The California Fair Employment and Housing Act (“FEHA”) generally prohibits “any employer” from making a medical or psychological inquiry of an applicant. It also states that the term “employer” includes any person regularly employing five or more persons, or any person acting as an agent of an employer, directly or indirectly.

On August 21, 2023, the California Supreme Court addressed a question posed by the Ninth Circuit Court of Appeals regarding the scope of potential liability under the FEHA in Raines v. U.S. Healthworks Medical Group, __Cal. 5th __ (2023). Specifically, the Ninth Circuit asked the following question: “Does California’s Fair Employment and Housing Act, which defines “employer” to include “any person acting as an agent of the employer permit a business entity acting as an agent of the employer to be held directly liable for employment discrimination?” The Supreme Court concluded that an employer’s business-entity agent can be held directly liable under the FEHA for employment discrimination in appropriate circumstances when the agent has at least five employees and carries out FEHA-regulated activities on behalf of an employer.

1. Facts

Two plaintiffs, Kristina Raines and Darrick Figg, filed a proposed class action alleging that they received offers of employment that were conditioned on the successful completion of pre-employment medical screenings to be conducted by U.S. Healthworks Medical Group (“USHW”), who was acting as an agent of the plaintiffs’ prospective employers. The plaintiffs claimed that as part of its medical screenings, USHW required job applicants to complete a written health history questionnaire that included numerous health-related questions having no bearing on the applicant’s ability to perform job-related functions. The plaintiffs complained these questions covered details of the applicant’s health history, including whether the applicant has, and/or has ever had, (1) venereal disease, (2) painful or irregular vaginal, discharge or pain, (3) problems with menstrual periods, (4) irregular menstrual period, (5) penile discharge, prostate problems, genital pain or masses, (6) cancer, (7) mental illness, (8) HIV, (9) permanent disabilities, (10) painful/frequent urination, (11) hair loss, (12) hemorrhoids, (13) diarrhea, (14) black stool, (15) constipation, (16) tumors, (17) organ transplant, (18) stroke, or (19) a history of tobacco or alcohol use.

Kristina Raines received an offer from Front Porch Communities and Services for a position as a food service aide, but the offer was conditioned on her passing the pre-employment medical screening conducted by USHW. Raines alleged that she responded to most of the questions on the written questionnaire, but she declined to answer the question about the date of her last menstrual period. She alleged that the exam was then terminated and Front Porch revoked its offer of employment.

Darrick Figg received an offer from the San Ramon Valley Fire Protection District to serve as a member of the volunteer communication reserve, but his offer, too, was conditioned on his passing the pre-employment medical screening conducted by USHW. Figg alleged that he answered all the questions, successfully passed the screening, and was hired for the position.

Raines filed a state court action against Front Porch and USHW. The defendants removed the action to federal court. The operative complaint alleged claims under the FEHA, the Unruh Civil Rights Act, the unfair competition law, and common law right of privacy. The district court granted the defendants’ motion to dismiss, concluding that the FEHA does not impose liability on the agents of a plaintiff’s employer. The plaintiffs appealed the dismissal. After holding oral argument, the Ninth Circuit asked the California Supreme Court to answer the question described above.

2. The Issue Presented

The Supreme Court viewed the case as presenting a question regarding the proper interpretation of the definition of “employer” in the FEHA. Based on its examination of the indicators of legislative intent, the Supreme Court concluded that the agent-inclusive language in Government Code Section 12926(d) permits a “business-entity agent” of an employer to be held directly liable for violation of the FEHA when it carries out FEHA-regulated activities on behalf of an employer. Notably, the Supreme Court recognized the value of federal authorities and cited numerous federal anti-discrimination statutes and cases that supported its conclusion.

3. Holding

The Supreme Court answered the Ninth Circuit’s question as follows: “The California Fair Employment and Housing Act, which defines “employer” to “include[]” “any person acting as an agent of an employer” . . . permits a business entity acting as an agent of an employer to be held directly liable as an employer for employment discrimination in violation of the FEHA in appropriate circumstances when the business-entity agent has at least five employees and carries out FEHA-regulated activities on behalf of an employer. We do not decide the significance, if any, of employer control over the act(s) of the agent that gave rise to the FEHA violation, and we also do not decide whether our conclusion extends to business-entity agents that have fewer than five employees. We base our conclusion on our interpretation of the FEHA’s definition of employer (§ 12926, subd. (d)); we express no view of the scope of a business-entity agent’s possible liability under the FEHA’s aider and abettor provision (§ 12940, subd. (i)).”

The Raines decision has potentially far-reaching significance on FEHA liability and the potential exposure faced by “business-entity agents” of employers who carry out FEHA-regulated activities. It also reminds readers of the adage that “bad facts make bad law.” The Supreme Court made a point of quoting the list of questions posed in the pre-employment health history questionnaire that was made a condition of employment even though the questions themselves played no direct role in deciding whether USHW was an “employer.” It also emphasized the harsh consequences of an individual’s unwillingness to answer highly personal questions having nothing to do with the ability to perform job-related functions. In reading the decision, it quickly became clear that the Supreme Court wished to send a message and was prepared to take steps to make the agent who posed those questions accountable. It did exactly that.

Raines reminds employers to exercise caution when delegating roles to other entities to carry out functions relating to the hiring process, such as pre-employment screening and background checks. If an applicant loses an employment opportunity because of the FEHA-regulated activities of an agent, the prospective employer cannot shield itself from accountability simply by claiming it did not pose the questions directly or it did not know the applicant’s rights were being violated. It is evident that the potential significance of the decision is not limited to preemployment activities. Further, neither the employer nor its business-entity agent will be able to escape accountability by claiming that the agent will not directly employ the applicant or some unlawful discrimination allegedly occurred in connection with a post-hire action.

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About The Author

Richard J. Simmons is a Partner in the law firm of Sheppard, Mullin, Richter & Hampton LLP in Los Angeles. He represents employers in various employment law matters involving litigation throughout the country and general advice regarding state and federal wage and hour laws, employment discrimination, wrongful discharge, employee discipline and termination, employee benefits, affirmative action, union representation proceedings, and arbitrations. Mr. Simmons received his B.A., summa cum laude, from the University of Massachusetts, where he was a Commonwealth Scholar and graduated in the Phi Kappa Phi Honor Society. He received his J.D. from Berkeley Law at the University of California at Berkeley where he was the Editor-in-Chief of the Industrial Relations Law Journal, now the Berkeley Journal of Employment and Labor Law.

Mr. Simmons argued the only case before the California Supreme Court that produced a victory for employers and business in 2018. He was recently recognized as the Labor and Employment Attorney of the Year by the Los Angeles Business Journal and was inducted into the Employment Lawyers Hall of Fame. He has lectured nationally on wage and hour, employment discrimination, wrongful termination, and other employment and labor relations matters. He is a member of the National Advisory Board to the Berkeley Journal of Employment and Labor Law, published by Berkeley Law at the University of California at Berkeley. He was also appointed by the California Industrial Welfare Commission as a member of three Minimum Wage Boards for the State of California.