Medical screening business can be liable (as an employer’s agent) for FEHA violations.
Kristina Raines was offered employment contingent upon a medical screening by U.S. Healthworks Medical Group (USHW), an agent of her future employer. After she responded to all but one question on an extensive health history questionnaire, USHW terminated the exam. Raines’s employment offer was revoked as a consequence. Raines sued USHW in federal court for violating California’s Fair Employment and Housing Act (FEHA), which states it is an “unlawful employment practice” for “any employer” “to make any medical or psychological inquiry of an applicant.” (Gov. Code, § 12940.) FEHA defines an employer to include “any person acting as an agent of an employer.” (Id., § 12926, subd. (d).) In context, these provisions could be read two ways: (1) that liability for violating the statute resides with the employer, not the agent; or (2) that an employer’s agents are liable to the same extent as the employer. The district court concluded that FEHA did not impose liability on USHW. Raines appealed to the Ninth Circuit, which asked the California Supreme Court to resolve whether, under the FEHA, a business entity acting as an agent of an employer may be directly liable for employment discrimination.
The California Supreme Court answered the Ninth Circuit’s question in the affirmative—agents such as USHW may be directly liable for FEHA violations in appropriate circumstances. The Court construed section 12926 to mean that an agent of an employer counts as an “employer” under FEHA. The Court found further support for its interpretation in FEHA’s legislative history, which showed that the Legislature borrowed from National Labor Relations Act provisions interpreted to impose employer status on certain employer agents. Consulting analogous federal decisions regarding antidiscrimination laws, the Court determined that a business-entity agent could bear direct FEHA liability only when it carried out FEHA-regulated activities on behalf of an employer. The Court further reasoned that public policy supported its construction: extending FEHA liability to the business entity most directly responsible for the violation furthers FEHA’s remedial purpose. Finally, the Court distinguished its earlier opinions holding that individual employees of the same employers are not subject to FEHA liability. The rationale for those opinions did not apply to a business entity employing five or more employees that carries out FEHA-regulated activities on behalf of an employer.
The bulletin describing this appellate decision was originally prepared for the California Society for Healthcare Attorneys (CSHA) by H. Thomas Watson, Peder K. Batalden, and Lacey Estudillo at the appellate firm Horvitz & Levy LLP, and is republished with permission.