Do Not Lose Your Head with Respect to the Evolving Standards for Associational Discrimination

11.06.2025

In Head v. Costco Wholesale Corp. (N.D. Cal. 2025) 2025 WL 1592737, a federal district court is the latest actor to chime in on the developing law related to associational discrimination. Any trial lawyer will advise you that the key to winning a trial is telling a good story, and employers need to beware when facts create sympathetic plaintiffs, and thus, the potential for large jury verdicts. You can be the judge on which of the following viewpoints will resonate better with a jury.

Terry Head was in his late sixties, and he worked for Costco for almost thirty years from 1993 until 2022. He claimed he was discriminated against because he was the named plaintiff in a class action lawsuit that was filed in 2001 and settled in 2009, and he further was discriminated against when Costco did not accommodate him by allowing him to take additional leave because of his wife’s cancer. When he ran out of protected leave under the Family Medical Leave Act and California Family Rights Act (FMLA/CFRA) and additional leave provided by Costco’s policy, he claimed he had no other option except to resign his job, which he claimed was a constructive termination. After his wife passed away, he reapplied for his job, but he was not rehired. These are the kind of facts that plaintiff attorneys find very attractive.

Costco tells a slightly different tale. Head received 15 employee counseling notices between June 2003 and June 2020. He repeatedly asked to be transferred to a different store to be closer to home to take care of his wife, who was diagnosed with cancer in 2015. He first asked in October 2015 and four more times up to May 2017, and he was denied each time. When his request was finally granted in November 2017, he asked to be returned to his original store within three weeks of the transfer, and this request was granted. He went out on a leave of absence on March 15, 2021, until June 15, 2021, when his FMLA/CFRA leave was exhausted. He requested and was granted continued personal leave from June 15, 2021, through February 2022. As the leave period was approaching one year, Costco sent him a letter letting him know that the company policy was to provide leave for up to one year and Costco invited him to attend a Job Assessment Meeting. In response, Head submitted a request for continuous leave to care for his wife through February 4, 2023. When he was notified that he was not eligible for any more FMLA/CFRA leave, he provided a doctor’s note stating that he was under medical care and needed to remain off work until May 7, 2022. Costco sent him a letter stating that although its policy was to allow leave only for up to one year, Costco approved his leave through May 7, 2022. On April 3, Head responded that while he was released to return to work, he needed to remain off work to care for his wife. Head did not return to work on May 8, which resulted in Costco sending him a letter in June 2022 saying that he had exhausted leave and he was scheduled to work starting on July 5, 2022, since he had notified Costco back in April that he was able to work. The letter went on to state if he needed more time to care for his spouse, he could resign. He was provided with a resignation form and requested to return it to Costco by July 7, 2022. Head resigned his employment on June 30, 2022. After his wife passed away in April 2023, Head asked Costco to reinstate him in May 2023. Costco told Head it might be able to rehire him part-time up until the holiday season, and then full-time, and they would investigate the possibility.

Whistleblower Retaliation Claim

Head asserted two theories of retaliation - - one was based on his 2001 wage-hour class action, and the other was based on his advocating for wage-hour rights. The court found that a lawsuit filed in 2024 based on actions that took place twenty years earlier was time-barred. The court similarly dismissed the claim based on advocating wage-hour rights because no specifics were provided about the timing of the advocacy, and thus, the vague allegation could not be tied to his resignation or the failure to rehire him.

Discrimination

The court recognized that the Fair Employment and Housing Act (“FEHA”) provides a cause of action for associational disability discrimination, which is independent from a failure to accommodate claim. The court found that the association with his wife, a disabled person, provided the disability element necessary for a disability discrimination claim by Head to go forward. Regarding his discrimination and failure to prevent discrimination claims, Head alleged four discriminatory acts: (1) denial of transfer requests, (2) counseling notices, (3) forced resignation, and (4) failure to rehire. The court found that the denial of transfer requests and the counseling notices were time-barred by the statute of limitations; consequently, they could not form the basis for a discrimination claim.

The court then found that there was no discriminatory animus motivating the forced resignation. The court concluded that because Costco had provided Head leave to take care of his wife, and this act suggested no discriminatory animus with respect to its request for him to come back to work in July 2022 since he had been on continuous leave since March 15, 2021 (a total of 15 months).

