California’s Fair Employment and Housing Act (FEHA) is already one of the most employee-friendly state civil rights laws in the country. Until now, it was not clear whether employees could sue not only their direct employers for discrimination and harassment, but also other independent businesses that work on behalf on their employers.

In Raines v. U.S. Healthworks Medical Group, the California Supreme Court ruled that under FEHA, third-party “business entity agents” are  employers if they have at least five employees and they perform “FEHA-regulated” activities on an employer’s behalf.

The issue originated in the Ninth Circuit, which certified to the California Supreme Court the question of whether FEHA’s definition of “employer” extended to corporate agents of the employer. Raines involves a putative class action in which the named plaintiffs allege that their employment offers were conditioned upon completion of pre-employment medical tests conducted by U.S. Healthworks Medical Group (USHW). The applicants allege that USHW asked intrusive and illegal questions unrelated to their ability to work during these medical screenings, including whether the applicants had cancer, mental illnesses, HIV, or problems with menstrual periods. The applicants asserted FEHA claims against both the companies they applied to that used USHW to conduct the medical screenings and sued USHW itself.

The Court examined FEHA’s definition of “employer,” and concluded that the definition did encompass third-party corporate agents like USHW. The Court referenced similar holdings from federal circuit courts where similarly situated third-parties were found liable under Title VII. California courts often look to Title VII case law to determine how the FEHA should be interpreted. The Court also found that third-party liability aligns with the public policy underlying FEHA. In situations like in Raines, extending liability to the company that administered the intrusive medical test, extends liability to the company most directly responsible for a FEHA violation.

Perhaps of even greater import, Raines has potential implications for the extension of FEHA’s reach beyond third party entities like USHW. For example, artificial intelligence vendors that provide automated employment decision tools to employers to assist with tasks such as recruitment, screening, hiring, and other employment related decisions could potentially fall within FEHA’s definition of employer.

We’ll continue to closely monitor these developments.

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Photo of Tony Oncidi Tony Oncidi

Anthony J. Oncidi is the co-chair of the Labor & Employment Law Department and heads the West Coast Labor & Employment group in the firm’s Los Angeles office.

Tony represents employers and management in all aspects of labor relations and employment law, including…

Anthony J. Oncidi is the co-chair of the Labor & Employment Law Department and heads the West Coast Labor & Employment group in the firm’s Los Angeles office.

Tony represents employers and management in all aspects of labor relations and employment law, including litigation and preventive counseling, wage and hour matters, including class actions, wrongful termination, employee discipline, Title VII and the California Fair Employment and Housing Act, executive employment contract disputes, sexual harassment training and investigations, workplace violence, drug testing and privacy issues, Sarbanes-Oxley claims and employee raiding and trade secret protection. A substantial portion of Tony’s practice involves the defense of employers in large class actions, employment discrimination, harassment and wrongful termination litigation in state and federal court as well as arbitration proceedings, including FINRA matters.

Tony is recognized as a leading lawyer by such highly respected publications and organizations as the Los Angeles Daily JournalThe Hollywood Reporter, and Chambers USA, which gives him the highest possible rating (“Band 1”) for Labor & Employment.  According to Chambers USA, clients say Tony is “brilliant at what he does… He is even keeled, has a high emotional IQ, is a great legal writer and orator, and never gives up.” Other clients report:  “Tony has an outstanding reputation” and he is “smart, cost effective and appropriately aggressive.” Tony is hailed as “outstanding,” particularly for his “ability to merge top-shelf lawyerly advice with pragmatic business acumen.” He is highly respected in the industry, with other commentators lauding him as a “phenomenal strategist” and “one of the top employment litigators in the country.”

“Tony is the author of the treatise titled Employment Discrimination Depositions (Juris Pub’g 2020; www.jurispub.com), co-author of Proskauer on Privacy (PLI 2020), and, since 1990, has been a regular columnist for the official publication of the Labor and Employment Law Section of the State Bar of California and the Los Angeles Daily Journal.

Tony has been a featured guest on Fox 11 News and CBS News in Los Angeles. He has been interviewed and quoted by leading national media outlets such as The National Law JournalBloomberg News, The New York Times, and Newsweek and Time magazines. Tony is a frequent speaker on employment law topics for large and small groups of employers and their counsel, including the Society for Human Resource Management (“SHRM”), PIHRA, the National CLE Conference, National Business Institute, the Employment Round Table of Southern California (Board Member), the Council on Education in Management, the Institute for Corporate Counsel, the State Bar of California, the California Continuing Education of the Bar Program and the Los Angeles and Beverly Hills Bar Associations. He has testified as an expert witness regarding wage and hour issues as well as the California Fair Employment and Housing Act and has served as a faculty member of the National Employment Law Institute. He has served as an arbitrator in an employment discrimination matter.

Tony is an appointed Hearing Examiner for the Los Angeles Police Commission Board of Rights and has served as an Adjunct Professor of Law and a guest lecturer at USC Law School and a guest lecturer at UCLA Law School.

Photo of David Gobel David Gobel

David R Gobel is an associate in the Labor Department and a member of the Employment Litigation & Counseling Group.

David Gobel earned his J.D at USC Gould School of Law, where he was a Senior Citations Editor of the USC Journal of

David R Gobel is an associate in the Labor Department and a member of the Employment Litigation & Counseling Group.

David Gobel earned his J.D at USC Gould School of Law, where he was a Senior Citations Editor of the USC Journal of Interdisciplinary Law, and part of the executive committee of USC’s Music Law Society. Prior to law school, David worked as a research executive for a marketing research firm in New York.