New Jersey courts have made it clear that independent contractors, such as the skating instructor inPukowsky v. Caruso, 312 N.J. Super. 171 (App. Div. 1998), are not protected by section 12(a) of the NJLAD. That provision makes it unlawful for an employer, because of a person’s protected classification, to refuse to hire, terminate, or discriminate against such person in compensation or in the terms and conditions of employment. Since Pukowsky, practitioners have attempted to argue that independent contractors should be entitled to the law’s protections, or that they are de facto employees. But few practitioners have recognized that an entirely separate provision of the NJLAD is available to protect their independent contractor clients.

Section 12(l) of the NJLAD provides:

It shall be an unlawful employment practice, or, as the case may be, an unlawful discrimination:

. . . .

For any person to refuse to buy from, sell to, lease from or to license, contract with, or trade with, provide goods, services or information to, or otherwise do business with any other person on the basis of the. . . sex . . .of such other person . . . .[emphasis added.]

This is the provision that could have protected Pukowsky when the owner of the skating rink refused to allow her to her give private lessons at the rink after she rebuffed his sexual advances.

The LAD was enacted in 1945 “to protect all persons in their civil rights” and “to prevent and eliminate practices of discrimination” [Historical and Statutory Notes, N.J.S.A. 10:5-1]. In enacting the LAD, the legislature found that “practices of discrimination against any of its inhabitants, because of . . . sex. . . are matters of concern to the government of the State, and that such discrimination threatens not only the rights and proper privileges of the inhabitants of the State but menaces the institutions and foundation of a free democratic State . . . .” N.J.S.A. 10:5-3. It further declared its “opposition to such practices of discrimination when directed against any person by reason of the . . . sex . . . of that person”.Ibid. Recognizing the “personal hardships” and “grievous harm” suffered because of discrimination, the Legislature stated that the LAD should be “liberally construed in combination with other protections available under the laws of this State.” Ibid. By amending the LAD in 1977 to add 12(l), which prohibits discrimination when private parties do business with one another, the Legislature expanded the scope of the LAD to further these legislative goals.

Section 12(l) of the LAD is unrelated to the employment context, instead prohibiting discrimination in a business-to-business setting. In fact, this provision of the NJLAD is one of several which prohibits discrimination in settings other than an employment context. See also N.J.S.A. 10:5-12 (b) (prohibiting discrimination by labor organizations); 12(f)(prohibiting discrimination in places of public accommodation); 12(g) (prohibiting discrimination in real estate); and 12(i) (prohibiting discrimination in banking). Thus, it is certainly not true, as some courts have simplistically found, that “the LAD applies to employer-employee relationships only”. Chrisanthis v. County of Atlantic, 361 N.J. Super. 448, 450 (App. Div. 2003). What can be said (and was probably meant in such pronouncements), is that N.J.SA. 10:5-12(a) of the LAD applies only to employer-employee relationships. However, 12(l) of the LAD, which clearly is not limited to the employer-employee relationship (see Rubin v. Chilton, 359 N.J. Super. 105, 111 (App. Div. 2003)), but encompasses business relationships generally, prohibits a company from refusing to do business with another individual or company for discriminatory reasons.

In Rubin v. Chilton, 359 N.J. Super. 105 (App. Div. 2003), plaintiffs, pathologists who provided services to Chilton Memorial Hospital for many years until their contract was cancelled, alleged age discrimination pursuant to 12(a) and 12(l) of the LAD. The trial court dismissed their entire complaint on the basis that they were independent contractors rather than employees, pursuant to the Pukowsky test, and therefore not protected by the LAD. On appeal, the Appellate Division affirmed the holding as to plaintiffs’ 12(a) employment discrimination claim. However, the court held that plaintiffs could proceed on their 12(l) failure to contract claim. It held that if plaintiffs could show the hospital terminated their contracts because of their age, they would establish a violation of 12(l). In so finding, the court stated that “[t]he conduct proscribed by N.J.S.A. 10:5-12l is exclusively related to non-employee relationships.” Id. at 111. The court went on to note that defendant’s reliance on Pukowsky was misplaced, as that case “stands for no more than the proposition that only employees are protected by the provisions of subsection a.” Ibid.

