We all understand the common meaning of the word “employer.” In California, “employers” need to keep track of the various rules and regulations, all of which have their own definitions of the word. Most frequently, the number of employees dictates whether a given statute or ordinance applies to the employer. In addition, California’s Fair Employment and Housing Act (“FEHA” or the “Act”), exempts certain “employers” from the application of the anti-discrimination laws found within the Act.
This blog post focuses on protecting the so-called “religious entity” exemption from the FEHA.
Employer versus Employer versus Employer – Various Definitions
The FEHA prohibits discrimination, harassment, and retaliation on a large list of protected class statuses, and is more expansive than the federal analog, Title VII. FEHA’s anti-discrimination provisions apply to “employer” – defined as any person who employs five or more persons, subject to certain exceptions. Relevant to this blog, Cal. Gov. Code § 12926(d) a “religious association or corporation not organized for private profit” is not an “employer” for the “unlawful practices” provisions of FEHA.
FEHA, Cal. Gov. Code § 12950, also requires “all” employers, impliedly using the section 12926 definition and impliedly subject to the religious entity exemption – to post notices regarding employees’ rights under FEHA. But, most employers – including religious entities – are required to post a variety of other notices (minimum wage, payday notices, unemployment insurance, worker’s compensation, whistleblower rights, etc.) pursuant to various Labor Code, Unemployment Insurance Code, federal law, local ordinances, and the Department of Industrial Relations requirements. There are several vendors who supply “all in one” posters, updated annually. Most HR professionals and in-house counsel order these “all in one” posters from reputable sources, relying on them to be accurate.
FEHA also has a mandatory training component (commonly referred to as “AB 1825” training). For this purpose, an “employer” is defined in the FEHA regulations – Ca. Admin Code 11024 – as “any person engaged in any business or enterprise in California, who employs 50 or more employees to perform services for a wage or salary or contractors or any person acting as an agent of an employer, directly or indirectly.” Notably, there is NOT an express “religious entity” exemption from FEHA regulations. Such “employers” are required to conduct bi-annual anti-harassment training to educate supervisors on the prohibitions against harassment and discrimination in FEHA and Title VII – apparently, even if those “employers” are otherwise exempt from FEHA.
The Unresolved Question since 2002 – is a Nonprofit Religious Corporation Operating a School exempt from FEHA?
Certain religious entities have long been exempt under Cal. Govt. Code section 12926(d). But effective January 1, 2002, section 12926.2(f) was added, expanding the definition of “employer” to include religious non-profit educational institutions that are (1) non-profit public benefit corporations; (2) formed by, or affiliated with a particular religion; and (3) operate an educational institution as its sole or primary activity. However, the amendment left intact the ability for such institutions to restrict employment in all categories of employment to adherents of the religion, regardless of whether the duties of the positions are connected to a religious function.
There has only been one case interpreting the 2002 amendment to preserve the exemption for a school organized as a Nonprofit Religious Corporation, Henry v. Red Hill Evangelical Lutheran Church (2011) 201 Cal. App. 4th 1041. In that case, the Court seemed to find it relevant that the school was part of the church’s ministry, did not exist as a separate legal entity, was on church property and was adjacent to the church. Until 2017, no case had expressly protected the religious entity exemption for a school that is separately incorporated, is not on church grounds, but is nevertheless a religiously affiliated school organized as a Nonprofit Religious Corporation.
The good news for religious entities, especially nonprofit religious schools.
In December 2017, the San Francisco Superior Court ruled on an issue of first impression, and decided that a private high school, organized as a California Nonprofit Religious Corporation primarily for religious and educational purposes, is exempt from FEHA.
The judge correctly interpreted the 2002 FEHA amendment (§12926.2(f)(2)) that narrowed the exemption for public benefit corporations operating schools as applying only to public benefit corporations, not to all schools including those organized and incorporated as nonprofit religious corporations.
This may seem axiomatic based on the plain language of the statute, but it was a hard-fought issue at trial because of three facts: (1) the school was, for a time, incorporated as a public benefit corporation (and reincorporated after to the 2002 amendment), (2) unlike the school in Red Hill, this high school is a distinct corporate entity from any church and is not on church grounds, and (3) the school teaches secular (as well as religious) subjects. Continue Reading