Third parties acting on behalf of an employer can be held liable for employment discrimination under California law, the state Supreme Court has ruled iby unanimous decision.
The court said liability under California’s Fair Employment and Housing Act, or FEHA, can extend to agents of business entities with at least five employees. Direct liability may apply when the outside party performs FEHA-regulated activities on behalf of an employer.
Legal experts said the California Supreme Court Raines v. US Healthworks Medical Group The opinion has important implications for third parties involved in recruitment processes.
“The opinion opens agency businesses to potential FEHA litigation that was otherwise clearly not available to employees under the statute,” according to a Gibson Dunn Blog Post for the case.
The trucking industry has faced its own discrimination cases where courts have sided with plaintiffs. One case involved Werner Enterprises and a driving school subsidiary, where a jury found that the defendants failed to hire a driver because he was deaf, while another resulted in a $490,000 settlement and the establishment of a women’s scholarship after the jury found a yellow subsidiary refused to hire women as drivers at a terminal in Mississippi.
Third-party entities involved in the labor recruitment process are advised to review their policies, methods and practices to ensure they comply with California law, according to Sheppard Mullin’s Lauren Blaes. Write inside a blog post that affected entities include those that provide medical screenings and background checks of prospective employees for employers;
The underlying Raines case involved prospective employees’ concerns about pre-employment medical examinations performed by US Healthworks Medical Group;
A plaintiff alleged that after she refused to answer a question about the date of her last menstrual period, her tests were terminated and her job offer by the company that hired the screening company was terminated.
Employer implications
Legal experts said the California court’s ruling also has implications for employers, who can be held liable for the actions of their agents.
Heather Dillion, a partner at Dorsey & Whitney, recommends that employers review the California Department of Civil Rights’ pre-employment screening guidelines and conduct training for everyone involved in the interview process.
“Employers should confirm with any third-party recruitment agency or screening company that they are only asking legitimate questions before hiring,” Dillion said in a prepared statement.
Meanwhile, Barnes & Thornburg lawyers said the ruling should prompt employers to carefully select and monitor third-party agents involved in recruitment processes.
They also said the court’s ruling, which came in a putative class-action lawsuit, opens the door to increased class-action lawsuits against employers who employ third-party agents.
“Employees from multiple companies could join together to challenge the actions of a single agent,” Barnes & Thornburg lawyers wrote in a blog post. “With this in mind, employers should be prepared for potential legal ramifications that may indirectly affect them due to their relationships with these third-party agents.”
Impact beyond California?
The California Supreme Court’s ruling came in a federal case referred to it by the U.S. Court of Appeals for the Ninth Circuit so the state Supreme Court could answer a question related to FEHA.
Dillion said that while the court’s decision is limited to California law, the language analyzed by the California Supreme Court is comparable to the language in Title VII of the Civil Rights Act of 1964.
“All employers are encouraged to review pre-hire questions and ensure interviewers are adequately trained,” Dillion said.
Unanswered questions
The California Supreme Court stated that its decision did not “attempt to identify the specific scenarios in which an agent of a business entity would be subject to liability under FEHA.”
The court also said it was not deciding the significance of “employer control over the agent’s acts that caused the FEHA violation.”
Additionally, the opinion authored by Associate Justice Martin Jenkins said the court did not decide whether its finding of liability extended to agents of business entities that have fewer than five employees.
Reaction from the parties
The California Supreme Court’s opinion drew praise from plaintiffs’ attorneys in Phillips, Erlewine, Given & Carlin.
“The Supreme Court sent a message: Agents of employers cannot avoid liability for their own violations of the law,” said Randy Erlewine, lead counsel for the plaintiffs. prepared statement.
An attorney for defendant US Healthworks Medical Group did not immediately respond to a request for comment Monday.
The defendants had argued that an agent of an employer’s business entity should not be held vicariously liable under FEHA because an agent acts under the control of its principal, and thus the principal is the entity primarily responsible for any deficient performance of the agent . the court’s decision said.