FEHA May Protect Out-of-State Employees, California Appellate Court Holds

California’s Fair Employment and Housing Act (FEHA) may protect out-of-state employees, an appellate panel in the state recently determined in a case involving an employee residing in Washington.

A former SpaceX employee filed a complaint with the Civil Rights Department (CRD) alleging the company discriminated and retaliated against her in violation of FEHA. She listed a California address for SpaceX.

After receiving the complaint, CRD served on SpaceX interrogatories and a subpoena duces tecum seeking information related to the employee and her allegations.

SpaceX objected to all the requests on the ground that CRD lacked jurisdiction over the claims because the employee was a resident of Washington and FEHA does not apply outside California.

CRD agreed to focus its investigation on the jurisdictional questions before deciding whether to investigate the merits of the employee’s claims, identifying 14 discovery requests seeking information related to the location where the conduct giving rise to the claims took place and asking SpaceX to respond to those specific requests.

SpaceX eventually provided supplemental responses. Based on the responses, CRD determined it had jurisdiction over the retaliation claim and asked SpaceX to respond to discovery requests.

When SpaceX declined to do so, CRD filed a petition in the superior court seeking an order compelling SpaceX to comply with its subpoena. Specifically, CRD asked the court to compel SpaceX to produce documents that would help it to evaluate the merits of the employee’s retaliation claim and the jurisdictional issue concerning her discrimination claims.

CRD acknowledged SpaceX hired the employee to work in its Redmond, Wash. office, but told the court the law requires it to investigate the allegations and determine whether the conduct has a substantial connection to California.

SpaceX opposed the petition, arguing that CRD’s assertion of jurisdiction violated California law and the U.S. Constitution.

The superior court granted the petition and SpaceX appealed.

Affirming the superior court, the appellate panel was careful to note that whether CRD has jurisdiction and whether the employee’s allegations have merit are distinct issues, and it was conceivable that CRD would have authority to request information related to one issue but not the other.

However, because SpaceX contended that CRD was categorically prohibited from seeking any information related to the complaint, the court limited its consideration to that issue.

SpaceX was unable to show that enforcement of the subpoena violated the federal constitution, the court found, as it “fails meaningfully to explain how enforcement of an investigatory subpoena violates the commerce clause – or any other constitutional provision for that matter – particularly when the subpoena is directed at a company with a significant presence in California, issued in response to an administrative complaint filed in California and alleging violations of California law, that requests information to determine if the company violated California law.”

The court was similarly unpersuaded that enforcement of CRD’s subpoena violated the presumption against extraterritorial application of laws. Again, the court distinguished between the CRD’s enforcement of the substantive provisions of FEHA and the application of its investigatory provisions.

“By conflating them, SpaceX overlooks the fact that different FEHA provisions have different aims, roles, and potentials to create conflict with other sovereigns,” the court said. “Indeed, the potential for conflict with other sovereigns is far less when CRD seeks to exercise its investigatory powers than when it seeks to enforce FEHA’s substantive provisions by enjoining employment practices.”

Finally, the court found that SpaceX had not shown that CRD lacked jurisdiction under FEHA.

While SpaceX insisted it was undisputed that all the alleged adverse employment actions occurred exclusively in Washington, “it does not explain how it came to that conclusion,” the court noted, calling it “misleading at best, and deceptive at worst.”

One of the primary purposes of the subpoena was to determine whether there were sufficient connections to California, the court pointed out, and case law did not “compel a categorical rule that FEHA does not apply under any circumstances to any employee working outside California.”

The court affirmed the order compelling SpaceX to comply with the CRD’s investigatory subpoena.

To read the opinion in Civil Rights Department v. Space Exploration Technologies Corp., click .

Why it matters: While the court was careful not to state a broad rule about the application of FEHA to employees outside the state of California, it recognized that “[t]here is no single, all-purpose answer to the question of when state law will apply to an interstate employment relationship,” leaving the door open for out-of-state employees.