Does California Employment Law Protect Workers Outside California? What the SpaceX Ruling Means
By Aidin Ghavimi, Managing Attorney ·
A September 2026 appellate ruling let California's Civil Rights Department investigate SpaceX over a Washington-based employee's claims. What it means for remote and out-of-state workers.
Employment Law
4 min read
More employees than ever work for California companies without living in California. Remote engineers, out-of-state sales teams, and workers at branch offices in other states often report to managers in Los Angeles, San Francisco, or Silicon Valley. When one of those employees experiences discrimination or retaliation, a natural question follows: does California's Fair Employment and Housing Act (FEHA) protect them?
A September 2026 decision involving SpaceX does not answer that question for every worker, but it rejects the idea that the answer is automatically no.
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The Case: Civil Rights Department v. Space Exploration Technologies
A former SpaceX employee who lived and worked in Washington State alleged sex and gender discrimination in pay and promotion, and retaliation for protected activity. California's Civil Rights Department (CRD), the state agency that enforces FEHA, opened an investigation and issued a subpoena. It asked for information about the merits of the retaliation claim and about whether the alleged discrimination had enough of a connection to California.
SpaceX refused to comply. It argued that because the employee lived and worked in Washington, the CRD had no authority to investigate, relying on the U.S. Constitution, the legal presumption that California laws do not apply outside the state, and the text of FEHA itself. The trial court ordered SpaceX to comply with the subpoena, and on September 9, 2026, the Court of Appeal (Second Dist., Div. Three) affirmed.
What the Court Decided
- Investigating is different from deciding. The court explained that the CRD's power to investigate and the question of whether FEHA ultimately applies to a particular out-of-state employee are separate issues. The agency can gather facts to figure out whether the law applies.
- No automatic bar for out-of-state employees. The presumption against applying California law outside the state did not categorically block the investigation.
- No bright-line rule. The court rejected SpaceX's proposed rule that FEHA can never apply to an employee working outside California.
When Might FEHA Cover a Worker Outside California?
Earlier California decisions have held that FEHA generally does not reach nonresidents who work outside the state when the unlawful conduct did not happen in California. The SpaceX ruling keeps the focus on the facts. The key question is how strongly the employment decision and the alleged misconduct are connected to California. Facts that may matter include:
- Whether the decision to fire, demote, underpay, or deny a promotion was made by managers working in California;
- Whether pay and promotion policies were set at a California headquarters;
- Whether the employee regularly worked in California, traveled to California offices, or was supervised from California;
- Whether complaints were received and handled, or ignored, by human resources staff in California; and
- Where the harassment or retaliation actually took place.
The answer can also depend on whether the employee has protections under the law of the state where they work, and on federal laws like Title VII and the Equal Pay Act, which apply nationwide.
What This Means for Remote and Out-of-State Employees
If you work outside California for a California-based employer, you should not assume California law cannot help you. Likewise, if you are a California resident who works for an out-of-state company, California law may still protect you. The SpaceX decision means the CRD can look into the facts before deciding whether your claim is covered.
Keep in mind that FEHA claims generally must be filed with the CRD within three years of the discriminatory act before you can file a lawsuit. Federal claims with the Equal Employment Opportunity Commission usually have much shorter deadlines, often 300 days. If you are unsure which law applies, it is safer to act quickly.
For a broader overview of the protections California provides, see our guides to workplace discrimination in California and signs of workplace discrimination.
This article is general information, not legal advice about your situation.
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