Court Opinion

ID: 4447659
Source: CourtListenerOpinion
Date Created: 2019-10-17 19:02:12.088941+00
Date Added: 2024-06-11T14:44:58.761314
License: Public Domain

Filed 10/17/19

                            CERTIFIED FOR PUBLICATION

                 COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                      DIVISION ONE

                                   STATE OF CALIFORNIA

ELVIA VELASCO JIMENEZ,                           D075532

        Plaintiff and Appellant,

        v.                                       (Super. Ct. No. RIC1604613)

U.S. CONTINENTAL MARKETING, INC.
et al.,

        Defendants and Respondents.

        APPEAL from a judgment of the Superior Court of Riverside County,

Daniel A. Ottolia, Judge. Affirmed in part; reversed in part and remanded with

directions.

        Levin & Nalbandyan, A. Jacob Nalbandyan and Charles L. Shute, Jr., for Plaintiff

and Appellant.

        Littler Mendelson, Uliana Kozeychuk and Philip L. Ross, for Defendants and

Respondents.
       Elvia Velasco Jimenez asserted claims under the Fair Employment and Housing

Act (FEHA) (Gov. Code, § 12900 et seq.)1 against her contracting employer2 U.S.

Continental Marketing Inc. (USCM), a manufacturing company that negotiated with

Jimenez's direct employer Ameritemps, Inc. (Ameritemps), a temporary-staffing agency,

for her employment.3 Jimenez's claims required a threshold showing that USCM was her

employer. Disputing that assertion at trial, USCM framed the inquiry as a contest of

relative influence between the direct and contracting employers, asking the jury during

closing arguments, "Did [USCM] have control over plaintiff more than the temp

agency?" (Italics added.) The jury agreed with USCM and returned a special verdict

finding that USCM was not Jimenez's employer. Jimenez moved for a new trial,

unsuccessfully, and judgment was entered in favor of USCM. On appeal, Jimenez argues

that there is insufficient evidence to support the special verdict finding and asks that we

reverse the judgment.

1      All statutory references are to the Government Code unless otherwise indicated.

2       Because the nomenclature of temporary-staffing varies in the caselaw, we specify
our terms here. As used in this opinion, a "temporary-staffing agency" is an entity that
hires individuals who are placed with third-party entities for temporary or long-term
work. Individuals hired by the temporary-staffing agency for this purpose are "direct
employees" of the temporary-staffing agency and "temporary employees" of the third-
party entities, which we refer to as "contracting employers." "Employee" refers to direct
and/or temporary employees. Likewise, "employer" refers to direct or contracting
employers. Here, Ameritemps is a temporary-staffing agency and direct employer of
Jimenez; USCM is a contracting employer of Jimenez; and Jimenez is a direct employee
of Ameritemps and temporary employee of USCM.

3   Jimenez also asserted these claims against Nelson Cuellar, a direct employee of
USCM with whom she worked.

                                              2
       To evaluate whether an entity is an employer for FEHA purposes, courts consider

the totality of circumstances and analyze several factors, principal among them the extent

of direction and control possessed and/or exercised by the employer over the employee.

(Vernon v. State of California (2004) 116 Cal. App. 4th 114, 118 (Vernon).) In the

particular case of temporary-staffing, factors under the contractual control of the

temporary-staffing agency (such as hiring, payment, benefits, and timesheets being

handled by a temporary-staffing agency) are not given any weight in determining the

employment relationship with respect to the contracting employer. (See Bradley v.

Department of Corrections & Rehab. (2008) 158 Cal. App. 4th 1612, 1619 (Bradley).)

The inquiry with respect to the contracting employer is considered individually, not in

relation to that of the direct employer. (See ibid.) There is no contest of relative

influence as framed by USCM in its closing argument.

       The facts relevant to the specific and narrow question presented here are not in

dispute. Just like in Bradley, the contracting employer here did not hire the temporary

employee, pay her, provide her benefits, or track her time—all of which, according to

USCM, amounts to substantial evidence in support of the jury's finding. (See Bradley,

supra, 158 Cal.App.4th at pp. 1623–1624.) But because those factors are outside the

scope of the terms and conditions of the temporary employee's employment with the

contracting employer, they do not bear on the issue. As the Bradley court helpfully

explained, "[t]he key is that liability is predicated on the allegations of harassment or

discrimination involving the terms, conditions, or privileges of employment under the

                                              3
control of the employer, and that the employment relationship exists for FEHA purposes

within the context of the control retained." (Id. at p. 1629.)

