The California Supreme Court issued a ruling this week that expands the definition of employer under the state's main discrimination statute, the Fair Employment and Housing Act (FEHA). This expansion not only increases the number of defendants that can be swept into a FEHA action, but it may also have a significant impact on California's burgeoning efforts to regulate the use of artificial intelligence in employment decisions.
Background
As we previously noted, on March 16, 2022, the U.S. Court of Appeals for the Ninth Circuit certified to the Supreme Court of California the following question:
Does California's Fair Employment and Housing Act, which defines "employer" to include "any person acting as an agent of an employer," permit a business entity acting as an agent of an employer to be held directly liable for employment discrimination?1
In Raines v. U.S. Healthworks Medical Group, the California Supreme Court answered in the affirmative to this question, first concluding that an employer's business entity "agents" may be considered "employers" for purposes of the statute, and then holding that such an agent may be held directly liable for employment discrimination in violation of the Fair Employment & Housing Act when it has at least five employees2 and "when it carries out FEHA-regulated activities on behalf of an employer." The court recognized that its ruling "increases the number of...