Other cases have also addressed 12(l), including: Perlowski v. Elson T. Killam Associates, Inc., 384 N.J. Super. 467, 479 (Law Div. 2005) (attorney found to be an independent contractor rather than an employee could proceed under a 12(l) theory of liability); Marascia v. Cardio Medical Products, Inc., 2006 WL 2038503 (D.N.J. 2006) (plaintiff permitted to amend age discrimination complaint to add claim under 12(l) following defendant’s assertion of affirmative defense that plaintiff was an independent contractor rather than an employee); Bubbles N’ Bows, LLC v. Fey Publishing Co., 2007 WL 2406980 (D.N.J. 2007) (court accepted plaintiff’s 12(l) claim alleging that Defendants engaged in discriminatory acts when they refused to print a line of greeting cards called “Alternative Lifestyles”); Behringer v. Medical Center at Princeton, 249 N.J. Super. 597 (Law Div. 1991) (non-employee surgeon with AIDS found to have made out a prima facie case under 12(l) after hospital suspended his privileges due to AIDS diagnosis); Horn v. Mazda Motor of America, Inc., 265 N.J. Super. 47 (App. Div. 1993) (Mazda’s refusal to contract with plaintiff because of his addiction was a violation of 12(l) of the LAD).

Section 12(l) of the LAD provides an avenue for protection of independent contractor clients that is often overlooked by practitioners who have blithely accepted that the LAD is merely an employmentdiscrimination law. But one unanswered question about the reach of 12(l) remains. Does this provision also protect against sexual harassment in the course of contracting?

The term “sexual harassment” is not used in the LAD. Pukowsky v. Caruso, 312 N.J. Super. 171, 177 (App. Div. 1998). The provision of the LAD from which the vast majority of sexual harassment cases arise, N.J.S.A. 10:5-12(a), speaks of discrimination because of an employee’s sex. Likewise, the same prohibition against discrimination on the basis of sex is used in LAD sections relating to labor organizations (12b), places of public accommodation (12f), real estate (12g and 12h), banking (12i), and refusal to contract or otherwise do business (12l). However, despite no mention of the term “sexual harassment” in the LAD, there is no question that “sexual harassment is a form of sex discrimination that violates . . . the LAD.” Lehman v. Toys ‘R’ Us, Inc., 132 N.J. 587, 601 (1993), citing Meritor Sav. Bank v. Vinson, 477 U.S. 57, 106 S.Ct. 2399, 91 L.Ed.3d 49 (1986); Erickson v. Marsh & McLennan Co., 117 N.J. 539, 555-56 (1990).

Since there have not yet been any 12(l) cases involving sex discrimination, the issue of whether sex discrimination in that provision encompasses sexual harassment has never been decided. But sexual harassment is by definition a form of sex discrimination which is explicitly prohibited in 12(l). And where the sexual harassment results in defendant’s refusal to do business with plaintiff, there can be no doubt that the conduct is prohibited by 12(l) of the LAD.

It is clear that sexual harassment claims are not limited to the employment setting. In Thomas v. County of Camden, 386 N.J. Super. 582 (App. Div. 2006), the Appellate Division held that the language in N.J.S.A. 10:5-4 of the LAD (“all persons shall have the opportunity to . . . obtain all the accommodations, advantages, facilities, and privileges of any place of public accommodation . . . without discrimination because of . . . sex. . .”), proscribed sexual harassment in places of public accommodation. See alsoFranek v. Tomahawk Lake Resort, 333 N.J. Super. 206 (App. Div. 2000) (reversing summary judgment where plaintiff had set forth a hostile environment disability discrimination case in a public accommodations setting). In Allen v. Educational Community Credit Union, 2006 WL 1495775 (W.D. Wash. 2006), although plaintiff could not proceed on an employment discrimination case because the harasser was not her employer, the court did permit her to pursue a sexual harassment claim on a public accommodations theory. Sexual harassment claims have also been recognized in the housing context.See, e.g., Ewers v. Columbia Heights Realty, LLC, 44 A.D.3d 608 (N.Y. A.D. 2007); State v. Burche, 729 N.W.2d 431 (Iowa 2007); Szkoda v. Illinois Human Rights Commission, 302 Ill.App.3d 532 (App. Ct. Ill. 1998); Grieger v. Sheets, 689 F.Supp.835 (N.D. Ill. 1988); Shellhammer v. Lewallen, 770 F.2d 167 (6^thCir. 1985); Brown v. Smith, 55 Cal. App. 4^th 767 (Cal.Ct.App. 1997).

Given the LAD’s strong public policy to eradicate the cancer of discrimination (Fuchilla v. Layman, 109 N.J. 319, 334 (1988); Dale v. Boy Scouts of America, 160 N.J. 562 (1999)), there is no reason to assume that the prohibition of discrimination on the basis of sex in 12(l) would not also include a prohibition on the creation of a sexually hostile environment (e.g., subjecting a female to sexually offensive comments or unwelcome sexual touching as a condition to doing business with her). But whether a claim for hostile environment sexual harassment that does not result in defendant’s refusal to do business can be read into 12(l), there is no doubt that the provision protects an individual whose business relationship is ended as a result of sex discrimination (such as because of her refusal to give in to another’s sexual demands), or due to discrimination on the basis of any other protected status.

When the courts shut a door, it is up to us to find a window. Section 12(l) of the NJLAD is a window of opportunity for protecting independent contractor clients whose rights have been violated.