Discrimination and coercion lead to liability under two laws

California has an all-purpose, wraparound statute prohibiting arbitrary discrimination of any kind: Civil Code Section 51, or the Unruh Act. In the following case, the court found lending practices that discriminated against women violated the Unruh Act. But when an employer coerces its employees to violate the Act, that is a violation of the Fair Employment and Housing Act (FEHA) as well.

Finance discrimination

Defendants M&N Financing Corporation and Mahmood Nasiry operated a business that purchased retail installment sales contracts from used car dealerships. In deciding how much to pay for the contracts, they used a formula that considered the gender of the car purchaser. Specifically, the defendants would pay more for a contract with a male purchaser than for a contract with a female purchaser or female coborrower (collectively, "female borrowers").

Based on Nasiry's 10 years of experience with loan defaults, he believed there was "a greater risk of default for female borrowers." Thus, he included the gender of the used car purchaser as one of the 18 to 20 specific factors on the spreadsheet. For gender, M&N employees, at Nasiry's direction, assessed one point for a contract with a female purchaser, zero points for a contract with a male purchaser, and half a point for a contract with a female coborrower. Each point on the spreadsheet corresponded to a percentage point, so M&N would pay a car dealership one percent less for a contract with a female purchaser and half a percent less for a contract with a female coborrower than it would pay for a contract with a male purchaser.