On August 21, 2023, the California Supreme Court issued a significant ruling that expanded the potential liability under the Fair Employment and Housing Act (FEHA). It was decided that business-entity agents could henceforth be liable for FEHA violations with respect to individuals who were not their direct employees.
This landmark ruling applies specifically to business-entity agents that have a minimum of five employees. Such agents, conducting activities regulated by FEHA on behalf of an employer, now find themselves under a new and significant legal obligation.
Previously, entities performing tasks under the FEHA were only held accountable for actions regarding their employees. This new interpretation of liability under the FEHA significantly broadens the scope of those who could be liable in the event of a violation.
The case that led to this ruling involved a series of complex interactions between multiple employers and business-entity agents. The comprehensive review and eventual verdict: these non-employer entities could be held responsible under FEHA.
This ruling underscores the need for all business entities involved in FEHA-regulated activities to review their functional roles, especially in cases where their staff size meets the specified threshold. Recognition of new liabilities and understanding their implications will be crucial in maintaining compliance.
For a more detailed analysis of this ruling, feel free to visit Foley & Lardner LLP’s discussion on the topic.