Appellate Division questions NYS DHR's $60,000 civil fine imposed on absent employer
In a decision issued on October 18, 2018, the Appellate Division concluded that the New York State Division of Human Rights (NYS DHR) has a right to impose a civil fine on an employer above $50,000 limit, due to a “serious and wanton disregard for the law,” but also concluded that NYS DHR could not impose the higher fine just because the employer refused to participate in the administrative hearing.
In 2017, NYS DHR found that there was probable cause that Empire Toyota Scion engaged in disability discrimination when it terminated one of its employees. Empire Toyota Scion refused to appear or participate in the administrative trial. The trial was held without the employer, and the Administrative Law Judge concluded that the employer engaged in unlawful discriminatory conduct, and recommended awards of back pay, compensatory damages, and a civil fine of $1,000.
Empire Toyota Scion then challenged the ALJ’s recommendations, through an administrative appeal. After reviewing the appeal, NYS DHR adopted the ALJ’s recommendations, but increased the fine to $60,000, citing both (a) the employer’s submission of a letter indicating it had no intention of appearing at the hearing, and (b) the employer’s “serious and wanton disregard for the law.”
The employer commenced a proceeding in Albany County Supreme Court under Executive Law §298, challenging the $60,000 fine. The Supreme Court dismissed the petition, granting NYS DHR’s cross-petition, writing that "[p]etitioner's complete disregard for [respondent's] investigation and inquiries throughout the process evinced a serious and wanton disregard for the law and warranted the imposition of a greater penalty." A judgment was entered thereon in May 2017.
On appeal, the Appellate Division reversed and remanded, holding that NYS DHR has the right to impose a civil fine of up to $50,000. However, under Executive Law § 297 (4) (c) (iv) a civil fine exceeding $50,000, up to $100,000, may be assessed only when respondent determines that the offending party "committed an unlawful discriminatory act which [was] found to be willful, wanton or malicious." The Appellate Division concluded that it was unclear if NYS DHR relied on a valid reason for exceeding the $50,000 threshold. If the increased fine was due to the employer’s “serious and wanton disregard for the law” in terms of its violation of New York Human Rights Law, then the increased civil fine was permitted. However, if the increased fine was due to the employer’s refusal to participate in the hearing, then the higher fine would have exceeded NYS DHR’s statutory authority to fine recalcitrant employers. The matter was sent back to NYS DHR for more information about its justification for the increase in the civil fine from $1,000 to $60,000.
The bottom line is that NYS DHR has discretion to impose fines on employers up to $50,000, and fines exceeding that amount may not be imposed for refusing to participate, but only where there is strong evidence of intentional discrimination.
THIS ARTICLE IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL ADVICE.
 JPK Imps./Oneonta, Inc. v. N.Y. State Div. of Human Rights, 2018 NY Slip Op 7011 (N.Y. App. Div., 2018)