         Undisputed evidence demonstrates that USCM exercised considerable direction

and control over Jimenez under the terms, conditions, and privileges of her employment.

(See Bradley, supra, 158 Cal.App.4th at 1629.) And although the parties contest the

characterization of Jimenez's termination, the appropriate inquiry in the temporary-

staffing context is whether the contracting employer terminated the employee's services

for the contracting employer (which USCM did), not whether the contracting employer

terminated her employment with her direct employer (which USCM did not do). (See

ibid.)

         Accordingly, without expressing any opinion as to the ultimate merit of Jimenez's

claims, we reverse the judgment as to three of those claims and, for reasons explained

below, affirm the judgment as to one. As to the three remaining, we remand for a new

trial at which the jury should be instructed that USCM was Jimenez's employer.

                    FACTUAL AND PROCEDURAL BACKGROUND

A.       Foundational Facts4

         The relevant facts are neither complicated nor disputed. USCM, a manufacturing

company that makes shoe care products, relies on temporary employees for much of its

workforce and contracts for employees' services with Ameritemps. Jimenez worked for

4      Our discussion focuses on the facts directly relevant to the specific legal issue
presented—whether USCM was Jimenez's employer—and omits the facts underlying
Jimenez's claims against USCM and Cuellar.
                                              4
USCM as either a direct or temporary employee for five years before her employment

was terminated. At that point, she was performing a supervisory role as a line lead in

USCM's production department, overseeing as many as thirty colleagues, including both

temporary and direct employees of USCM. Jimenez's supervisor was a direct USCM

employee.

       Jimenez, like USCM's other temporary employees, was placed with USCM at

Ameritemps' direction. Ameritemps pays these individuals for the services they perform

for their contracting employer, as well as any associated benefits. It also tracks the

employees' time by using a clock that it provides. USCM maintains the ability to

terminate the services of any of its temporary employees, which it exercises in the same

circumstances in which it would terminate the employment of a direct employee. USCM

cannot, however, terminate Ameritemps' employment relationship with Ameritemps'

employees.

       The relationship between USCM and Ameritemps includes a history of temporary

employees becoming direct USCM employees and vice versa, sometimes multiple times.

Direct and temporary employees work alongside each other at USCM's production area

using equipment provided by USCM, and they are both sent to the same USCM clinic for

on-the-job injuries. Additionally, temporary and direct employees supervise and train

(and, in turn, are supervised and trained by) both temporary and direct employees.

Likewise, USCM's employee handbook and accompanying policies apply to all

employees, including both direct and temporary employees. In other words, in terms of

                                             5
the day-to-day work experience with USCM, there is virtually no difference between

direct and temporary employees.

      Pursuant to applicable company disciplinary procedures, USCM investigated

Jimenez as a result of bullying complaints made against her. It concluded that Jimenez

had violated the company's antibullying policy and issued a warning (through a direct

USCM employee) pursuant to its progressive disciplinary process that calls for initially

coaching underperforming workers, then retraining them, and if ultimately unsuccessful,

terminating their employment.

      During this same time period, Jimenez raised allegations of harassment against her

coworker Nelson Cuellar, first to USCM and then to Ameritemps. USCM and

Ameritemps investigated and held meetings with Jimenez, Cuellar, and several other

employees. They concluded that the allegations could not be corroborated and decided

against disciplining Cuellar or Jimenez.

      USCM later terminated Jimenez's services. Jimenez was made aware of USCM's

decision through a USCM employee and was escorted from the building by USCM

personnel. Shortly thereafter, Ameritemps also terminated Jimenez's employment.

