California has some of the nation’s strongest anti-discrimination laws, and the state Supreme Court has proven it is dedicated to protecting them. The most recent example of this comes in the Court’s landmark opinion on the case Raines v. U.S. Healthworks Medical Group, which it issued in August. In this opinion, the California Supreme Court declared that “business entity agents” can be held directly responsible for employment discrimination alongside employers.
California’s New Expansion of Employment Discrimination Liability
The opinion was issued after the 9th Circuit Court of Appeals submitted a question to the Supreme Court regarding the language used in the California Fair Employment and Housing Act (FEHA). This law contains many of the state’s workplace discrimination regulations, and defines the term “employer” to include “any person acting as an agent of an employer.” The 9th Circuit Court asked the California Supreme Court whether this definition permits “a business entity acting as an agent of an employer to be held directly liable for employment discrimination?”
This question arose after a federal district judge initially dismissed the Raines v. U.S. Healthworks Medical Group class action claim. The lawsuit was filed by Kristina Raines on behalf of a putative class of workers who may have faced discrimination by U.S. HealthWorks. She argued the company had violated her right to fair employment and freedom from discrimination when it reported she failed her pre-employment screening for refusing to answer invasive health questions.
In her case, Raines stated that the U.S. HealthWorks medical screening questionnaire required her to provide information about her pregnancy status, prescriptions, menstrual issues, and cancer diagnoses, among other private details. She argued that this information was not job-related or a matter of business necessity. FEHA explicitly prohibits these types of medical inquiries by employers.
Initially, a federal district judge in San Diego dismissed Raines’ case, arguing that only employers can be held directly liable for FEHA violations. However, the California Attorney General requested that the case be revived, leading the 9th District Court of Appeals to submit its question of law.
With the California Supreme Court’s opinion on record, Raines’ class action claim may proceed. More importantly, California workers can now hold discriminatory screening companies directly responsible for the harm they cause.
What Counts as a Covered Agent?
The Raines opinion makes it clear that any business entity agent can be held accountable for discrimination if it consists of five or more employees and performs “FEHA-regulated activities.” This impacts millions of California residents who work for companies that outsource certain administrative tasks.
Examples of Covered Agents
It has become common for small and medium-sized companies to outsource administrative tasks rather than take on the burden internally. For example, many employers work with recruiter organizations to identify promising candidates for specific roles and trusting that the recruiters will perform any screenings fairly. Under the Raines opinion, the recruiting company could be liable along side or instead of the employer if it discriminates against candidates based on protected characteristics or activities.
Other FEHA-regulated activities that may make a business entity liable for employment discrimination include:
- Health tests: FEHA and other anti-discrimination laws permit employers to perform limited health screenings on potential employers. However, these screenings are restricted to job-related health issues, such as ability to lift a certain amount of weight or operate machinery safely. If an agency like U.S. HealthWorks makes providing unrelated information mandatory, it may be committing disability discrimination.
- Background checks: Employers and their agents may not ask about applicants’ criminal histories until conditional offers of employment have been made. In addition, they may only revoke an offer of employment if applicant’s criminal history “has a direct and adverse relationship with the specific duties of the job that justify denying the applicant the position.” Performing criminal background checks earlier or using the results to deny a candidate is considered discriminatory.
- Benefits and compensation: Companies that administer compensation packages for other employers may not use protected characteristics to determine what benefits or pay candidates and employees will receive. They must also ensure that workers performing substantially equal work within an organization receive equal compensation and that wages are paid fairly and on time.
- Setting job standards: Recruiting companies and industry organizations often set the minimum qualifications and standards for specific roles. They must take care to ensure these standards reflect the actual physical and educational requirements for each role, or they may commit disability discrimination.
Organizations that may perform these types of activities on behalf of other employers include:
- Healthcare facilities
- Drug testing locations
- Recruiting companies
- Staffing and employment agencies
- Accounting firms
- Investment firms
- Benefits administration companies
- Trade associations and unions
- State and federal safety agencies
In short, any organization which work closely with employers during the hiring and employment process could now be held liable if they discriminate against workers.
If you work for one of these companies, you may be able to file a claim against your employer, the partner organization, or both. For example, Raines’ lawsuit is against U.S. HealthWorks, not the employer that revoked her job offer, because the employer was not the party that required the discriminatory questionnaire. However, if an employer instructs a partner to take discriminatory actions and the partner agrees, the organizations may share liability.
Have Your Employment Rights Been Violated?
The Raines case will move forward, but it’s just one example of potential discrimination by a business entity agent. If you have struggled with discriminatory background checks, health screenings, benefits administration, or other activities outsourced by your employer, you can fight back. Your first step should be to talk to the experienced Los Angeles employment discrimination lawyers at the Law Offices of Todd M. Friedman, P.C. We have the knowledge, resources, and skills to hold employers and their partners accountable for discriminating against you. Schedule your consultation today to discover how our employment law firm can help you get the compensation you deserve.
