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May 21, 2009

Out-of-State Employees May Sue New York Employers
Under the State and City Human Rights Laws

On May 7, 2009 the New York Appellate Division, First Department held that New York courts have subject matter jurisdiction over discrimination claims filed under the New York State Human Rights Law (“NYSHRL”) and the New York City Human Rights Law (“NYCHRL”) where the act of discrimination occurred within New York, even if the effects of the alleged discrimination are felt primarily outside the state. Hoffman v. Parade Publications, 2009 NY Slip Op 3678 (N.Y. App. Div. May 7, 2009)

In Hoffman, a salesman who worked and resided in Georgia brought an action for age discrimination under the NYSHRL and NYCHRL when he was terminated from his employment at Parade Magazine. Plaintiff alleged that the termination decision was made at the company’s office in New York City. Plaintiff also alleged that he reported to, and occasionally traveled to meet with, the company’s management in New York City. Plaintiff further alleged that, after being informed of the decision to terminate his employment but prior to the effective date of termination, he traveled to New York City to discuss alternatives to his termination.

Parade Magazine moved to dismiss the action on the grounds that the New York court lacked subject matter jurisdiction over the action because the alleged misconduct did not occur either in New York City or State. The lower court agreed, citing Shah v. Wilco Systems, Inc., 27 A.D.3d 169 (2005), a First Department decision which held that a New York court had no jurisdiction over a discrimination claim brought by a New Jersey employee who was informed of her termination in New Jersey. In its decision, the Shah court announced that “the locus of the decision to terminate [the employee] is of no moment. What is significant is where the impact is felt.”

Court Rejects “Impact Rule”

Without expressly overruling Shah, the Hoffman court refused to apply the impact rule articulated in Shah. It explained that Shah’s “locus . . . is of no moment” language was not necessary to the holding and was unsupported by prior precedent. According to the Hoffman court, the impact rule should not be applied so broadly as to preclude any discrimination action “where the allegations support the assertion that the act of discrimination was made in New York.” Instead, the court followed the reasoning of the federal district court in Rylott-Rooney v. Alitalia-Linee Aeree Italiane-Societa Per Azioni, 549 F. Supp. 2d 547 (S.D.N.Y. 2008), which focused on whether the alleged discriminatory action took place within New York.

In Rylott-Rooney, an employee who lived and worked in Minnesota brought an action for discrimination when she was terminated while temporarily visiting in New York. The district court held that subject matter jurisdiction in a New York court was proper, explaining that the NYSHRL and NYCHRL apply either when the initial discriminatory act (i.e., the termination) occurs in New York or when the original experience of injury, which occurs at the employee’s workplace, is in New York.

Relying on Rylott-Rooney, the Hoffman court found it significant that the plaintiff had received a call from New York notifying him of his termination and had subsequently traveled to New York to discuss the termination. Thus, according to the Hoffman court, the fact that the termination decision occurred in New York was sufficient, on its own, to establish discrimination “within” New York, even if, as the employer argued, the employee felt the effects of the termination only in Georgia. The Hoffman court also explained that it would be improper for courts of other jurisdictions to respond to acts of discrimination that allegedly occurred in New York.

Significance for Employers

Employers should be aware that, as a result of the Hoffman decision, an out-of-state employee may be able to seek redress in New York courts for allegations of employer misconduct when the allegedly discriminatory decision was made in New York. Employers should consider addressing this possibility when entering into employment contracts and termination and release agreements with out-of-state employees. We are available to assist you in this regard.

Of course, if you should have any questions regarding this decision, please contact us.