B.    Procedural Overview

      In April 2016, Jimenez filed a complaint against USCM and Cuellar, alleging five

causes of action under FEHA5 and a sixth claim under the common law for wrongful

5      Jimenez alleged (1) a hostile work environment based on sex; (2) failure to
prevent harassment; (3) sex and gender discrimination; (4) failure to prevent
discrimination; and (5) retaliation.
                                            6
termination in violation of public policy.6 Prior to trial, the court granted summary

adjudication as to the discrimination-related third and fourth causes of action. The case

proceeded to trial on the four remaining claims, with the jury returning a verdict in favor

of USCM and Cuellar.

       Across all claims, the jury made five special verdict findings. On the two special

verdict forms for the hostile-work-environment-based-on-sex claim,7 it responded "No"

(by a nine to three margin) to the question, "Was Elvia Velasco Jimenez an employee of

U.S. Continental Marketing, Inc.?" On the verdict form for the retaliation claim, the jury

responded "No" (by a nine to three margin) to the question, "Was Elvia Velasco Jimenez

employed by U.S. Continental Marketing, Inc.?" Likewise, on the verdict form for the

wrongful discharge in violation of public policy claim, the jury responded "No" (by a

nine to three margin) to the question, "Was Elvia Velasco Jimenez employed by U.S.

Continental Marketing, Inc.?" Finally, with respect to the alleged failure to prevent

harassment or retaliation, the jury responded "No" (by an 11 to one margin) to the

question, "Did U.S. Continental Marketing, Inc. fail to take all reasonable steps to

prevent the harassment or retaliation?"

       After the verdicts, Jimenez filed a motion for a new trial, arguing that the jury's

finding—that USCM was not Jimenez's employer—was contrary to law. Opposing the

6       Jimenez initially named Ameritemps as a defendant but later dismissed it from the
action.

7      Two forms were used to distinguish between the entity and individual defendants.

                                              7
motion, USCM pointed to six facts that it believed showed USCM was not Jimenez's

employer. Specifically, USCM asserted that: (1) "[USCM] did not hire [Jimenez]"; (2)

"[Jimenez's] paychecks came from Ameritemps, not [USCM]"; (3) "[USCM] did not

exercise any control over the decision to terminate [Jimenez]"; (4) "[Jimenez's]

termination letter came from her employer, Ameritemps, on their letterhead, not from

[USCM]"; (5) "there were two separate sets of time clocks at [USCM] premises, one for

the employees and one for the temps, which clock was installed and monitored by

Ameritemps"; and (6) "when asked questions about her most recent job, [Jimenez]

testified about her most recent job that she was placed as a janitor at Target by her actual

employer, and did not claim that Target was her employer (as she did with [USCM])."

The court denied the motion, and judgment was entered in favor of USCM and Cuellar.

                                       DISCUSSION

A.     Standard of Review

       The facts bearing on the specific question presented here are not in dispute.

Instead, the parties contest the characterization and legal significance of these facts with

respect to whether, under the relevant statutes and regulations, USCM may be held to be

Jimenez's employer. (See § 12940, subd. (j).) We therefore review the question under a

de novo standard, which applies to interpretations of statutes and to mixed questions of

law and fact when legal issues predominate. (See Bradley, supra, 158 Cal.App.4th at

pp. 1623–1624; Crocker Nat'l Bank v. City and County of San Francisco (1989) 49
Cal. 3d 881, 888.)

                                              8
B.     The Employment Relationship for FEHA Purposes in the Temporary-Staffing
       Context

       FEHA's purpose is to protect and safeguard the right and opportunity of all

persons to seek and hold employment free from discrimination. (See Brown v. Superior

Court (1984) 37 Cal. 3d 477, 485.) To this end, FEHA makes it unlawful for an employer

to harass or retaliate against an employee. (See § 12940.) To be entitled to relief for

allegations of harassment and retaliation, a FEHA claimant must first demonstrate an

employment relationship with his or her alleged employer. (See Bradley, supra, 158

Cal.App.4th at pp. 1623–1624.)

