Types of Business Activity Covered by § 296(13)

Although the other subsections of 296 address specific types of business activities (for example, § 296(1) addresses employer-employee interaction, § 296(2) addresses real estate transactions and § 296(4) addresses education), § 296(13) addresses a broad range of commercial activities. See, e.g., Harvey v. NYRAC, Inc., 813 F. Supp 206 (E.D.N.Y. 1993) (rental of automobile); West v. Mohawk Commercial Carpets, 589 N.Y.S.2d 218 (N.Y. App. Div.1992) (bidding for contracts); Mehtani v. N.Y. Life Ins. Co., 537 N.Y.S.2d 800 (N.Y. App. Div. 1989) (terminating employment contract). In Holly v. Pennysaver Corp., 471 N.Y.S.2d 611 (N.Y. App. Div. 1984), the Appellate Division illustrated the broad reach of § 296(13), holding that the refusal of a corporation to distribute a free advertising circular in a black neighborhood fell under § 296(13). With respect to the definition of covered business activity, Scott neither broadens nor restricts prior case law. The court did little more in its analysis than imply that the plaintiff's status as an independent contractor, while fatal to other discrimination claims, would not by itself remove her from the coverage of 296(13).

C. Behavior Forbidden by § 296(13) and Required Proof

The main focus of the Scott court's inquiry concerned the type of behavior forbidden by § 296(13) and the factual allegations required to bring a claim within the subsection. Courts have generally emphasized specific language in § 296(13) that forbids a "boycott or blacklist." New York courts have held this language to require some sort of "collective action or action aimed at a specific group." Mehtani v. New York Life Ins. Co., 537 N.Y.S.2d at 803. Collective action refers to cases where multiple defendants work to exclude or interfere with a single plaintiff. Absent such collective action, a plaintiff must show the discriminatory behavior was aimed at a group of which he or she is a member. Id. § 296(13) has never been applied to cases where one plaintiff complains of discrimination by one defendant aimed solely at the plaintiff. Id.

Scott continued the rather strict adherence to the boycott and blacklist language. The court declined plaintiff's invitation to expand the coverage of 296(13) to nearly any discriminatory business practice. The plaintiff had urged that the phrase, "it shall be an unlawful discriminatory practice . . . for any person to discriminate against, boycott or blacklist," should be interpreted as a prohibition against general discrimination in commerce. The court held that the words, "for any person to discriminate against," could not be viewed in isolation from the words, "boycott and blacklist." Rather, the court argued that rules of statutory interpretation and documented legislative intent supported the continued restriction of § 296(13) to traditional boycott and blacklist cases. The court explained that under the plaintiff's interpretation, where § 296(13) forbade all discrimination in commerce, the dozens of other subsections in § 296 dealing with specific types of commerce would all be rendered unnecessary. Additionally, the court pointed out that legislative intent was that the phrase was to forbid only some types of "economic warfare," not all discrimination in commerce.

A plaintiff is required to produce at least some evidence of "action" against a protected group to survive a motion for summary judgment. Merely alleging discriminatory behavior toward an individual plaintiff will not suffice. See Mehtani v. N.Y. Life Ins. Co., 537 N.Y.S.2d at 803. Additionally, a plaintiff must show that the action was because of his or her status in a protected group, rather than for legitimate "business reasons." See, West v. Mohawk Comm'l. Carpets, 589 N.Y.S.2d at 129. Scott demonstrated that the requirements of proof continue to be viewed as more than cursory. The court held that the plaintiff's bare allegations that no women had achieved District Manager status was insufficient without some proof that the company had a policy of rejecting qualified women who applied for such positions.

