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Jimenez v. U.S. Continental Marketing, Inc.

California Court of Appeals, Fourth District, First Division

October 17, 2019

ELVIA VELASCO JIMENEZ, Plaintiff and Appellant,
U.S. CONTINENTAL MARKETING, INC. et al., Defendants and Respondents.

          APPEAL from a judgment of the Superior Court of Riverside County, No. RIC1604613 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.

          DATO, J.

         Elvia Velasco Jimenez asserted claims under the Fair Employment and Housing Act (FEHA) (Gov. Code, § 12900 et seq.)[1] against her contracting employer[2] 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.

         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 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.


         A. Foundational Facts[4]

         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 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 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 ...

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