Can an Employer Refuse to Renew a Seasonal Worker’s Contract Without Risking FEHA Liability?

In California, the Fair Employment and Housing Act (FEHA) provides broad protections against discrimination and retaliation in the workplace. While employers often assume they have discretion when deciding whether to renew seasonal or temporary employees’ contracts, non-renewal decisions are not immune from legal scrutiny. If an employer declines to renew a seasonal worker’s contract due to their membership in a protected class (e.g., race, sex, disability) or in retaliation for engaging in protected activity  (e.g., filing a discrimination complaint), that employer may face legal liability under the FEHA.

FEHA’s Broad Protection Against Discrimination and Retaliation

FEHA, codified at California Government Code §12940, prohibits employers from refusing to hire, employ, discharge, or otherwise discriminate against individuals based on a protected characteristic. (Gov. Code §12940(a)). It also protects employees from retaliation when they oppose unlawful employment practices or participate in proceedings related to the FEHA claims (Gov. Code §12940(h)).

California courts interpret adverse employment actions broadly. The California Supreme Court in Yanowitz v. L’Oreal USA, Inc. (2005) 36 Cal.4th 1028, 1052 clarified that an adverse action need not be an outright termination; it is sufficient if the action “materially affects the terms, conditions, or privileges of employment.” Because non-renewal results in the loss of employment, it is generally recognized as an adverse employment action.

FEHA does not distinguish between employees with indefinite employment and those working under seasonal or fixed-term contracts when it comes to protection from discrimination and retaliation. If an employer’s decision not to renew a seasonal employee’s contract is substantially motivated by the employee’s protected status or their engagement in protected activity, the employer could be held liable for violating the FEHA.

Non-Renewal vs. Termination: Legal Distinctions and Similarities

California law distinguishes between termination and non-renewal of a contract, particularly for common-law wrongful termination claims. In Touchstone Television Productions v. Superior Court (2012) 208 Cal.App.4th 676, actress Nicollette Sheridan alleged that the producers of Desperate Housewives refused to renew her contract in retaliation for her complaints about workplace misconduct. The court held that non-renewal of a fixed-term contract does not give rise to a wrongful termination claim under common law because it is not a “discharge” in the traditional sense. However, the court emphasized that statutory claims—such as those under FEHA—are a separate matter. The case reaffirmed that while common-law claims may not apply, FEHA protections remain fully intact.

Another relevant case is Motevalli v. Los Angeles Unified School District (2004) 122 Cal.App.4th 97. A teacher on a one-year contract was denied rehire and claimed wrongful termination in violation of public policy. The court ruled that because her contract simply expired, there was no “termination.” However, as with Touchstone, this case did not address FEHA claims, which provide separate statutory protection for employees subject to discriminatory or retaliatory non-renewal.

A similar principle was applied in Daly v. Exxon Corp. (1997) 55 Cal.App.4th 39, where the court rejected a common-law wrongful termination claim for non-renewal but emphasized that statutory remedies remained available if the plaintiff could establish discrimination under FEHA.

FEHA Claims for Discriminatory or Retaliatory Non-Renewal

Even though common-law wrongful termination claims may not apply to non-renewal, the FEHA still prohibits employers from refusing to renew a contract for unlawful reasons. Courts have repeatedly ruled that failure to rehire or renew a contract can constitute an adverse employment action when based on discrimination or retaliation.

In Salas v. Sierra Chemical Co. (2014) 59 Cal.4th 407, the plaintiff had worked several seasonal positions at Sierra Chemical Co. and suffered a workplace injury. After filing a workers’ compensation claim, he was not rehired for the following season. He sued under FEHA, alleging disability discrimination and retaliation. The employer tried to defend itself by citing after-acquired evidence—specifically, discovering Salas had used false work documents. However, the California Supreme Court held that while after-acquired evidence could limit remedies, it did not bar the FEHA claim altogether. This ruling reinforced that seasonal employees can challenge non-renewal decisions under FEHA if they stem from discrimination or retaliation.

Additional Case Law Supporting FEHA Claims

In Harris v. City of Santa Monica (2013) 56 Cal.4th 203, the California Supreme Court clarified that if a discriminatory motive was a “substantial factor” in an adverse employment decision, liability under FEHA may attach, even if other legitimate factors were involved. This principle applies to non-renewal cases where an employer cites neutral reasons but evidence suggests discrimination played a meaningful role. Another critical case is Yanowitz v. L’Oreal USA, Inc. (2005) 36 Cal.4th 1028, which established that adverse employment actions must be viewed in context. If a pattern of conduct indicates retaliatory or discriminatory intent, even seemingly neutral employment actions—such as non-renewal—can violate FEHA.