D. Law in Other Jurisdictions

There are provisions closely analogous to New York Exec. Law § 296(13) in New Jersey, California, Connecticut, Florida, Oregon, and Washington. See, N.J. Stat. Ann.§ 10:5-12(l) (West 1993); Cal. Civ. Code § 51.5 (West 1982); Conn. Gen. Stat.§ 42-125a (West 1986); Fla. Stat.§ 542.34 (West 1988); Or. Rev. Stat. ch. 30.860 (Butterworth 1988); Rev. Code Wash.§ 49.60.030 (West 1991). Despite the similarities in wording, the laws of Connecticut, Florida, Oregon, and Washington do not run parallel to the statute considered in Scott, because they were enacted solely to address boycotts sponsored by Arab nations. See, e.g., Samuel S. Cross, Reflections on Corporation Law in the 1970's, 54 Conn. Bar J. 126, 130 (1980) (Connecticut anti-Arab boycott law preempted by Export Administration Act, 50 U.S.C.A. section 2403-1a (West 1979), 38 Op. Atty. Gen. 2017, 2033 (Oregon 1978) (boycott law only applies when foreign government is seeking to force business action), Fla. Stat. § 542.34 (West 1988) (statute applies only to "a foreign boycott or embargo imposed by a nation other than the United States"), Rev. Code Wash. § 49.60.030 (West 1991) (requirement that boycott be imposed "by a foreign government or foreign person"). Due to the requirement of action by a foreign nation, these four state laws could never be applied to the factual situation presented in Scott.

The laws of the two remaining states, California and New Jersey, have been read by their respective state courts to cover a broad range of business activity without a requirement of foreign governmental action. See, e.g., Horn v. Mazda Motor of Am., Inc., 625 A.2d 548 (N.J. Super. Ct. App. Div. 1993), Jackson v. Superior Court, ___ P.2d ___, 30 Cal. App. 4th Supp. 936 (1994). See also, Presbytery of New Jersey of the New Jersey Orthodox Presbyterian Church v. Florio, 40 F.3d 1454 (3d Cir. 1994). However, the New Jersey and California laws differ from New York law on the questions of which groups are protected and what type of behavior is forbidden.

With respect to protected groups, New York covers only religion, race, color, national origin and gender. The California law includes all of the New York groups as well as disability. See, Cal. Civ. Code § 51.5 (West 1982). New Jersey outlaws discrimination based not only upon the groups protected in New York but also disability and sexual preference. See, N.J. Stat. Ann. § 10:5-12(l) (West 1993).

With respect to forbidden conduct, New York courts have interpreted the "boycott or blacklist" language to prevent only systematic discrimination in commerce; the two other state courts have interpreted their analogous statutes more broadly. The New Jersey law can be applied to situations where one plaintiff complains of discrimination against only his or her person. See, Horn v. Mazda Motor of Am., Inc., 625 A.2d 548, 557 (N.J. Super. Ct. App. Div. 1993) ("Mazda was not legally entitled to refuse to contract with Mr. Seneca because of his [disability]. See, N.J.S.A. [sic] 10:5-12(l) (prohibiting discrimination in contracting).") While the California law contains references to boycotting and blacklisting language to the New York law, yet has been given a far more expansive interpretation by the courts -- an interpretation similar to that which Plaintiff Scott urged upon the New York court. Thus, while the New York courts require systematic discriminatory action, "[California law] forbids a business to discriminate against' any person' and does not just forbid a business to boycott or blacklist.'" Jackson v. Superior Court,___ P.2d ___, 30 Cal. App. 4th Supp. 936, 941 (Ca. Ct. App. 1994). See also, Ambrosino v. Metropolitan Life Ins. Co., ___ P.2d ___, 1995 U.S. Dist. Lexis 13054 (N.D. Cal.)

There are several less closely analogous federal claims which merit passing note. 42 U.S.C. § 1981 has been applied to situations involving the "interference with the formation of contracts" on the basis of race, religion, ethnicity or other federally protected categories. See, e.g., Daniels v. Pipefitters' Ass'n Local Union No. 597, 945 F.2d 906, 913 (7th Cir. 1991). In contrast to N.Y. Exec. Law § 296(13), claims based upon 42 U.S.C. § 1981 may be raised in response to activity by one defendant against a single plaintiff. 42 U.S.C. section 1985(3) also has been applied to situations involving interference with commerce on the basis of federally protected class status. A § 1985(3) claim must be based upon action by more than one individual, making it similar to some applications of N.Y. Exec. Law § 296(13). See, e.g., McCalden v. California Library Ass'n, 955 F.2d 1214, 1222 (9th Cir. 1992).

Prepared By:

  • Kathryn W. Becker, '97
  • Quentin C. Faust, '97
  • James D. McCann, '97
  • Stephen A. Mutkoski, Jr., '97
  • Charles A. Samuelson, '96

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