       FEHA does not define "employee," but the administrative agency charged with

interpreting FEHA—the Fair Employment and Housing Council (FEHC)—does define

the term. (See § 12935; see also Bradley, supra, 158 Cal.App.4th at p. 1625.) We give

great weight to an administrative agency's interpretation of its own regulations and the

statutes under which it operates. (Colmenares v. Braemar Country Club, Inc. (2003) 29
Cal. 4th 1019, 1029.) The FEHC defines "employee" as "[a]ny individual under the

direction and control of an employer under any appointment or contract of hire or

apprenticeship, express or implied, oral or written." (Cal. Code of Regs., tit. 2, § 11008,

subd. (c).) FEHA thus requires an employment relationship, but that relationship need

not be direct. (See Vernon, supra, 116 Cal.App.4th at p. 123.) Instead, the employment

relationship must show the employer's exercise of direction and control over the

employee—the common-law "keystone of the employment relationship"—and other

factors outlined in Vernon. (Bradley, supra, 158 Cal.App.4th at pp. 1625−1626; Vernon,

                                             9
at p. 123.) Direction and control may be shown by, among other factors, whether the

employee must obey instructions from the employer and whether "there was a right to

terminate the service at any time." (Bradley, at p. 1625, citing Villanazul v. City of Los

Angeles (1951) 37 Cal. 2d 718, 721.)

       The FEHC's regulations further provide that "[a]n individual compensated by a

temporary service agency for work to be performed for an employer contracting with the

temporary service agency may be considered an employee of that employer for such

terms, conditions and privileges of employment under the control of that employer. Such

an individual is an employee of the temporary service agency with regard to such terms,

conditions and privileges of employment under the control of the temporary service

agency." (Cal. Code of Regs., tit. 2, § 11008, subd. (c)(5), italics added.) As the court in

Bradley explained, "[t]his language reflects that the employment relationship for FEHA

purposes must be tied directly to the amount of control exercised over the employee."

(Bradley, supra, 158 Cal.App.4th at pp. 1625–1626.) The court continued, "[t]he key is

that liability is predicated on the allegations of harassment or discrimination involving the

terms, conditions, or privileges of employment under the control of the employer, and

that the employment relationship exists for FEHA purposes within the context of the

control retained." (Id. at p. 1629.) In other words, the direction and control held by a

contracting employer over a temporary employee may not be discounted by the absence

of factors relating to control that are outside of the bounds of the contractual context,

which in the temporary-staffing context typically include the hiring, payment, benefits,

and time-tracking being handled by the temporary-staffing agency. This general

                                             10
principle—that an individual may be held to have more than one employer in the

temporary-staffing context—has "long been recognized . . . for the purposes of applying

state and federal antidiscrimination laws." (Id. at p. 1626, citing Mathieu v. Norrell

Corp. (2004) 115 Cal. App. 4th 1174, 1184.)8

       Our analysis is guided significantly by Bradley. There, a social worker in a

temporary employee position with the California Department of Corrections and

Rehabilitation (CDC) brought harassment and retaliation claims under FEHA against the

CDC. (Bradley, supra, 158 Cal.App.4th at pp. 1617–1618.) The jury found for Bradley

on both causes of action, but the court granted CDC's motion for judgment

notwithstanding the verdict as to the retaliation claim, finding that she lacked standing.

(Id. at p. 1618.) The Court of Appeal reversed in relevant part, concluding the social

worker was "an employee within the meaning of the FEHA, even though she [was] not an

8      This principle is sometimes referred to as the joint employer or dual employer
doctrine, which can create confusion. (See Scheidecker v. Arvig Enterprises, Inc.
(D. Minn. 2000) 122 F. Supp. 2d 1031, 1038 [joint employer]; Kowalski v. Shell Oil Co.
(1979) 23 Cal. 3d 168, 174 [in a personal injury context, " '[w]here an employer sends an
employee to work for another person, and both have the right to exercise certain powers
of control over the employee, that employee may be held to have two employers—his
original or "general" employer and a second, the "special" employer' "], citing Riley v.
Southwest Marine, Inc. (1988) 203 Cal. App. 3d 1242, 1247–1248 ["where an employer
lends an employee to another employer and relinquishes to the borrowing employer all
right of control over the employee's activities," a "dual employment" situation is
created].) Although the terms "joint employer" and to a lesser extent "dual employer"
might suggest one employer or employment relationship made up of two or more
constituent parts, the principles relevant here may be more easily understood and applied
by simply discarding the somewhat-dated assumption that an employee typically has, or
ought to have, a single employer. After all, the temporary-staffing context is only one
subset of many possible cases in which an individual may have more than employer.

