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Kristina Raines and Darrick Figg, on behalf of themselves and a putative class, allege that they received offers of employment that were conditioned on successful completion of preemployment medical screenings to be conducted by defendant U.S. Healthworks Medical Group (USHW), who was acting as an agent of plaintiffs’ prospective employers.

Raines received an offer from Front Porch Communities and Services (Front Porch) for a position as a food service aide, but the offer was conditioned on her passing the preemployment medical screening conducted by USHW. Raines alleges that she responded to most of the questions on the written questionnaire, but she declined to answer the question about the date of her last menstrual period. She alleges that the exam was then terminated, and Front Porch revoked its offer of employment.

Figg received an offer from the San Ramon Valley Fire Protection District to serve as a member of the volunteer communication reserve, but his offer, too, was conditioned on his passing the preemployment medical screening conducted by USHW. Figg alleges that he answered all the questions, successfully passed the screening, and was hired for the position.

Raines filed a state court action against Front Porch and USHW which the defendants removed to federal court. A second amended complaint added Figg as a named defendant, and dismissing Front Porch as a defendant (pursuant to a settlement) and adding other defendants. The third amended complaint, which is the operative complaint, alleges claims under the FEHA, the Unruh Civil Rights Act (Civ. Code, § 51 et seq.), unfair competition law (Bus. & Prof. Code, § 17200 et seq.), and the common law right of privacy.

The named defendants were ultimately U.S. Healthworks Medical Group, a corporation; Select Medical Holdings Corporation, a corporation; Concentra Group Holdings LLC, a corporation; U.S. Healthworks, Inc., a corporation; Select Medical Corporation, a corporation; Concentra, Inc., a corporation; Concentra Primary Care of California, a medical corporation; and Occupational Health Centers of California, a medical corporation.

Defendants moved to dismiss, and the district court granted the motion with prejudice as to all claims except plaintiffs’ unfair competition law claim. In dismissing plaintiffs’ FEHA claim, the district court concluded that the FEHA does not impose liability on the agents of a plaintiff’s employer. As to plaintiffs’ unfair competition law claim, the district court had granted dismissal without prejudice, but plaintiffs requested an order dismissing the claim with prejudice, and the district court granted their request.

Plaintiffs then appealed the dismissal of their other claims. After holding oral argument, the United States Court of Appeals for the Ninth Circuit asked the California Supreme Court to answer the question “Does California’s Fair Employment and Housing Act, which defines ‘employer’ to include ‘any person acting as an agent of an employer,’ Cal. Gov’t Code § 12926(d), permit a business entity acting as an agent of an employer to be held directly liable for employment discrimination?” (Raines v. U.S. Healthworks Medical Group (9th Cir. 2022) 28 F.4th 968, 969.)

The California Supreme Court concluded that “an employer’s business entity agents can be held directly liable under the FEHA for employment discrimination in appropriate circumstances when the business-entity agent has at least five employees and carries out FEHA-regulated activities on behalf of an employer.” in the case of Raines v. U.S. Healthworks Medical Group -S273630 (August 2023).

Section 12940 of the FEHA makes it an “unlawful employment practice” for “any employer” “to make any medical or psychological inquiry of an applicant” (§ 12940, subd. (e)(1)), and section 12926, subdivision (d) states that, for purposes of the FEHA, the term ” ‘[e]mployer’ includes any person regularly employing five or more persons, or any person acting as an agent of an employer, directly or indirectly . . . .”

The most natural reading of this language is that a ‘person acting as an agent of an employer’ is itself an employer for purposes of the FEHA. Indeed, this interpretation accounts for and reasonably construes the word ‘includes’ (§ 12926, subd. (d)), a word that, in this context, can only be intended to broaden the scope of the term ’employer.’ ”

And they went on to say “Of significance to our analysis, the FEPA’s 1959 definition of employer took its agent-inclusive language from the National Labor Relations Act (NLRA) (29 U.S.C. § 151 et seq.), a federal law that assures fair labor practices and workplace democracy. At that time, and still today, the NLRA provided that ‘[t]he term ‘employer’ includes any person acting as an agent of an employer, directly or indirectly.’ ”

The California Supreme court therefore concluded that the “legislative intent leads us to conclude that the agent-inclusive language of section 12926, subdivision (d) permits a business-entity agent of an employer to be held directly liable for violation of the FEHA when it carries out FEHA-regulated activities on behalf of an employer.