California Supreme Court Rules Third Party Screening and Hiring Companies are Liable for Employment Discrimination  

On August 21st, 2023, the Supreme Court of California issued a ruling that held that third party companies used in the hiring process, or who provide services to employees, can potentially be liable for employment discrimination under California’s civil right laws. The decision was unanimous, the opinion can be read here. 

Plaintiffs had alleged health screening questions that covered multiple protected categories of information including pregnancy and medical physical and mental health. 

Raines v U.S. Healthworks Medical Group 

The case before the court was Raines v U.S. Healthworks Medical Group, where two Plaintiffs on behalf of a putative class alleged employment offers were condition on medical screening by Defendant. The Defendant was not the company hiring Plaintiffs or class members, it was third party on behalf of hiring companies. 

Plaintiffs alleged U.S. Healthworks required screenings and medical history questionnaires that contained tests and questions unrelated to job-related functions. Questions alleged to have been required include questions about Plaintiffs’ venereal disease history, menstruation, prostate, cancer, mental illness, HIV, disabilities, and if the job applicant was pregnant. 

Raines alleged her employer rescinded an offer when she declined to note her last menstrual period, a question that may relate to whether an employee is pregnant. Pregnancy is a protected condition requiring no harassment or discrimination. 

Who is an Employer? 

The Supreme Court summarizes a main element of their opinion in their first sentence: “This case requires us to clarify the meaning of the term “employer” as used in the California Fair Employment and Housing Act (FEHA)”. 

FEHA defines its use of employer as “any person regularly employing five or more persons, or any person acting as an agent of an employer, directly or indirectly”. 

An employer is subject to rules regarding questions they can ask of job applicants, and questions they can ask of employees.  This case raises the issue of who is responsible when third-party services are used for employers to gather information they may not legally be allowed to otherwise.  

The California Supreme Court’s unanimous decision on whether FEHA holds third-parties as employers: 

“We conclude 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.” 

What is the California Fair Employment and Housing Act (FEHA)? 

The California Fair Employment and Housing Act is a law passed in 1959 that prohibits discrimination, harassment, and retaliation in employment, housing and public accommodations, based on protected characteristics. FEHA was amended in 1978 to include job-protected maternity leave. 

The protected characteristics include race, color, religion, sex, marital status, origin, ancestry, disability, age, familial status, genetic information and sexual orientation. 

Can You Sue for Discrimination Under FEHA? 

The government agency with primary responsibility for enforcement is the Department of Fair Employment and Housing (DFEH). 

However private causes of actions can be brought, such as plaintiffs in this case suing defendants and third parties for discrimination, by: 

  1. File a complaint with DFEH. You or our attorney can file a complaint. 
  2. Exhaust administrative remedies, or allow the DFEH an opportunity to resolve your dispute. 
  3. File prior to the statute of limitations, which is typically one year after DFEH does not resolve the dispute and plaintiffs receive the right to sue. 
  4. Filing a private action. Your attorneys can assist in claims for remedies that include back pay, front pay, punitive damages, compensatory damages for emotional distress, injunctive relief (employer required to change behavior), and your attorney’s fees. 

Schneider Wallace Cottrell Konecky – Employee Discrimination Law Firm 

Consult with Schneider Wallace to resolve employment disputes including harassment or discrimination. We invite you to schedule a consultation with an employment law attorney in our Bay Area and Los Angeles, California offices. 

Schneider Wallace Cottrell Konecky LLP

300 S. Grand Ave., Suite 2700

Los Angeles, California 90071

Tel: 415-421-7100

Toll Free: 800-689-0024

Fax: 415-421-7105


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