We all know that the Minnesota Human Rights Act prohibits employment discrimination. However, a little-known provision in that law also bans contract-based discrimination, which makes it illegal for a person engaged in a trade or business:
… to 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 purpose.
Recently, the Minnesota Supreme Court heard the case of Krueger v. Zeman Const. Co., — N.W.2d —- (Minn. April 29, 2010) to decide who actually gets to enforce this law – is it just the business itself or may the employees of the business sue if they are damaged in some way?. In that case, Pamela Kreuger was the owner and sole employee of Diamond Dust, a drywall and sheetrock business. Diamond Dust subcontracted with Zeman Construction to supply materials and labor for a construction project. Krueger personally worked on the project and alleged that Zeman’s managers sexually harassed her and discriminated against her because of her gender. Krueger sued Zeman under the contract discrimination provision as both the owner of Diamond Dust and as an individual employee.
There was no question that Diamond Dust could sue since they were actually the party to the contract. However, could Kruger sue as an individual since she was the actual victim of harassment? No, said a slim majority of the Minnesota Supreme. Only the actual parties to a business contract can sue for business discrimination in the performance of a contract. Otherwise, every employee of a business harmed by discrimination in a contract could sue and collect damages for lost potential wages and other opportunities. The Supreme Court concluded that the legislature did not intend to create this remedy for the employees of contractors.
This case closes off opportunities for non-employees to come in through the back door to sue Minnesota employers for employment discrimination. Fewer lawsuits is always a welcome development.