                                             11
official employee of the state for civil service and benefit purposes." (Id. at pp. 1617,

1629.)

         Much like the circumstances here, Bradley was not hired by the CDC, did not

receive her payments or benefits from the CDC, and instead "worked at the facility as a

contract worker pursuant to a contract negotiated between CDC and the [temporary-

staffing agency]," which "contracted with Bradley to work at and provide services to the

facility." (Bradley, supra, 158 Cal.App.4th at p. 1618.) Additionally, Bradley's time was

managed by the temporary-staffing agency through timesheets. (Ibid.) In this way, the

scenario was typical of the temporary-staffing context, such that the "CDC use[d]

contract workers on a regular basis when needed to supplement regular staff." (Ibid.)

Yet the court found that such factors did not affect the employment relationship between

Bradley and CDC for FEHA purposes, instead focusing on the exercise of direction and

control within the context of the terms, conditions, or privileges of Bradley's employment

with CDC. (Id. at pp. 1629–1631.) Thus framed, the court found significant evidence of

direction and control and reinstated the jury verdict on the retaliation claim. (Id. at

pp. 1629–1631, 1635.)

C.       There Is Insufficient Evidence to Support a Finding that Jimenez Was Not an
         Employee of USCM for Purposes of FEHA.

         With respect to the issue presented here—whether USCM is Jimenez's employer

for the purposes of FEHA—Jimenez argues that "no evidence even arguably relevant to

the issue supports the jury's verdict." USCM maintains substantial evidence supports the

jury's finding, reciting many of the same facts presented in opposition to Jimenez's new

                                             12
trial motion. Specifically, (1) USCM did not hire Jimenez, who was instead placed at

USCM by Ameritemps; (2) USCM did not track Jimenez's time; (3) USCM did not pay

or provide benefits to Jimenez; and (4) "it was Ameritemps who terminated Jimenez, not

[USCM]." USCM identifies no other evidence rebutting Jimenez's evidence of an

employment relationship or otherwise tending to show that USCM was not Jimenez's

employer.

       Under FEHA, the first three of USCM's factual bases are not entitled to any

weight, as they do not bear on USCM's control over Jimenez's work performance. (See

Bradley, supra, 58 Cal.App.4th at pp. 1625−1626 & fn. 2.) The termination of

employment may be considered, but only within the specific employment relationship at

issue. (See id. at pp. 1625, 1629.) In other words, the relevant question here is whether

USCM terminated Jimenez's relationship with USCM, not whether USCM terminated

Jimenez's relationship with Ameritemps. Although the parties dispute the characterization

and import of the facts surrounding Jimenez's termination, they do not contest that

USCM terminated Jimenez's services with USCM. We accordingly can identify no

substantial evidence to support the jury's special verdict finding that USCM was not

Jimenez's employer.

       On the other side of the ledger, considerable evidence shows that USCM exercised

direction and control over Jimenez's employment. Jimenez worked in a supervisory role

as a line lead in USCM's production department with responsibility for thirty colleagues,

including temporary and direct employees of USCM, and she reported to a USCM

employee. She was subject to USCM's employee handbook and benefitted from USCM's

                                            13
mandatory in-house training and the availability of USCM's clinic used by direct and

temporary employees for any on-the-job injuries. She was subject to USCM's

disciplinary policies, and was in fact investigated by USCM as a result of bullying

complaints made against her. After concluding that Jimenez had violated USCM's

antibullying policy, USCM issued a warning (through a direct USCM employee)

pursuant to its progressive disciplinary policy. USCM investigated the harassment

allegations that Jimenez raised and could have disciplined her as a result of the

investigation, though it declined to exercise this power. And Jimenez worked in a system

in which direct USCM employees supervise and train (and are supervised and trained by)

temporary employees.

       USCM argues that the absence of some facts that may be relevant should weigh in

its favor, noting, for example, that no evidence was introduced to demonstrate ownership

of the equipment provided by USCM for its temporary employees to utilize on its

property during their employment. But FEHA does not require that a claimant present

evidence related to every possible factor that might bear on the question of an

employment relationship, and the absence of some indicia of employment does not affect

Jimenez's extensive showing of an employment relationship with respect to USCM under

FEHA.

