A recent Privilege Point described a New York federal court’s rejection of the “functional equivalent” doctrine — under which a nonemployee can be treated as an employee for privilege purposes. More recently, a New York State Supreme Court (which ironically is a trial rather than an appellate court) reached the same conclusion after a detailed analysis.
In P.Z.R. Construction Inc. v. Town of Esopus Planning Board, No. EF2024-3280, 2025 NYLJ LEXIS 1742 (N.Y. Sup. Ct. May 1, 2025), the board claimed privilege protection for communications involving its town planner — who was a contractor rather than an employee. The court acknowledged that the “functional equivalent” doctrine can apply when an entity “chooses to do business through contractors or consultants” who are (1) “integrated into the corporate structure,” (2) “necessary,” (3) “not fully independent” and (4) “possess unique knowledge” about matters on which the contractor can “make decisions.” Id. at *21.
The court rejected the board’s “functional equivalent” argument, emphasizing that the planner’s services were paid for by the special use permit applicant — who thus “may fairly expect, at a minimum, independence and neutrality.” Id. at *22. Any entity hoping to rely on the “functional equivalent” doctrine should examine cases like this, which list and assess the demanding requirements.
