While courts have generally avoided finding members of management individually liable for claims of discrimination under California Fair Employment and Housing Act (“FEHA”) and the California Family Rights Act (“CFRA”), plaintiff attorneys have attempted several different tactics to achieve this end especially where the employer is owned by a sole shareholder. In Leek et. al. v. Cooper, No. C061510 and C063152 (3rd Appellate District April 15, 2011), the Court held that whether a sole shareholder is liable as an employer for discrimination under the FEHA and the CFRA should be determined by using the alter ego doctrine.
Plaintiffs alleged that Jay Cooper (“Cooper”), the sole shareholder of a company, was liable for age discrimination as their employer since individuals are not personally liable for discrimination under FEHA or CFRA. To show he was an employer, Plaintiffs argued the Court should considering using such analysis as: (1) a test similar to determining if an individual is an employee or independent contractor; (2) whether a shareholder is an employee under the Americans with Disabilities Act; and/or (3) whether two corporations should be considered a single employer. The Court rejected the Plaintiff’s arguments. The Court held that when seeking to hold a shareholder liable as the employer under the FEHA and the CFRA, the alter ego test is the appropriate test, not whether the sole shareholder exercises control over employees. In this case, the Court upheld summary judgement for the employer and found insufficent evidence to establish the sole shareholder as the alter ego of the employer.