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Protecting gig workers and independent contractors under the MHRA

by Katherine Rollins

Between 2001 and 2016, Minnesota saw a 30 percent increase in independent contractors, compared to a less than 10 percent increase in employees.1 Nationally, in 2016, 4.9 million taxpayers reported income earned as an independent contractor as their only income.2 That same year, the median income for a primary earner for whom independent contracting work was their primary source of income was $15,510.3 The “gig economy” also allows workers to supplement their income through app-based work. According to Pew Research Center, 16 percent of U.S. residents have earned money from an online gig platform.4 Approximately 4 percent of U.S. adults are currently driving for a ride-share app; delivering take-out, groceries, and packages; or performing household tasks on-call.5


Companies that rely on the labor of independent contractors tout the flexibility and independence those workers have, while spending millions to prevent being required to provide benefits like unemployment insurance and health care.6 And companies are often able to evade liability for discrimination against independent contractors, as most anti-discrimination statutes only impose liability on employers who discriminate against employees.

Traditionally, the “business discrimination” section of the Minnesota Human Rights Act (MHRA) has been cited by customers or businesses alleging discrimination in: insurance claims adjustment,8 approval of a conditional use permit by a city planning commission,9 plasma donation,10 enforcement of Minnesota Department of Health licensing,11 hotel accommodations,12 foreclosure proceedings,13 motor vehicle sales,14 air travel,15 awarding city contracts,16 a joint venture agreement,17 commercial leases,18 contracting and provision of taxicab services,19 and dental care.20 

“It is an unfair discriminatory practice for a person engaged in a trade or business or in the provision of a service… [t]o intentionally refuse to do business with, to refuse to contract with, or to discriminate in the basic terms, conditions, or performance of the contract because of a person’s race, national origin, color, sex, sexual orientation, or disability, unless the alleged refusal or discrimination is because of a legitimate business practice.”21

Construed liberally,22 this section can and should be used to hold companies accountable for discrimination against their independent contractors.

Minnesota courts have only issued decisions in two cases brought by an independent contractor alleging discrimination under the business discrimination provision of the MHRA.

In Wilson v. CFMOTO Powersports, Inc.,23 a sales representative brought claims for employment and, in the alternative, business discrimination based on race. Denying the defendant’s motion to dismiss for failure to state a claim, the court noted the plaintiff “does not need to show that he is an ‘employee’ for the purposes of his §363A.17(3) claim.”24

Hanson v. Friends of Minn. Sinfonia25 provides the most substantive analysis of an independent contractor’s claim of discrimination. There, a professional musician was terminated while on medical leave for an injury. After rejecting her claims of employment discrimination, the court considered whether the business discrimination section could provide a remedy. Without explicitly deciding whether the section applied to independent contractors, the court affirmed summary judgment in favor of the defendant because the plaintiff failed to show she was disabled under the MHRA.26 

Despite the limited guidance, analysis of other business discrimination claims, and anti-discrimination laws more generally, can provide a framework for evaluating an independent contractor’s claims of discrimination.

Independent contractors suing for discrimination in the performance of a contract must be a party to the contract,27 but those denied a contract or whose business has been refused for discriminatory reasons will also have standing to sue.28 

To survive summary judgment, plaintiffs can offer either direct evidence of discrimination or sufficient indirect evidence of discrimination through the McDonnell Douglas burden-shifting analysis.29 Direct evidence shows “a specific link between the alleged discriminatory animus and the challenged decision, sufficient to support a finding by a reasonable fact finder that an illegitimate criterion actually motivated” the adverse action.30 Under the McDonnell Douglas analysis, a plaintiff can establish a prima facie case of discrimination by showing their membership in a protected class, qualifications to perform or receive the anticipated or contracted services, adverse action by the defendant, and a causal connection between the adverse action and the protected status.31 The burden then shifts to the defendant to show a “legitimate business purpose” for the alleged refusal or discrimination.32 If the defendant meets their burden, a plaintiff can still succeed on their claim by showing defendant’s “legitimate business purpose” was pretextual.33

If successful, a plaintiff is entitled to compensatory damages and may be awarded attorneys’ fees and costs and punitive damages.34

The statutory language and limited case law support the application of this section to claims of discrimination brought by independent contractors. However, given the lack of case law, a number of open questions remain: 

• What constitutes a “legitimate business purpose”? 
• Are disparate impact claims viable under the business discrimination provision? 
• Does the MHRA extend protection to independent contractors who report violations of the business discrimination provision?35 

Independent contractors should not be excepted from the protections of anti-discrimination law. “[T]o secure for persons in this state, freedom from discrimination[,]” plaintiffs’ attorneys must be willing to test the application of this provision in the courts. 


 

KATHERINE ROLLINS is a recent graduate of Mitchell Hamline School of Law and an associate attorney at Baillon Thome Jozwiak & Wanta LLP. She is passionate about protecting civil rights and represents individuals who’ve faced unlawful discrimination, retaliation, and harassment in the workplace and in housing.

