October 13, 2008

General Contractors Beware: Massachusetts Court Expands General Contractor Liability for Job Site Discrimination

Holland & Knight Alert
Gina A. Fonte

In a recent decision with broad implications for the construction industry, the Massachusetts Appeals Court has held that general contractors owe a duty to their subcontractors’ employees to provide a discrimination-free work environment.

In the case of Thomas O'Connor Constructors, Inc. v. Massachusetts Commission Against Discrimination, a subcontractor employee sued the project’s general contractor for harassment and racial discrimination. The worker claimed that the general contractor’s superintendent had subjected him to racially offensive remarks. He also claimed that the general contractor was informed of the misconduct, but failed to take any steps to prevent or remedy the harassment. In its defense, the general contractor argued that it owed no duty to the worker to prevent the discrimination because he was not the general contractor’s direct employee. The worker prevailed in his case filed with the Massachusetts Commission Against Discrimination (MCAD), and the general contractor was ordered to pay $50,000 in emotional distress damages and $10,000 in civil penalties, and was also directed to conduct annual training sessions for its employees. The MCAD award was affirmed in the Superior Court. On appeal by the general contractor, the Massachusetts Appeals Court sided with the worker, concluding that a general contractor has an affirmative obligation to provide a discrimination-free work environment to its subcontractors’ employees working at its job site.

Because of the O’Connor decision, general contractors may now face discrimination lawsuits not only from their own employees, but also from employees of other companies at the job site.

Are You Covered?

Discrimination lawsuits brought by non-employees are often outside the protections of commercial insurance policies. Most Commercial General Liability (CGL) policies specifically exclude discrimination claims from coverage. While Employment Practices Liability Insurance (EPLI) policies generally provide coverage for discrimination claims brought by employees, claims from independent contractors, subcontractors and other non-employees are commonly excluded.

In light of the O’Connor decision, general contractors with Employment Practices Liability Insurance policies should confirm with their insurance carriers whether they are covered for discrimination claims brought by persons at the job site who are not direct employees of the general contractor.

The Best Defense Is a Good Offense

In the O’Connor case, the Appeals Court penalized the general contractor for failing to remedy the hostile work environment at its job site. It implicitly found that the general contractor’s investigation, and the step of returning the superintendent to the project, did not address the discriminatory actions. Thus, it is critical that general contractors take affirmative steps to deal with discrimination and harassment at their job sites, not just for the protection of their own employees, but also for others working at the job site. These steps may include:

  • maintaining a clear, written non-discrimination policy, and requiring subcontractors to maintain similar
  • providing on-site discrimination and harassment training to supervisors, employees and third parties who operate at the job site, such as subcontractors and independent contractors
  • promptly investigating claims of discrimination and/or harassment made by individuals working at the job site, including non-employees, and remedying discrimination if it exists; it is important to document and create a detailed record of the investigation

These affirmative strategies may, in the long run, be the best insurance against the type of non-employee discrimination claims discussed in O’Connor.

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