Regarding the claim of discrimination based on the failure to rehire, the court found that Head could not show the required animus. The decision was made by a new manager who had not worked with Head, and the decision was based on Head’s previous counseling notices. It was not the content of the counseling notices, but rather the fact that Head had refused to sign the notices, which indicated to the new manager that Head was a “problem” employee. The court held that the decision based on the refusal to sign the notices did not create the necessary animus to evidence discrimination.

Failure To Accommodate

The court reached a different conclusion regarding the failure to accommodate, failure to engage in the interactive process, and retaliation based on failure to accommodate. Costco took the position that one cannot accommodate an associational disability. The court disagreed.

The only published California court decision where this arose was Castro-Ramirez v. Dependable Highway Express, Inc. (2016) 2 Cal. App. 5^th 1028, wherein the court noted there was a difference between associational disability discrimination and a failure to accommodate claim, and the court declined to decide whether FEHA established a separate duty to reasonably accommodate employees who associate with a disabled person. Several federal court decisions have found that there is a duty to reasonably accommodate associational disability. See Castro v. Classy, Inc., 2020 WL 996948 at *7 (S.D. Cal. 2020)(associational disability claims brought under failure to accommodate and failure to engage in the interactive process were sufficient to survive a motion to dismiss); McVay v. DXP Enters., Inc., 645 F. Supp. 3d 971, 975 (C.D. Cal. 2022)(FEHA permits employees to bring accommodation and interactive-process claims based on a theory of associational disability); Acosta v NAS Ins. Servs., LLC, 2025 WL 975007 at * (C.D. Cal. 2025)(because the definition of disability in the FEHA includes associational disability, a claim for failure to accommodate an associational disability is actionable).

In two unpublished state court decisions the courts found that there is no duty to reasonably accommodate an associational disability. In Shahin v. Kaiser Found. Health Plan (Cal. Ct. App. May 1, 2023) 2023 WL 3166730, the court found that under Cal. Gov’t. Code § 12926, association with a disabled person is a protected characteristic. While the list of protected characteristics is utilized in disability discrimination, they are not used in the provisions regarding an employer’s duty to accommodate. The court concluded that based on the plain language of the statute, the FEHA does not require an employer to accommodate an employee’s association with a person who has a disability. See also Monterroso v. Hydraulics Int’l Inc. (Cal. Ct. App. January 4, 2022) 2022 WL 33250 at *8. The Head court rejected this analysis and found that the definitions in section 12926 apply to the entirety of the FEHA, including the duties to accommodate and engage in an interactive process. Once it determined that such a cause of action can be maintained, the court found that Head’s request for leave for a date certain in early 2023 was a reasonable request even if he had exhausted his leave under Costco policy.

Employer Takeaways

This case exemplifies the difficulties of maintaining a maximum leave policy. Having a policy that limits leave to one year may result in a failure to engage in an interactive process claim and possibly a failure to accommodate claim. Even in this case, where the one-year limitation was tempered by policy language: “except as required by law,” such a modifier might not save the policy. Employers must be able to explain why allowing an employee unpaid leave is not reasonable. For a salesperson at Costco, this would seem to be a high threshold.

When Head requested an extension of his leave, it was time-limited by an exact return to work date. The court recognized this was a potentially reasonable accommodation and declined to grant Costco summary judgment on this issue. At trial, Costco will have to show how providing him an unpaid leave was an undue hardship on Costco, which is an exceedingly high bar to meet. Costco would have been better off granting Head unpaid leave and wait to see if he was ready to return to work one year later. If Head chose to try and further extend his leave after another year, Costco might have been in a better position to argue that such an extension is akin to indefinite leave and not reasonable. The line of how much extra leave is too much has not been drawn yet definitively.

In its communications with Head, Costco suggested they were only willing to accommodate Head’s own medical needs and not those tied to caring for his wife. The trend toward associational discrimination is upon us, and it may just be a matter of time before a California court echoes the federal courts’ decisions recognizing a duty to accommodate an associational disability.

Do not forget that the employer’s conduct may also be relevant to claims for punitive damages. In this case, Costco, in its summary judgment motion, attacked punitive damages, and the court found punitive damages were not merited because Costco afforded more leave time in toto than required by FMLA/CFRA and Costco’s own leave policy even if a jury were to find a failure to provide a reasonable accommodation or a failure to engage in the interactive process.