       USCM additionally contends that Jimenez misreads Bradley and improperly

attempts to extend the joint employer doctrine such that "every time a staffing agency

sends a worker to one of its clients, that client is a joint employer." It goes on to claim

that any such argument is barred by the invited error doctrine because Jimenez agreed to

                                             14
submit the "employer" question to the jury with an instruction telling jurors they "may"

find a joint employer relationship—not that they "must." (See Transport Ins. Co. v. TIG

Ins. Co. (2012) 202 Cal. App. 4th 984, 1000.)

       Contrary to USCM's contention, we do not read Jimenez to argue on appeal that a

jury "must" necessarily find an employment relationship as to all direct and contracting

employers in the temporary-staffing context (described by the jury instruction as "[w]here

an employer sends an employee to do work for another company, and both have the right

to exercise certain powers of control over the employee"). It is true that in the trial court

Jimenez advocated for a legal conclusion broader than ours here. She contended that

"there can never be a scenario where a staffing agency sends an employee to work for a

client, yet a jury finds no employment between the worker and the client." We do not

read the FEHA statutes, the FEHC's regulations, Bradley, or other relevant caselaw to

establish such a bright-line rule, and we do not adopt one here. Instead, we consider the

totality of circumstances through the lens of a temporary staffing dynamic or other

contractual framework, which means simply calibrating the analysis of relevant factors

like the extent of direction and control to reflect the particular employment context.

Consequently, where a FEHA claimant presents substantial evidence of an employment

relationship that is rebutted only by direction and control evidence outside the bounds of

the contractual context (such as in a temporary-staffing situation where hiring, payment,

benefits, and time-tracking are handled by a temporary-staffing agency), the claimant has

demonstrated an employment relationship for FEHA purposes. Accordingly, there is no

issue of invited error.

                                             15
D.     Jimenez's Common Law Claim

       The parties do not address the distinction between Jimenez's FEHA claims and her

common law claim for wrongful discharge in violation of public policy with respect to

Jimenez's employment relationship with USCM. But as discussed in Bradley, the

principles supporting the primacy of the direction and control factor under FEHA are

firmly rooted in the common law. (See Bradley, supra, 58 Cal.App.4th at pp. 1626–1628

[finding an employment relationship under either FEHA or the common law]; see also

Tameny v. Atlantic Richfield Co. (1980) 27 Cal. 3d 167, 170; Casella v. SouthWest Dealer

Services, Inc. (2007) 157 Cal. App. 4th 1127, 1138–1139.) Accordingly, for the same

reasons discussed above with respect to the FEHA claims, we likewise find that USCM

was Jimenez's employer for the purposes of her common law claim.

E.     Jimenez's FEHA Claim for Failure to Prevent Harassment or Retaliation

       On all claims but one, the jury's special verdict findings were limited to the

question of the employment relationship between Jimenez and USCM. But with respect

to Jimenez's failure-to-prevent claim, for reasons that are not entirely clear the jury was

not asked about the employment relationship and instead proceeded to the merits. It

found, by an 11 to one margin, that USCM did not "fail to take all reasonable steps to

prevent the harassment or retaliation." Neither Jimenez nor USCM challenges the jury's

finding or otherwise addresses the matter in their briefing. Accordingly, we affirm the

judgment as to this individual claim.

                                             16
                                      DISPOSITION

       The judgment with respect to Jimenez's FEHA failure-to-prevent claim is affirmed

(second cause of action). In all other respects the judgment is reversed and the case is

remanded to the superior court for a new trial on Jimenez's two FEHA claims for a

hostile work environment based on sex and retaliation (first & fifth causes of action), as

well as her common law claim for wrongful termination in violation of public policy

(sixth cause of action). As to each of those claims, the jury should be instructed on retrial

that USCM was Jimenez's employer. Jimenez shall recover her costs on appeal.

                                                                                   DATO, J.

WE CONCUR:

McCONNELL, P. J.

AARON, J.

                                             17