 


1 Katherine Lim, Alicia Miller, Max Risch & Eleanor Wilking, Independent Contractors in the U.S.: New Trends from 15 Years of Administrative Tax Data, U.S. Dep’t Treas.: Internal Rev. Serv. 58, table 2 (July 2019), https://www.irs.gov/pub/irs-soi/19rpindcontractorinus.pdf?msclkid=626ac70ca88611ecb127bc6da64b27e6. 
2 Id. at 37, fig. 5. 
3 Id. at 61, table 5. 
4 Monica Anderson, Colleen McClain, Michelle Faverio & Risa Gelles-Watnick, The State of Gig Work in 2021, Pew Rsch. Ctr. (12/8/2021), https://www.pewresearch.org/internet/2021/12/08/the-state-of-gig-work-in-2021/.
5 Id.
6 Kate Conger, It’s a Ballot Fight for Survival for Gig Companies Like Uber, N.Y. Times (10/23/2020). 
7 See Midwest Sports Marketing, Inc. et al. v. Hillerich & Bradsby of Canada, Ltd. et al., 552 N.W.2d 254, 260-62 (Minn. Ct. App. 1996); Minn. Stat. §363A.03, subdiv. 15. 
8 See Darmer v. State Farm Fire & Casualty Co., No. 17-4309 (JRT/KMM), 2020 WL 514261, at *13 (D. Minn. 1/31/2020).
9 See Dewalt v. City of Brooklyn Park, No. 15-cv-4355 (PAM/KMM), 2017 WL 2178310, at *8 (D. Minn. 5/17/2017).
10 See Scott v. CSL Plasma, Inc., 151 F. Supp. 3d 961, 962 (D. Minn. 2015). 
11 See Unity Healthcare, Inc. v. County of Hennepin, No. 14-cv-114 JNE/JJK, 2015 WL 2097668, at *1 (D. Minn. 5/5/2015). 
12 See Childs v. Extended Stay of Am. Hotels, No. 10-3781 (SRN/JJK), 2012 WL 2126845, at *3 (D. Minn. 6/12/2012). 
13 See Allen v. Bank of Am. Corp., No. 10-4205 (MJD/JSM), 2011 WL 2437087, at *2 (D. Minn. 5/9/2011). 
14 See Hunter v. Ford Motor Co., No. 08-4980 (PJS/JSM), 2010 WL 3385225, at *12 (D. Minn. 7/28/2010). 
15 See Shqeirat v. U.S. Airways Group, Inc., 515 F. Supp. 2d 984, 1006 (D. Minn. 2007). 
16 See Borom et al. v. City of St. Paul, 184 N.W.2d 595, 596 (Minn. 1971); Boone v. PCL Constr. Servs., Inc., No. 05-24 (MJDJGL), 2005 WL 1843354, at *1 (D. Minn. 8/2/2005). 
17 See NDN Drywall, Inc. v. Custom Drywall, Inc., No. Civ. 04-CV-4706DSDSRN, 2005 WL 1324056 (D. Minn. 5/4/2005). 
18 See D.B. Indy, L.L.C. v. Talisman Brookdale LLC, No. Civ. 04-1023 (PAM/JS), 2004 WL 1630976, at *1 (D. Minn. 7/20/2004).
19 See Gold Star Taxi & Transportation Serv. v. Mall of Am. Co., 987 F. Supp. 741, 748 (D. Minn. 1997). 
20 See State by Beaulieu v. Clausen, 491 N.W.2d 662, 663 (Minn. Ct. App. 1992).
21 Minn. Stat. § 363A.17, subdiv. 3. 
22 See Minn. Stat. § 363A.04.
23 No. 15-3192 (JRT/JJK), 2016 WL 912182 (D. Minn. 3/7/2016). 
24 Id. at *7. 
25 A03-1061, 2004 WL 1244229 (Minn. Ct. App. 6/8/2004).
26 Id. at *5. 
27 Krueger v. Zeman Construction Co., 781 N.W.2d 858, 863 (Minn. 2010). 
28 See id. at 864 (“Thus, the statute only provides a cause of action to the person who is denied a contract... because of [] discrimination.”); Scott v. CSL Plasma, Inc., 151 F. Supp. 3d 961, 967 (D. Minn. 2015) (“[Plaintiff’s] allegation of a ‘refusal to do business with’ or ‘refusal to contract with’ discrimination claim ‘constitutes sufficient injury for the law to provide a remedy.’”). 
29 Scott, 151 F. Supp. 3d at 967.
30 Torgerson v. City of Rochester, 643 F.3d 1031, 1044 (8th Cir. 2011).
31 See Darmer v. State Farm Fire & Casualty Co., -- F. Supp. 3d --, 2020 WL 514261, at * 13 (D. Minn. 1/31/2020).
32 Id.; Minn. Stat. § 363A.17, subdiv. 3. 
33 Darmer, 2020 WL 514261, at *13.
34 Minn. Stat. § 363A.29, subdiv. 4; see also Ginther v. Enzuri Group, LLC, A19-1303, 2020 WL 5888024, at *2 (Minn. Ct. App. 10/5/2020). 
35 See Minn. Stat. § 363A.15.

 


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