Raines v. U.S. Healthworks Medical Group
Business-Entity Agents Can Be Directly Liable Under FEHA
Raines v. U.S. Healthworks Medical Group (2023) 15 Cal.5th 268
PUBLISHED.
FEHA
Gov. Code § 12926(d)
Agent liability
Certified question
In brief. FEHA bars an “employer” from discriminating, and defines “employer” to include “any person acting as an agent of an employer.” Answering a question certified by the Ninth Circuit, the Court held that an employer’s business-entity agent can be held directly liable under FEHA — as an employer — when the agent has at least five employees and carries out FEHA-regulated activities on the employer’s behalf. The decision reaches the outside companies that perform delegated employment functions, here a pre-employment medical screener, not just the hiring employer.
Facts
Kristina Raines and Darrick Figg received conditional job offers — Raines from Front Porch Communities and Services, Figg from the San Ramon Valley Fire Protection District — each contingent on a pre-employment medical screening conducted by U.S. HealthWorks Medical Group (USHW), acting as the prospective employers’ agent. USHW required applicants to complete an extensive written health-history questionnaire containing numerous questions unrelated to the ability to perform job functions. When Raines declined to answer one question (the date of her last menstrual period), the examination was halted and her offer was revoked. Plaintiffs sued USHW under FEHA — which makes it unlawful for an employer to make medical inquiries of an applicant (Gov. Code, § 12940, subd. (e)(1)) — together with related claims.
Procedural history
The U.S. District Court for the Southern District of California dismissed, concluding that FEHA does not impose liability on an employer’s agent. On appeal, the Ninth Circuit found the statutory language ambiguous and certified to the California Supreme Court the question whether a business entity acting as an employer’s agent may be held directly liable for employment discrimination. (Raines v. U.S. Healthworks Medical Group (9th Cir. 2022) 28 F.4th 968, 969.)
Issue
Does FEHA — which defines “employer” to include “any person acting as an agent of an employer” (Gov. Code, § 12926, subd. (d)) — permit a business entity acting as an employer’s agent to be held directly liable for employment discrimination?
Holding
Yes, in appropriate circumstances. The agent-inclusive language of section 12926, subdivision (d), makes a business-entity agent itself an “employer” for FEHA purposes, so the agent can be held directly liable for FEHA violations when it has at least five employees and carries out FEHA-regulated activities on the employer’s behalf. The Court expressly declined to decide whether the employer’s control over the agent’s act matters, whether the holding extends to agents with fewer than five employees, or the scope of aider-and-abettor liability under section 12940, subdivision (i). (15 Cal.5th at pp. 273–274.)
Reasoning
Section 12926, subdivision (d), provides that “employer” includes any person acting as an agent of an employer; because business entities are “persons” under FEHA, a business-entity agent is itself an employer of the plaintiff. The Court found this reading confirmed by FEHA’s legislative history — the agent-inclusive language traces to federal labor law construed to confer employer status on certain agents — and by the statutory command that FEHA be construed liberally to advance its remedial purposes (Gov. Code, § 12993, subd. (a)). The interpretation places liability on the entity most directly responsible for the violation and, where the agent operates across many employers, best positioned to implement compliant industry-wide practices. (15 Cal.5th at pp. 273–274.)
The Court was careful to cabin its holding. Distinguishing Reno v. Baird (1998) 18 Cal.4th 640 and Jones v. Lodge at Torrey Pines Partnership (2008) 42 Cal.4th 1158, it explained that the agent-inclusive language does not impose liability on all agents, including individual employees of the same employer; individual non-employer supervisors remain outside FEHA’s personal-liability reach. The decision concerns business-entity agents only.
Key quote
The Court concluded that an employer’s “business-entity agents can be held directly liable under the FEHA” for employment discrimination in appropriate circumstances. (15 Cal.5th at p. 273.)
Practice pointer
For plaintiff-side counsel, Raines opens a second — and often better-capitalized — defendant in discrimination cases: the outside entity that performs delegated employment functions, such as background-check vendors, pre-employment medical screeners, and fitness-for-duty examiners that have five or more employees. When the unlawful conduct occurs during a FEHA-regulated function the employer has handed off, name that agent directly as an “employer,” not merely as an aider-abettor. Mind the limits the Court flagged: the agent must have at least five employees and be carrying out FEHA-regulated activities, and the opinion leaves the control question and aider-abettor scope for another day. Individual supervisors remain governed by Reno and Jones.
Open questions
The Court expressly reserved three issues: whether the employer’s control over the agent’s challenged act bears on liability; whether liability extends to business-entity agents with fewer than five employees; and the scope of a business-entity agent’s liability under FEHA’s aider-and-abettor provision (Gov. Code, § 12940, subd. (i)). It left undisturbed the settled rule that individual employees and supervisors are not personally liable for FEHA discrimination.