A recent decision handed down by the United States District Court for the Eastern District of Pennsylvania explains to what extent non-employers should be held liable for violations of Title VII, the Age Discrimination in Employment Act (ADEA), and the Pennsylvania Human Relations Act (PHRA). 

In McGehean v. AF&L Insurance Company, the plaintiff filed suit against her former employer, AF&L Insurance Company, and another entity, CIVC, for violations of Title VII, the ADEA and the PHRA. 

CIVC filed a motion to dismiss the complaint on the basis that the plaintiff only alleged that CIVC had “owned and operated AF&L or otherwise had direct control over AF&L’s business” as opposed to alleging that CIVC served as her employer.

Although initially dismissing the requirement that liability for discrimination under Title VII or the ADEA only extends to employers, the federal district court ultimately refused to impose such liability upon CIVC. 

The federal district court pointed out that liability may be imposed on a non-employer when it exercises the requisite control over a plaintiff’s employment activities or controls access to the plaintiff's employment opportunities with third parties and impermissibly interferes with those employment opportunities.  Additionally, the federal district court reiterated that a defendant who is not the plaintiff's employer may also be held liable under a theory of parent-subsidiary liability.  Although there is an initial presumption that a parent corporation is not liable for the wrongful acts of its subsidiary simply because the parent wholly owns the subsidiary, the federal district court noted that a plaintiff may overcome that presumption by demonstrating that the subsidiary is a “mere instrumentality” of the parent corporation. 

The federal district court dismissed the plaintiff’s claims against CIVC for violation of Title VII and the ADEA as it found that she had failed to sufficiently plead that CIVC had control over her employment activities or employment opportunities with third parties or that her employer was a mere instrumentality of CIVC. 

As to the plaintiff’s PHRA claim, the federal district court found that non-employer liability under that statute is potentially broader than under Title VII or the ADEA as the PHRA bars "any person, employer, employment agency, labor organization or employee" from aiding or abetting in discriminatory practices.

However, the federal district court dismissed the plaintiff’s PHRA claim against CIVC as it determined that she failed to plead that CIVC had aided or abetted in the alleged discriminatory practices.

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